Ask most Melbourne homeowners where the biggest chunk of their energy bill goes, and you’ll get answers like ‘the heating’ or ‘leaving lights on.’ Almost nobody says hot water. But they should — because heating water is one of the largest and most consistent energy costs in the average Australian home, typically sitting between 20 and 25 percent of the total bill.
And the technology most homes are still running — the old electric storage hot water tank — is one of the most inefficient ways to heat water ever invented. It sits there all day, keeping 125 to 400 litres of water hot whether you’re using it or not, losing heat through the tank walls, and using a resistive element that converts electricity to heat at a 1:1 ratio.
Enter the heat pump
Heat pump hot water systems work on the same principle as your refrigerator or reverse cycle air conditioner — they move heat rather than generate it. The unit draws warmth from the surrounding air and uses it to heat the water in the tank, achieving a coefficient of performance (COP) of 3 to 4. In plain terms: for every unit of electricity you put in, you get three to four units of heat out.
The running cost difference is significant. Energy Victoria estimates that switching from an electric storage system to a heat pump can save households up to $400 per year on hot water costs alone. For a family of four, that’s a compelling return — particularly when you factor in the Victorian Energy Upgrades rebate of up to $1,630 or more, which reduces the upfront cost substantially.
Switching from a gas hot water system to a heat pump? That’s an even bigger opportunity. With gas prices rising and the VEU rebate now reaching up to $2,030 for locally manufactured systems, the economics of switching have never been better.
The global energy context
Australia’s gas prices are not set by Australian demand alone. When global LNG markets spike — as they did following the invasion of Ukraine in 2022 — domestic gas prices follow. According to the Climate Council, switching from gas to efficient electric appliances can save households between $500 and $1,900 per year, and directly shields families from future global gas price volatility.
This isn’t just an environmental argument. It’s a practical financial one. The more your home runs on electricity — especially electricity from rooftop solar — the less exposed you are to commodity price shocks that originate thousands of kilometres away.
What about solar hot water?
Solar hot water systems are another option, and they work well in Melbourne’s climate — though they typically require a gas or electric booster for cloudy stretches. If you already have solar panels, pairing a heat pump hot water system with a timer set to run during peak solar generation hours can effectively give you hot water at near-zero cost for much of the year.
Making the switch with Helcro
Helcro Electrical is an accredited VEU provider and works with leading heat pump brands including the iStore — a locally manufactured unit that attracts the highest rebate tier under the Victorian Energy Upgrades program. We handle the assessment, installation, and rebate processing, so the process is straightforward from your end.
If your hot water system is more than 8 years old, it’s worth a conversation. Contact Helcro Electrical to find out what’s available, what the rebate looks like for your situation, and what you could save annually.
