How Does a Heat Pump Hot Water System Work?

Australia saw a 70% increase in heat pump hot water system installations last year. With energy savings and environmental benefits, Australians are choosing these efficient solutions for their hot water needs.

If you’ve been wondering what is a heat pump hot water system and how it works, you’ve come to the right place. We’ll cover everything you need to know about heat pump hot water systems, from how they function to their benefits and drawbacks.

Heat Pump Hot Water: How Does It Work?

Unlike conventional systems that use electrical resistance to heat water directly, a heat pump water heater operates by transferring heat from the surrounding air into the water. Below are the technical details of how a hot water heat pump functions:

• Heat Absorption: The system uses a fan to draw in the surrounding air and direct it into the evaporator coil.
• Conversion into Gas: The evaporator coil contains refrigerant fluid, which absorbs the heat from the air. This causes the refrigerant to turn into a gas.
• Compression: The gas is then compressed by the system’s compressor, which significantly raises its temperature.
• Heat Transfer: The hot gas is passed through a heat exchanger, where the heat is transferred into the water stored in the tank.
• Cooling and Recycling: After the heat is transferred, the gas cools down, turning back into a liquid. It then flows back to the evaporator to start the cycle again.

This process makes heat pumps for hot water extremely efficient because they don’t generate heat directly. Instead, they simply move heat from one place to another. This is why they use significantly less energy than traditional water heaters.

What Are the Different Types of Heat Pump Hot Water Systems?

When considering a heat pump hot water system, you’ll come across two main types:

• Integrated Systems: A single, compact unit that combines the heat pump and water tank. Ideal for homes with limited space, this system is easy to install.
• Split Systems: The heat pump and water tank are separate units, similar to a split-system air conditioner. This setup offers flexibility in placement, with the tank typically indoors and the heat pump outside.

What Are the Benefits of a Heat Pump Hot Water System

So, why should you consider a heat pump for hot water? Let’s look at the main advantages:

1. Maximise Energy Savings

Heat pump water heaters are incredibly energy-efficient. On average, they use around 70% less energy than traditional electric water heaters. This translates into lower electricity bills, making them a smart investment in the long run.

2. Sustainable Solutions

By using renewable energy from the air, heat pump systems produce fewer greenhouse gas emissions compared to electric heaters. This makes them a greener option that aligns well with Australia’s sustainability goals.

3. Can Be Integrated with Solar Power

One of the best features of heat pump hot water systems is their ability to be integrated with existing solar power systems. By using excess solar energy, you can reduce your reliance on grid power and further lower your electricity bills. It’s a win-win for your wallet and the planet.

4. Long-Term Reliability

Heat pump hot water systems are built to last. Typically, they come with warranties of up to 5-10 years, and with proper maintenance, they can function for over 15 years. Their durability makes them a solid investment for homeowners.

5. Perfect for Larger Homes

Heat pump hot water systems are great for larger homes with high hot water demands. They can efficiently supply hot water throughout the day for multiple bathrooms.

What You Should Know About Heat Pump Hot Water Systems

While heat pumps for hot water offer numerous benefits, they aren’t perfect for everyone. Here are a few drawbacks to consider:

1. Upfront Costs

Heat pump hot water systems have a higher upfront cost compared to traditional water heaters. They range from $2500 to $5000, excluding the installation cost, whereas electric systems cost only half as much. While the upfront cost is higher, the long-term energy savings make it a worthwhile investment.

2. Noise

Because heat pump systems have compressors and fans that run continuously, they can produce a hum or low-level noise while operating. While this noise is not overwhelming, it’s something to keep in mind if your system will be placed close to living areas or bedrooms.

3. Need for Well-Ventilated Space

For the system to work at its best, it needs fresh air to flow across the evaporator. This means heat pumps are best suited to open spaces or outdoor installations. In tighter indoor spaces, the system will not perform optimally.

4. Climate Sensitivity

Although heat pumps can work in colder climates, they operate more efficiently in warmer areas. If you live in a region with very cold winters, you will find that a hot water heat pump doesn’t perform as well during those times.

How Much Is the Cost of a Heat Pump Hot Water System in 2025?

As mentioned, heat pump hot water systems tend to cost more upfront than traditional electric water heaters. The prices can vary, but here’s a general price range:

• Heat Pump Water Heater: $2500-$5000
• Installation Costs: Simple installations can add approximately $1,000, while more complex installations, such as those requiring a new dedicated drain line, a concrete slab base, or extensive electrical work, can increase costs to $3,000.

Additionally, there are government rebates and incentives available in Australia to help reduce the cost of purchasing and installing a heat pump system.

NSW Energy Savings Scheme (ESS)

The NSW Energy Savings Scheme (ESS) offers financial incentives to households and businesses that upgrade to energy-efficient equipment, such as heat pumps. These incentives are provided as upfront discounts applied at the time of installation, rather than as rebates claimed after purchase. Eligible households can receive:

• $400 to $670 when replacing an electric water heater with an air source heat pump water heater.
• $190 to $310 when replacing a gas water heater with an air source heat pump water heater.

Small-Scale Renewable Energy Scheme (SRES)

The Small-Scale Renewable Energy Scheme (SRES) allows heat pump systems to earn Small-Scale Technology Certificates (STCs). Each STC represents one megawatt hour of renewable energy that the system produces. You can then trade these STCs with your installer or a third party, using their value as a discount on the cost of installation. The more STCs your system earns, the greater the discount you can receive, helping to reduce the upfront cost of the system.

Combining Incentives

Both the ESS incentives and STC discounts can be combined to significantly reduce the overall cost of installing a heat pump system. For example, replacing an electric water heater with a heat pump could result in total savings of approximately $700 to $1,100, depending on specific circumstances.

Conclusion

Now that you know how a heat pump hot water system works and its benefits, you’re better equipped to make an informed decision. If you’re looking for an energy-efficient solution for your hot water needs, a heat pump could be just the system for you. Ready to make the switch? Contact Fix N Flow today at 1300 319 275 or submit our online form. Talk to us and enjoy the benefits of hot water heat pumps for years to come.