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Upgrade your central hot water system


Hot water systems typically only need replacing every 10 to 15 years, so the more efficient the system you choose, the more you will save.

Here are the things you can do

Central water heating can account for a substantial amount of energy used by common property in apartment buildings. If your apartment building has central hot water then it’s worth reviewing your options now instead of during a crisis when your existing system dies. At that point you won’t have the luxury of carefully reviewing the best options. 


Co-generation is another energy system that simultaneously produces power (electrical or mechanical) and heat (e.g. to heat air or water) from the same fuel in a single thermodynamic process.

By creating more output energy from a single generation process, co-generation increases energy efficiency and can reduce greenhouse gas emissions. In addition, the generator can be located close to where energy is required, enabling system owners to control their own power.

Co-generation is used around the world in a variety of industrial and commercial settings. In some larger applications, the heat can be used for space cooling as well as for water and/or space heating (i.e. tri-generation).

In Australia, co-generation has been used for simple hot water supply in multi-unit residential apartments. Low greenhouse emission air-conditioning is also a potential application.

However irrespective of end use, establishing the cost-effectiveness of co-generation (as compared with alternative technologies) will become increasingly important. Despite their efficiency, rising gas prices may make co-generation facilities uneconomic for some buildings and applications.

Recommended actions

If yours is an electric hot water system or heater then your number one priority is to replace it with a cogeneration, solar, gas or heat pump system. Standard electric hot water systems are being phased out in most Australian states because they use energy inefficiently and are expensive to operate.

If your existing central hot water system is a gas system then you might upgrade to a solar hot water system. 

There are two types of hot water systems:

Storage systems heat and store water in an insulated tank for use when needed. Central hot water systems almost always utilise a storage tank.

Instantaneous systems (sometimes called continuous flow systems) only heat water when needed and don’t use a storage tank.


When comparing different systems and costs, take into consideration the long-term savings you will make on energy bills with a more efficient hot water system. Include the following when comparing costs:

  • Purchase costs and running costs
  • Installation costs
  • Warranties for the tank and other components
  • Maintenance costs
  • Future price of electricity and gas

Have your system installed by a registered plumber and electrician, maintain it as required and have it serviced according to the manufacturer's instructions.

You will also need to check with your installer and energy supplier to find out which electricity tariff your hot water system is connected. You will want to ask whether it is possible to run the system during off-peak hours to reduce energy costs.

Funding – discounts for solar and heat pump systems 

If you install an eligible hot water system you may be able to receive a benefit under the Small-scale Renewable Energy Scheme (SRES) to help with the purchase cost of either a:

  • solar hot water system
  • heat pump hot water system

Under Australia’s SRES some hot water systems are entitled to a number of small-scale technology certificates (STCs). What this means is your certificates can be assigned to a registered Agent (a retailer or installer) in exchange for a financial benefit, like a discount off your invoice.

Remember that this is an immediate discount on your product – not a rebate that you can claim back later. It means doing some extra research and paperwork, but it’s worth it for the discount that you can receive.


  1. Check that the solar or heat pump hot water system that you want is eligible to receive STCs. The webpage for the Clean Energy Regulator lists which models are eligible.
    (Please note that hot water systems over 700 litres require additional documentation in order to have certificates created against them. You’ll need to complete two statutory declarations with specific details.)
  2. You will need to confirm that your retailer or installer is a Registered Agents of STCs with the Clean Energy Regulator. Find a Registered Agent by downloading the list of Registered Agents.
  3. You can find out how many certificates your system is eligible for by putting the details into this Solar Water Heater Calculator.
  4. Get an idea of the approximate discount you could receive by checking the website of the Clean Energy Regulator.