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Install a gas hot water system


If you are replacing an electric hot water system then you will make significant energy savings by opting for a gas system.

Gas hot water systems are cheaper to purchase than solar or heat pump systems. Although the ongoing savings will not be as high, a gas system will still be much cheaper and more efficient than an electric system.

There are two kinds of gas hot water systems:

  • Storage water heaters

  • Instantaneous water heaters

Both options can operate using either:

  • Natural gas (mains gas or reticulated gas) delivered via a piped network
  • LPG gas (liquefied petroleum gas), which is usually bottled

Check whether your building has a natural gas network pipeline because bottled gas is not a good option when servicing a whole apartment block. If you are connecting to natural gas for the first time, there may be installation costs and there will also be an annual service fee for the gas connection of around $200.

Storage systems

  • They usually have a pilot flame that burns continuously and lights the main burner when needed
  • This operates on a thermostat basis not a hot water demand basis
  • Storage systems lose heat through the walls of the tank so they need to burn gas regularly to keep the water at the desired temperature
  • Locating the tank indoors will help to reduce heat loss
  • Storage systems should be set to 60 degrees Celsius at minimum, to kill dangerous bacteria
  • Systems installed indoors need a flue that leads outside to vent exhaust gas
  • The most common tank material is enamelled steel, but stainless steel is also used
  • Stainless steel is more expensive, but the tank will usually last longer

Instantaneous systems

Instantaneous systems heat water at the time it is required and do not use a storage tank. Instantaneous systems become slightly hybridised systems in the context of apartment buildings because in many cases they will be connected to a small buffer tank to allow some storage capacity.

  • For this reason they cannot run out of hot water but they do have a maximum output capacity (litres per minute)
  • They operate most economically on natural gas
  • Electronic ignition is the most energy efficient as it does not waste gas with a pilot flame
  • They can be mounted externally or internally with an exhaust system
  • If space is limited for a storage tank then an instantaneous system might be the answer as they take up less room

Which one is more energy efficient?

Both storage and instantaneous systems carry an energy-rating label. The more stars, the less gas used, and the lower the operating costs will be.

  • Storage systems typically have 3 to 4 stars and high-efficiency models have around 5 stars 
  • Instantaneous systems generally have higher star ratings of 4 - 6 stars*

*Keep in mind that star ratings are based on an assumed hot water usage profile of 200 litres per day in a single household. An apartment building would have a number of storage or instantaneous units linked together to meet the needs of the whole building.


Gas energy rating label

To determine the size of either system you will need to understand how much hot water is currently being used in the building. The supplier or installer should be able to help you with this assessment or you could seek independent engineering advice.

Use this tool to compare the difference between gas hot water systems.  


To decide which system is best for your building you will need to compare:

  • The purchase and installation price
  • The unit's efficiency and running costs
  • The life expectancy of the unit Your next step is to talk with a few suppliers and gain quotes.

All major suppliers now function as a one-stop shop. An experienced supplier or installer will be able to help you make an assessment of the type of system you require. If you are a very large apartment building then replacing your hot water system is a significant capital upgrade and we suggest you seek advice from a professional engineer on how best to proceed.

Maintenance of gas hot water systems 

Storage systems should last at least 10 years if properly maintained and either located indoors or protected by an enclosure. Storage tanks made of enamelled steel have a sacrificial anode, which needs to be checked and replaced about every five years by a licensed service person.

Instantaneous units require no routine maintenance apart from having the burner operation checked every few years. Heat exchangers usually come with a 10 year warranty and can be easily replaced. Most systems last 15 to 20 years.