Hot Water Heating: Electric vs Gas

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Many of us don’t give too much thought about how our water is heated. But hot water heating makes up about 30% of the average household energy bill, according to the Energy Efficiency and Conservation Authority. So, it is worth giving more than just a passing thought in the shower to the best system for your home, especially if you are building, renovating or needing to replace your existing system.

If you are weighing up electricity or gas for your hot water heating, there are three main systems in New Zealand: electric hot water cylinders, gas continuous flow, or heat pump water heaters. The best one for your household will depend on how much hot water you use, space requirements, your existing system, and whether or not you can get reticulated gas.

In most cases, if you are changing your water heating system, you will need a building consent from your local council. The work will need to be done by a registered plumber – and a registered gas fitter if you are using gas, although that could be the same person. In some cases, a registered electrician might also be needed. This means it pays to really research if the installation costs will be covered by any long-term savings made in running a different system.

Electric hot water cylinders

A hot water cylinder run by electricity is the most common type of hot water heating in New Zealand and they are often said to be the most expensive way to heat your water. However, that is not always true – costs depend on efficiency and what power tariffs are available to you.

The system uses an electric element to heat the water stored in an insulated tank or cylinder. To stop legionnaires’ disease, hot water cylinders must be regularly heated to at least 60 degrees Celsius to prevent the growth of legionella bacteria.

To help reduce running costs, electric hot water cylinders can be set up to run on lower-cost power supplied at night. However, you will need to ensure that your cylinder is big enough to store all the hot water you will use in a day.

Installing a new electric hot water cylinder costs approximately $2,000-$3,000. Running costs for an average three-person household are approximately $560-$1,000 a year, depending on electricity rates – such as a night tariff being available.

Pros of electric hot water cylinders:

  • Most common form of hot water heating in New Zealand so you are likely to already have this installed.
  • Can be put on a night-rate electricity supply to get a cheaper electricity price.
  • Will hold hot water for several hours in the event of a power cut.
  • Good for households with low to moderate hot water use.

Cons of electric hot water cylinders:

  • Requires water to be regularly heated to 60 degrees to prevent legionnaires’ disease – much hotter than commonly used in the home.
  • Hot water amount is limited to the amount stored in the cylinder meaning you can run out of hot water. This is a particular concern if you heat your water only at night to save electricity costs.
  • Cylinders that are more than 15 years old have limited insulation and need wraps around them to prevent heat loss.

Gas continuous flow

Gas hot water heaters use a califont which burns gas to heat the water instantly: when you turn on the hot tap, the califont sparks up, heating the water on demand as it flows through the system. The amount of hot water is limitless and the temperature can be set so you don’t need to add a lot of cold water.

Gas continuous flow califonts are usually installed outside the house, so you can save space inside if needed. Most require electricity to start, so will not work during a power cut.

Installing a new gas continuous flow system can cost about $2,000-$3,000 and can sometimes cost more than a new hot water cylinder as a registered gas fitter is needed, as well as a plumber.

The cost of using gas continuous flow hot water heating depends greatly on whether you can access reticulated gas. If you have reticulated natural gas or reticulated LPG – which are available only in certain areas in New Zealand – it costs approximately $750-$950 a year to run for a three-person household. Running it with LPG 45kg bottles, available in most parts of the country, will cost approximately $850-$1,250. The running costs come down if you already have a gas supply for another use, such as for heating.

Pros of gas continuous use:

  • Continuous hot water.
  • Not need to heat up to 60 degrees.
  • Saves on space inside the home.
  • Cost-efficient if you have reticulated gas and/or have gas supply for another use.
  • Good for households wanting unlimited hot water.

Cons of gas continuous use:

  • Expensive to install if you already have a hot water cylinder that is working effectively.
  • Running costs can be high if you use LPG bottles.
  • Most systems require an electrical supply to start, so won’t work during a power cut.
  • Although the hot water never runs out, using more than you need is a waste of money, water and energy.

Heat pump water heater

Heat pump water heaters are relatively new in New Zealand. They use a compressor unit to extract energy from the outdoor air to heat water, which is stored in an insulated hot water tank. In most cases, the system can be retrofitted to an existing hot water cylinder. However, installation costs are still higher than other systems.

While the heat pump water heater also uses electricity, it is much more efficient to run than a standard hot water cylinder. The system can also be put on a night rate to reduce electricity costs.

Like a standard hot water cylinder, the hot water tank needs to be regularly heated at 60 degrees to prevent legionnaires’ disease.

As the system uses air from the outside, it does not work efficiently in cooler temperatures. This means heat pump water heaters are not suitable for colder parts of New Zealand, such as central North Island and most of the South Island. This system also cannot be used if you have ‘hard water’ or ‘aggressive water’ including Whanganui, Christchurch and places with bore water.

Installing a new heat pump water heater can cost about $4,000-$8,000. Running costs for a heat pump water heater cost approximately $150-$650 a year, depending on the electricity rate and the average outdoor temperature.

Pros for heat pump water heaters:

  • Very low running costs.
  • Can be put on a night rate electricity supply to get a cheaper rate.
  • Can be retrofitted to existing hot water cylinders.
  • Will hold hot water for several hours in the event of a power cut.
  • Good for households that use moderate to high amounts of hot water.

Cons of heat pump water heaters:

  • Relatively expensive up-front costs to install.
  • Works best in hotter climates and is not recommended for cooler parts of New Zealand.
  • Cannot be used with hard water.
  • Requires water to be regularly heated to 60 degrees to prevent legionnaires’ disease – much hotter than commonly used in the home.
  • Hot water amount is limited to the amount stored in the cylinder meaning you can run out of hot water.

Reducing hot water costs

Whatever system you use to heat your water, it pays to reduce your hot water costs and limit your use – to help save both costs and energy supply. Check out these tips from Canstar Blue.

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