Section 3: Choosing between a heat pump and solar hot water system

A hot water system is a big investment and one that won’t be replaced too frequently, so a household should weigh up the differences between a heat pump and solar hot water system.

In this section we discuss the two main types of efficient hot water system to help you decide which best suits your needs. Look here for further detail: Planning a solar hot water system and Planning a heat pump hot water system.

What is a heat pump hot water system and how does it work?

Air conditioners and refrigerators are two common forms of heat pumps that you might be familiar with. They work by moving or ‘pumping’ heat from one medium to another. For example, your fridge extracts heat from its freezer section and pumps warm air out the back.

A heat pump hot water system includes a heat pump unit, like the outdoor unit for a split-system air conditioner, and a storage tank. The heat pump extracts heat from the air and pumps it into the water storage tank. Good heat pumps can do this effectively even in freezing weather.

Heat pump hot water systems are much more efficient than standard electric water heaters, although the electricity for the unit is still supplied via your normal household electricity wiring or your solar panels.

What is a solar hot water system and how does it work?

A solar hot water system uses heat directly from the sun to heat water. A typical system consists of a hot water storage tank connected via pipework to solar collector panels or evacuated tubes, which heat the water for the tank. Both system types are usually placed on a north-facing roof, although a west-facing roof can also work well in many cases.

As the sun shines on a collector panel, the water in the pipes inside the collector becomes hot. This heated water is circulated up the collector and out through a pipe to the storage tank. Cooler water from the bottom of the tank is then returned to the bottom of the collector, replacing the warmer water.

Deciding between a solar or heat pump hot water system

Consider the environmental benefits of a system, how a water heater works with the existing power supply, the upfront cost and the cost to run, along with other factors such as reliability.

Do you already have a solar electricity system at home?

If you have a solar photovoltaic (PV) system at home you might be keen to make use of any excess solar electricity generated throughout the day to run your hot water system and reduce household energy costs due to water heating. After all, hot water heating is one of the biggest energy users in the home. One way to do this is to install a heat pump hot water system and use a timer or diverter to set the system to run during the day when your solar PV system is generating the most electricity.

Is climate a consideration?

As heat pumps work by extracting heat from the air outside, you might think that they are less suitable in colder areas. However, regardless of where you live, heat pumps are almost always a viable option. Speak to your installer about which models are best for your location. You can also check the 'operating temperature range' which lists the temperatures at which the heat pump has been tested to operate. This is usually on the brochure or datasheet of the proposed system for suitability in your climate; if not, contact the manufacturer or supplier for a copy.

Differences between heat pump and solar hot water systems

Each type of system has advantages and disadvantages:


Heat pumps can be run whenever you like by using a timer. This might be to make use of low off-peak tariff prices, to run more efficiently during the day due to higher ambient temperatures, or to use excess solar PV.

Energy use

Heat pumps must always use electricity, although because they reclaim heat from the air they use a lot less than would otherwise be needed to heat the water. If timed to operate during the middle of the day, a heat pump could be fully powered by rooftop solar panels for much or all of the year, depending on other household energy usage and the size of the rooftop solar system.

Solar hot water systems may be completely solar-powered during the warmer months, but usually can’t collect enough solar energy to heat the water during winter or if it’s cloudy, so they always have a supplementary form of heating (a ‘booster’) that comes on automatically when required. This is powered by either gas or electricity.

Shading issues

In situations where the roof is often shaded by a tree that can’t be trimmed or by a neighbouring building, a solar hot water system might be unable to collect enough solar energy and a heat pump may be a better option.

A northern orientation is the optimal location for a roof system, but an easterly or westerly orientation can be used if the collector size is increased.

Choosing a reliable hot water system

When you choose a hot water system, you want a reliable unit that will last.

Installation or manufacturing issues

Solar hot water systems have complex installation requirements, so it’s crucial that you use a highly experienced and accredited installer.

Heat pumps are more complex internally, so a quality design and manufactured product will be important. Talk to your retailer about a trusted brand and model.

Whichever type of system you choose, a trusted installer and a reputable brand and model will reduce the likelihood of problems down the track. Make sure you also check warranty details.

Make sure you do your homework early, before a cold shower forces a snap decision!

I’m not ready to upgrade. How can I make the most of my current system?

Improve your current system

The simplest option may be to improve the efficiency of an existing system rather than buy a new one. Improvements can include:

  • If you haven't already done so, install low-flow shower heads and aerating taps to reduce hot water requirements
  • Check that the hot water pipes are properly insulated (to reduce heat loss) and improve the insulation where necessary
  • If you have a storage hot water system (i.e. with a tank):
    • Add a Valve Cosy to insulate the pressure and temperature relief valve (
    • Add a tank blanket or other insulation to your water tank
    • Adjust the tank’s temperature control to reduce tank temperature if it’s set too high, noting that it should not be less than 60°C for biosafety reasons (to prevent the growth of Legionella bacteria). Some tanks require an electrician to check and adjust temperature

This advice can even improve the performance of new systems.