To get the most heat from the least amount of non-renewable energy, go for solar water heating. The next most efficient water heating option is probably a heat pump, hot water system, followed by wetbacks and instant gas.

Saving hot water

There are several easy ways to cut down on your use of hot water without sacrificing your lifestyle.

• Fit water-efficient showerheads.
• Fit water-efficient taps and have your hot and cold taps separate – with a mixer, it is easy to leave the tap in the middle so it always draws hot water when you turn it on.
• Use cold water for washing clothes, rinsing, filling the jug etc.
• Turn off the water heater when you go on holiday.
• Have showers instead of baths and keep your showers relatively short.
• Choose water-efficient household appliances.
• Fix leaks and drips.
• Don't run the hot tap unless you need hot water.

Water heating options

Gas and electric

Most New Zealand homes use electricity or gas to heat their water. Both gas and electricity produce greenhouse gas emissions - but gas produces less than electricity when the latter is generated by burning fossil fuels.

Electric water heating

Most New Zealand homes have an electric hot water cylinder. These are very energy inefficient.  Older cylinders tend to be very small and low pressure whereas modern electric hot water cylinders are high pressure/mains pressure cylinders and most are 180 litres or bigger.

Hot water cylinders are often poorly insulated, leading to heat loss. Even new electric hot water systems are worth wrapping in more insulation (see Cylinders and pipes below).

Instant electric water heaters  are more energy efficient because they heat water where it is used, eliminating heat loss from storage cylinders and hot water pipes. Drawbacks with instant electric hot water systems are that they are typically used when electricity is charged at the peak rate and they also require separate heavy duty wiring for large flow-rates. They are best used as a supplementary system where the outlet is a long way from the main hot water system - for example, for washbasins or showers.

Gas/LPG water heating

Gas or LPG water heating includes hot water cylinders and instant gas hot water systems.

Gas hot water storage systems are slightly more efficient than electric cylinders and not affected by power cuts. They have a quicker heat recovery time than a comparable electric hot water cylinder. 

However, gas cylinders need to be located in a well ventilated area and flued to remove exhaust gases. This leads to long pipe runs.   Heat loss from gas hot water cylinders is large but it’s not safe to put a hot water cylinder wrap on a gas cylinder. (see Cylinders and pipes below).

Instant gas hot water systems provide continuous hot water that never goes cold, as the water is heated as it flows to the tap. Gas is only used when your hot water tap is turned on.

There is no storage cylinder, which means there are no energy losses from keeping water in a tank hot. Systems can be up to 95% efficient and water temperature is set at a control panel reducing the risk of burns.

If you're looking at an instant gas hot water system, look for one with automatic ignition not one with a pilot light. Pilot lights use gas even when the water is not being heated.

Costs - electricity and gas

The cost of electricity and gas to the consumer includes the line charges and connection fees. If you don't use much energy these can be a large part of your monthly bill.

Everybody needs electricity for lights and appliances. However the choice of having electricity or gas, or both, depends on your individual circumstances. The cost of switching from one form of energy to the other may outweigh any savings you make. Natural gas attracts a standing charge and this should be factored into your calculations if you are considering switching from electricity to gas. Gas will be more cost-effective if you use it for other appliances as well as hot water. LPG does not have a standing charge, but a yearly rental has to be paid for the use of two 45kg LPG cylinders.

Electricity prices are expected to keep rising in future. Gas prices are also likely to increase as the Maui gas supply reduces and gas is sourced from other fields (including being imported).

Visit What’s My Number to find out how much you can save on your energy bill, and see the Powerswitch section on the Consumer website to look into options and make an easy switch.

Solar water heating

This is the most energy-efficient water heating option - the sun's energy is free, unlimited and non-polluting. For many households, it is also the most economical with the lowest running costs ($140-$480 annually according to the Energywise website) - converting to solar can pay for itself over time through lower energy bills. A well-installed system should be able to deliver up to 75% of hot water heating for free, over the year, in most of the country.

Converting to solar is particularly worthwhile for larger households, households that use a lot of water and for homes in sunnier areas.

To maintain a hot water supply when the sun doesn't shine, solar hot water systems usually have backup heating - so you will still need to consider the pros and cons of other water heating systems too.

For more information, see Solar water heating.

Heat pump water heating

Heat pumps use electricity far more efficiently than ordinary electric water heaters. They are usually used for space heating, but some are designed to heat water.

They work by extracting heat from the air outside, using a process that's like a refrigerator working in reverse.
There are two main types of systems – an all-in-one system where the heat pump is part of the hot water cylinder; and a split system where the heat pump is located outside and the hot water cylinder (which can be a modern electric cylinder) is located inside the house. 

Consumer NZ research shows that a good heat-pump water heater would reduce your hot water bill by two-thirds over standard electric water heating.  Although heat pump hot water systems are more expensive to purchase than a standard electric hot water cylinder, their efficient operating costs mean that they are a good investment. 

