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Smart guide

Hot water options

Cut your power bill by choosing an efficient hot water system and cutting down on wasted water.

Hot water for less

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 wetback water heaters 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. Consider having your hot and cold taps separate. It’s more common to have a mixer these days – make sure the handle is left in the cold position so  it doesn’t draw hot water unless you need it.
  • 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

Solar water heating can provide a large contribution using free energy (the sun) and greatly reduce your reliance on reticulated energy sources.

Depending on usage patterns and household size, the next most efficient water heating option is probably a heat pump hot water system.

A wetback can also provide a good heat source. Look for woodburner models that meet your local clean air requirements with a wetback attached.

Instant gas water heaters heats water on demand, but its cost-effectiveness may depend on whether you are on mains supply or LPG. LPG is more expensive.

Solar water heating

Solar hot water heaters use the sun's free, unlimited energy. A well-installed system should be able to deliver up to 75 percent of hot water heating over the year, in most parts of the country. However, the concept of solar hot water heating has a few challenges in New Zealand:

  • the high initial cost compared with other water-heating options
  • difficulty in ensuring the system’s designed and installed correctly
  • difficulty in telling whether the system is working properly due to the non-user friendly interfaces
  • needs annual maintenance.

However, there are two situations where solar is particularly worthwhile:

  • when used in conjunction with a wetback on a wood or pellet burner that’s used as a primary space heating source over the colder months
  • when it’s used as a very simple pre-heater with no controllers, or pumps, and plumbed into the pipe feeding into your water-heating cylinder.

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.

Solar hot water options has more information.

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 well specified and installed 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, albeit long-term investment.

A heat pump water heater might cost around $5000 to install (not including the cylinder if it’s a split system). If you use 2800 kWh/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 outside 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 water heating is not appropriate (for example, where there is a shaded roof or installation of solar would be difficult).

New heat pumps have ozone friendly gases. However, in some older heat pumps, the gas used to extract heat is harmful to the ozone layer if it escapes. Because of this, old heat pumps should be disposed of carefully  contact your local landfill for advice on how to do this.

It’s worth choosing your system carefully as some are better than others. 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 noisy. Install the external unit away from bedrooms (yours – and your neighbour’s).


A wetback is a useful way to heat water in winter if you are replacing or installing a wood or pellet burner near your hot water cylinder. Ideally, the hot water cylinder should be located as close as possible to the wood or pellet burner to minimise the heat losses through the pipes. Larger diameter water pipes (25mm) are recommended.

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

Wetbacks are most useful in areas with a cold climate and a long heating season, and where the wood or pellet burner 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.

Many councils have regional clean air plans which strictly regulate the use of wood and pellet burners. The Ministry for the Environment has a list of

Authorised woodburners on the Ministry for the Environment website lists the woodburners that meet New Zealand's air quality standards.

Gas and electric water heating

Most New Zealand homes use gas or electricity to heat their water. The use of both gas and thermally generated electricity results in the release of greenhouse gas emissions. Although the vast majority of New Zealand’s electricity is generated using relatively clean hydropower, the conversion and transmission losses from the hydro dam to your wall socket can be quite high. This means that electric hot water heating may not be much more environmentally friendly than burning gas directly.

Gas/LPG water heating

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

Gas hot water storage systems have a quicker heat recovery time than a comparable electric hot water cylinder.

Gas cylinders need to be located in a well ventilated area and flued to remove exhaust gases. This lead to long pipe runs. Heat losses from gas hot water cylinders are higher than electric cylinders. It’s not safe to put a hot water cylinder wrap on a gas cylinder.

Hot water cylinders and pipes has more information.

Instant gas hot water systems provide continuous hot water that never goes cold, as the water is heated as it passes through the heater. Gas is only used when a 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 percent efficient. The water temperature is set at a control panel reducing the risk of scalding.

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.

Electric water heating

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

Older hot water cylinders are often poorly insulated, leading to heat loss. Electric hot water systems that are less than “A” grade insulated are worth wrapping with more insulation. If you do insulate them, they must be entirely insulated, otherwise the thermal benefit will be minimal.

Hot water cylinders and pipes has more information.

Instant electric water heaters are more energy efficient because they heat water only when it is used, eliminating standing heat losses from hot water sitting in storage cylinders and hot water pipes. However, they do have two drawbacks, in that they:

  • are typically used when electricity is charged at the peak rate
  • require separate heavy duty wiring for large flow-rates.

They are therefore 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).

Costs – gas and electricity

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 fixed 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.

If you have solar photovoltaic (PV) power an electric hot water cylinder can be a good option for using surplus power instead of feeding it back into the grid. There are sophisticated controllers available that can spill surplus PV power into up to three other loads including hot water, underfloor heating systems or air conditioning.

To estimate how much you could save by switching your power deal, see different retailers’ offers and decide whether to switch, go to the Powerswitch website.



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Note that this document is published by the Ministry of Business, Innovation and Employment Chief Executive as Guidance under Section 175 of the Building Act 2004. This is a guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case.