Hot water: your biggest flexible load
Heating water is typically 30-40% of an Australian household's electricity bill. The good news: you don't care exactly when it heats, which makes it the perfect load to shift to cheap times.
Why hot water is special
Unlike lighting or cooking, hot water has a built-in battery: the tank itself. Once the water in your tank is hot, it stays hot for hours (or days, with good insulation). That means you can heat it at the cheapest time of day and use it whenever you need it.
This makes hot water what energy professionals call a “flexible load” — it doesn’t matter when the electricity flows, only that the result (hot water) is ready when you want it. That flexibility is worth real money on the right tariff.
Types of hot water systems
Electric storage (resistive element)
The most common type. A heating element inside the tank heats water directly, like a giant kettle. Simple and reliable, but uses the most electricity: a typical 250L tank draws 3.6 kW and uses 8–12 kWh per day.
Heat pump hot water
Works like a reverse air conditioner — extracts heat from the surrounding air and transfers it into the water. Uses only a third to a quarter of the electricity of a resistive system for the same amount of hot water.
Gas storage or instantaneous
Heats water using natural gas or LPG. Historically cheap to run, but rising gas prices and emissions concerns are making electric options (especially heat pumps) more attractive. Not relevant to electricity tariff strategies.
Solar thermal
Roof-mounted panels heat water directly using the sun (not PV panels — these are separate flat or evacuated-tube collectors). Usually has an electric boost element for cloudy days. Effective but less popular now that heat pumps paired with solar PV offer similar or better economics with more flexibility.
Controlled load tariffs
If you have an electric storage hot water system, there’s a good chance it’s already on a controlled load tariff — a separately metered circuit that your distributor switches on only during off-peak hours.
Controlled load rates are typically 15–22c/kWh, compared to 30–40c on your main tariff. For a system using 10 kWh per day, that’s a saving of $1–$2 per day, or $350–$700 per year.
Check your bill
Timer strategies: match your heating to your cheapest energy
The optimal time to heat your water depends on whether you have solar:
With solar panels
Set your hot water to heat during the day (roughly 9am–2pm) so it runs on free solar electricity. Use a simple timer switch ($20–$50 from a hardware store, installed by an electrician) or a smart relay.
This shifts your hot water from the controlled load overnight window to daytime solar — saving you the 15–22c/kWh you’d otherwise pay on controlled load.
Without solar
If you don’t have solar, stay on controlled load or off-peak heating. Your cheapest electricity is overnight, so let the distributor’s controlled load schedule do its job.
If you’re on a TOU tariff without controlled load wiring, a timer set to heat between 10pm and 6am achieves a similar result manually.
Heat pump hot water: the efficiency champion
A heat pump hot water system is the single biggest efficiency upgrade most households can make to their hot water. The key metric is the Coefficient of Performance (COP):
COP of 3-4 means 1 kWh in = 3-4 kWh of heat
For a typical household using 10 kWh per day on a resistive system, switching to a heat pump cuts that to about 3 kWh per day. At 30c/kWh, that’s a saving of $2.10 per day, or about $770 per year. With solar panels running the heat pump during the day, the running cost drops to nearly zero.
Heat pump hot water systems cost $3,000–$5,500 installed, but federal STCs (similar to the solar “rebate”) and state incentives can reduce this by $1,000–$2,000 or more. The payback period is typically 3–5 years, making it one of the fastest- returning energy investments available.
Solar diverters: another option
A solar diverter is a device that monitors your solar export in real time and redirects any surplus electricity to your hot water element instead of exporting it to the grid. It works with your existing resistive hot water system — no need to replace the tank.
Diverters cost $800–$1,500 installed and are a good option if you have a working electric storage tank and want to use excess solar without upgrading to a heat pump. They don’t reduce total electricity consumption (the element still operates at COP 1.0), but they shift the source from grid to solar, turning otherwise exported kWh into free hot water.
Why this matters
Hot water is the single largest opportunity for most households to reduce electricity costs without changing their lifestyle. Whether you switch to a heat pump, install a timer, use a solar diverter, or simply confirm you’re on a controlled load tariff, the savings are typically hundreds of dollars per year.
Next: Flexible Loads →