Gas Water vs Electric Water Heater: Which Suits Canberra?

If you are weighing up a gas water vs electric water heater for a Canberra home, the honest answer is that neither is the best option any more. For a household replacing a system in 2026, an electric heat pump beats both on running cost, and the ACT’s gas phase-out makes a new gas unit a 12-year bet on a fuel the Territory is winding down.

There are still homes where gas makes sense, and homes where a plain electric tank is the right call. We install all three types, so we have no product to push. Here is how they compare on upfront cost, running cost, lifespan, winter performance and the installation constraints that catch people out.

Key Takeaways:

• For most Canberra homes replacing a system in 2026, a heat pump hot water system is the best buy.
• Gas storage and electric storage cost similar amounts to run with rising gas prices. A heat pump uses roughly half the energy of either.
• New gas connections have been banned in the ACT since December 2023, and the Territory plans to be off gas by 2045.
• Heat pumps work in Canberra winters if you choose a cold-climate model and place it away from bedroom windows.
• Eligible concession card holders can claim an ACT rebate, and the Sustainable Household Scheme finances the upgrade.

The three options, in plain terms

Water heating is the second biggest energy user in the average Australian home after heating and cooling, at roughly 15 to 27 per cent of household energy use according to energy.gov.au. So the type of system you choose is not a small decision.

Gas

There are two kinds: a gas storage tank heats and holds water and keeps a pilot flame burning around the clock. A gas instantaneous (continuous flow) unit heats water only when a tap runs, so it never runs out and uses less gas overall. CHOICE puts unit prices at $1,000 to $7,000 for storage and $700 to $3,000 for instantaneous, before installation.

Electric storage

A tank with a resistive element, like a kettle. Cheap to buy ($650 to $2,500 for the unit), simple, and in some cases wired to a controlled load (off-peak) tariff so it heats overnight. The catch is that every kilowatt-hour of electricity becomes one kilowatt-hour of heat, affecting your coefficient of performance.

Heat pump

Also electric, also a tank, but it works like a reverse-cycle air conditioner: it pulls heat out of the outside air and moves it into the water, so it uses far less power than a resistive tank. Units cost $2,200 to $6,800 before installation and rebates, which is the main reason people hesitate.

Installation costs come on top of all three figures and vary with plumbing, electrical work and access but give you longer-term savings.

What does each cost to run?

The clearest public numbers come from Sustainability Victoria, published by CHOICE in April 2025. For a four-person household using 150 litres of hot water a day, the annual running costs were:

• Electric storage on a peak tariff: $1,015
• Electric storage on an off-peak tariff: $780
• Gas storage: $780
• Gas instantaneous: $655
• Heat pump on a peak tariff: $435, on an off-peak tariff: $325, on a peak tariff with rooftop solar: $300

Those figures were calculated for Melbourne on mid-2024 prices, so treat them as relative rather than exact for Canberra. The pattern is what matters. Gas storage and off-peak electric storage cost the same to run. A heat pump costs less than half of either.

Gas has one more cost that rarely shows up in comparisons: the daily supply charge, which you pay whether you use gas or not. If the water heater is your last gas appliance, switching to electric and disconnecting removes that charge entirely. CHOICE also points to evidence that gas hot water will be the most expensive option by 2030.

Which one lasts longest?

In our experience across three decades of Canberra installs, storage tanks of any fuel type last around 8 to 12 years before the cylinder corrodes through. Replacing the sacrificial anode every five years or so buys extra life, most people never do. Gas instantaneous units have no tank, so 15 to 20 years is common. Heat pumps last around 10 to 15 years, with the compressor as the wear item.

Warranties tell the same story. Heat pump cylinders commonly carry five to seven-year warranties, with five years on the refrigeration components.

Does a heat pump work in a Canberra winter?

Yes, with two conditions: Buy a model rated for cold climates, and give it airflow. A heat pump extracts heat from the outside air, and there is still usable heat in the air at minus 5. Efficiency drops as the temperature drops, so on a frosty Canberra morning the unit runs longer to reheat the tank, and our Heat pump models include a small electric booster element that kicks in below a set temperature.

In practice, a heat pump that reheats in two hours in Brisbane might take three or four on a July morning in Tuggeranong. Most households never notice, because the tank is hot again before anyone showers. Set it to run through the middle of the day, when the air is warmest and, if you have solar, your panels are producing.