A heat pump water heater might cost around $5000 to install (not counting the cylinder if it’s a split system). If you use 2800 kWh  per year to heat water now, then the heat pump should save you around $470 per year (at 25.5 cents per kWh).

Heat pumps work most efficiently at warmer temperatures (above 6-7°C) at which they are up to 2-3 times better than standard electric hot water cylinders.  However, they lose efficiency as the temperature outside gets lower, so they are less efficient in winter. Ask suppliers for the heat output figures at an external air temperature of 2°C - the higher the figure the better. They are particularly suitable for temperate to warm climates where solar is not appropriate (for example, where there is a shaded roof or installation of solar would be difficult).

In some heat pumps, the gas used to extract heat is harmful to the ozone layer if it escapes. Old heat pumps should be disposed of carefully - contact your local landfill for advice on how to do this.

Because these are a relatively new technology, it’s worth choosing your system carefully as they are not all as good as each other.  Consumer NZ has tested some of the main systems available and found that the most efficient clearly outperformed the other systems.  This was particularly the case at lower temperatures.

Hot water heat pumps can be very noisy.  Don’t install the external unit outside a bedroom (yours – or your neighbour’s).

Wetbacks

A wetback is a useful way to heat water in winter if you have a pellet burner or woodburner . You can also use a wetback with an open fire, but open fires are very inefficient.

Wetbacks can complement solar hot water, particularly to ensure year-round hot water in areas with low winter sunshine (eg. Dunedin/Southland).

Wetbacks are most useful in areas with a cold climate and a long heating season, and where the woodburner heats the house well so there is surplus energy to heat the water.  They are also very useful in areas with low security of energy supply and abundant wood, enabling a greater degree of self sufficiency and resilience.

Modern wetbacks are more efficient than older ones, and have fewer air emissions.

For any type of hot water storage, energy is lost through the walls of the cylinder even if no hot water is being used. This is called 'standing loss'.

Although modern electric cylinders are better insulated than older cylinders, even modern A-grade cylinders will benefit from insulation, boosting efficiency between 11% and 30%.

The heat loss, even from a well-insulated electrical cylinder, may be about 2.0 kWh per day.

If you have an older cylinder, which is not as well insulated, then adding a cylinder wrap could save you up to 1 kWh/day (saving about $93 per year at 25.5 cents/kWh). Wraps cost very little – about $70 in 2012 – so insulating your cylinder could pay for itself in less than a year.

Gas hot water cylinders can't be fully insulated as they have an exposed flue in the middle where the flame heats the water. They lose about three and a half times as much heat as a similar electrical storage cylinder.

Hot water cylinders are now sometimes installed outside the house to save space. The cold and rain outside mean that the cylinder insulation needs to be particularly good.

Heat loss from pipes

Pipes from hot water cylinders are often not insulated at all and lose a lot of energy. You can buy foam tube pipe insulation from plumbers' merchants very cheaply. The first metre of pipe from the cylinder is the most important to insulate, but if you can, it's worth insulating the full length. installation can be difficult as pipes are often hidden inside walls.

Pressure

Low-pressure cylinders are common in New Zealand and tend to be smaller (135 litres) and are generally older (over 10 years).  If you regularly run out of hot water, this is probably what you have.  If they have been poorly installed, low pressure hot water systems often can only run one tap at a time with reasonable pressure.  They either require a header tank in the roof space, or have a pressure limiting valve in the system.

High-pressure cylinders are more expensive, give faster flow and allow you to use a wider range of taps. But this increases the water and energy used. High pressure systems can be made more efficient by using water-efficient showers and taps. These have lower water flow than standard taps and fittings, but are designed to deliver the water effectively and comfortably. High flow showers do not always equate to better showers.

There are some low-pressure cylinders which give you high-pressure delivery. These are called indirect mains pressure cylinders. They are often operated at high temperatures, so standing losses can be high.

Size

A cylinder should hold enough water so that it rarely runs out under normal use. A family of four will probably need about 200 litres capacity.

Cylinders for solar and wetback systems

Some cylinders are specially designed to work with solar systems and wetbacks. Other older cylinders don't work well in these situations. Ask your installer if yours is suitable.

Wetbacks must be vented, so cannot be connected directly to a high-pressure supply. They can be connected directly to a vented, low pressure cylinder, or be connected to a vented heat exchanger that heats a high pressure supply.

For solar hot water, it's better to have a larger cylinder as you will be less likely to run out of water, and for best performance, the heating element should be in the middle - not the bottom -  of the cylinder.

How long do cylinders last?

Life expectancy of modern copper or stainless steel cylinders is 20-40 years, but mains pressure glass-lined steel is shorter at 12-20 years.