When a hot water system fails — or you’re planning ahead — the choice of replacement isn’t as simple as “same as before.” Melbourne’s energy market has changed significantly. Gas prices have risen sharply. Victorian government rebates now favour electrification. And heat pump technology has improved dramatically.
1. Gas Storage Hot Water Systems
A gas burner heats water stored in an insulated tank (typically 135–315 litres). Common brands: Rheem, Rinnai, Bosch, Dux. Pros: Fast recovery, widely serviced, good for large households. Cons: Gas prices in Victoria have risen 40–60% since 2022, standing heat loss 24/7, gas connections being phased out of new Melbourne developments. Running cost: approximately $400–$700/year.
2. Gas Continuous Flow (Instantaneous)
Water is heated on demand as it passes through the unit — no storage tank. Common brands: Rinnai, Bosch, Rheem. Pros: No tank heat loss, unlimited hot water, smaller footprint. Cons: Higher upfront cost, not eligible for many Victorian rebates. Running cost: approximately $300–$500/year.
3. Electric Storage Hot Water Systems
Pros: Lower upfront cost, available everywhere. Cons: Highest running cost if not on off-peak. Running cost: $600–$900+/year on standard tariff; $350–$500/year on off-peak.
4. Heat Pump Hot Water Systems
Like a reverse refrigerator — they extract heat from ambient air to heat water. Use approximately 60–75% less electricity than a conventional electric system. Common brands: Sanden, Reclaim Energy, Rheem Ambiheat, iStore. Pros: Dramatically lower running costs (~$300–$500/year), eligible for Victorian VEU rebate (up to $1,000 off), no gas required, future-proofed. Cons: Higher upfront cost before rebates ($2,500–$4,500 installed), needs adequate space. Best for: Melbourne homeowners replacing old gas or electric systems, rental properties.
5. Solar Hot Water Systems
Pros: Very low running cost on sunny days. Cons: High upfront cost ($3,000–$7,000 installed), requires suitable north-facing roof space. Running cost: $100–$300/year.
What Does Hot Water System Replacement Cost in Melbourne?
| Type | Supply + Install | After VEU Rebate |
|---|---|---|
| Gas storage | $1,200–$2,000 | N/A |
| Gas continuous flow | $1,800–$3,000 | N/A |
| Electric storage | $900–$1,600 | N/A |
| Heat pump | $2,500–$4,500 | $1,500–$3,500 |
Sedcon Plumbing installs all types of hot water systems across Melbourne and can advise on VEU rebate eligibility. See our hot water service → or call 0468 013 012.
Learn more about our Hot Water Repairs Melbourne service, or see all suburbs we cover across greater Melbourne.