Electric storage is unaffected by outdoor temperature and gas barely is, so on winter performance alone, gas vs electric is a draw. The heat pump is the one that needs the right model.

The installation constraints that decide it

Gas connection

Since 8 December 2023, the ACT has not allowed new connections to the gas network. If your home already has gas, you can replace a gas water heater like for like. If it does not, gas is off the table. Queanbeyan and Jerrabomberra are in NSW, where new connections are still possible, but the running cost argument does not change at the border.

Switchboard capacity

A resistive electric tank draws around 3.6 kW while heating and needs its own circuit, usually on a controlled load. A heat pump draws a fraction of that, often under 1 kW. We provide a new dedicated circuit from your switchboard. Sometimes we can install into an older switchboard if the board is up to standard. We can advise on a site inspection and give advice when needed on whether it will fit into an older switchboard. Original boards in the older suburbs sometimes need an upgrade either way.

Space

Gas instantaneous is the smallest by far, with a box on an external wall. Storage tanks need a slab, and a heat pump needs clearance around the fan for airflow, typically half a metre or more in front. A 250 litre heat pump suits most households of up to four

Noise

This is the constraint people underestimate. A heat pump has a compressor and a fan, and sounds like a quieter outdoor air conditioning unit while running, on average, around 47db. Put it away from bedroom windows, yours and the neighbour’s, and check the published noise level of the model quoted. Gas and electric tanks are silent.

Rebates and the ACT gas phase-out

The ACT Government’s Home Energy Support Program offers eligible concession card holders (Pensioner Concession Card and DVA Gold Card holders among them) a rebate of 50 per cent of the cost up to $2,500 towards a hot water heat pump, after attending a free online workshop. Gas and resistive electric systems are not eligible.

The Sustainable Household Scheme offers eligible ACT homeowners finance from $2,000 to $20,000 over up to 10 years for heat pump hot water, reverse cycle heating and cooling and other electric upgrades. We are ActewAGL pre-approved professionals and help with the paperwork for both.

The policy direction matters as much as the money. Fossil-fuel gas made up about 20 per cent of the ACT’s emissions when the phase-out was announced, and the Territory has set 2045 as the date to be off it. A gas water heater installed today will probably see out its life. Its replacement almost certainly will not be gas.

The verdict for Canberra households

For most Canberra homes is a heat pump. It costs more up front, but the running cost gap of $350 to $450 per year, depending on usage against gas or electric storage, pays back the difference well inside its life, and the rebate or finance shortens that further.

Electric storage is the right call in three cases: a small household or granny flat where the upfront saving matters more than running cost, a home with solar and a timer so the tank heats on your own daytime power, or a site where a heat pump would be too noisy or would not fit.

Gas still makes sense if you already have gas, run other gas appliances, or you are not ready to replace, and want the compact footprint and endless hot water of a continuous flow unit. Just go in knowing it is the last gas water heater the house will have.

Whichever way you land, get the tank size and the placement right, because those two decisions cause more complaints than the fuel type ever does. Our hot water system replacement Canberra page covers how a swap works, our hot water system installation Canberra page covers new installs, and the finance page has the current scheme details.

Frequently Asked Questions

Can I still install a gas hot water system in Canberra?

Yes, if your home already has a gas connection. The December 2023 rule stops new connections to the network, not replacements. You will keep paying the daily gas supply charge, and the ACT plans to phase out fossil-fuel gas by 2045, so a unit installed now may outlive the network it runs on. If hot water is your last gas appliance, run the numbers on switching.

How big a hot water tank does a Canberra family need?

A 250 litre heat pump suits households of up to about four people, and a 315 litre tank suits four to six. Resistive electric tanks are usually sized larger for the same household because they only reheat overnight on a controlled load. Gas instantaneous has no tank. It is sized by flow rate, typically 20 to 26 litres a minute for a family home.

Is a heat pump worth it without solar panels?

Yes. On the Sustainability Victoria figures, a heat pump on a standard peak tariff with no solar costs $435 a year for a four-person household, against $780 for gas storage or off-peak electric storage. Solar improves it further, to about $300, but the savings do not depend on it. Timing the unit to run in the warmer part of the day helps either way.