Gas Fired Vs Electric Water Heaters (Detailed Comparison)

With all the recent talk about different hot water systems, we thought to throw in this simple little comparison between gas and electric hot water units.

Gas vs Electric hot water system

Assuming gas is about 70% efficient, the energy use is equivalent to about 23MJ or 6.45 kWh electrical equivalent. The feed in tariff is $0.105/kWh.

If we replaced the gas with electricity, the cost would be around $0.68/day.

That means that in this case, even a standard electric element heating would save us money in the long run. A heat pump would do even better.

Everyone’s individual circumstances are different, but it shows the value of doing even a simple analysis to see what the broad impacts could be.

The provided image shows a comparison of the daily running costs of gas and heat pump water heaters in Australia.

Daily and Annual Cost Analysis

• Gas: The daily cost of operating a gas water heater is $1.56. This includes the cost of gas itself ($0.70) and a service fee ($0.86). This translates to an annual cost of approximately $570.40.
• Heat Pump (Electricity): The daily cost of running a heat pump water heater is $0.68, based on an electricity tariff of $0.1050/kWh and usage of 6.46 kWh/day. This results in an estimated annual cost of about $248.20.

Key Insights

• Cost Savings: The heat pump is significantly cheaper to run daily and annually compared to the gas water heater, with potential annual savings of over $320.
• Efficiency: The gas water heater has an efficiency of 70%, meaning only 70% of the energy from the gas is transferred to the water. The heat pump, operating on electricity, is assumed to have 100% efficiency in this comparison.

Pros and Cons of Heat Pump and Gas Water Heaters

Heat Pump Water Heaters

Pros:

• Energy Efficient: Consumes less energy than gas heaters, resulting in lower operating costs.
• Environmentally Friendly: Produces fewer greenhouse gas emissions than gas heaters.
• Government Incentives: Eligible for government rebates and incentives in some areas.

Cons:

• Higher Upfront Cost: Initial purchase and installation costs can be higher than gas heaters.
• Slower Heating Time: May take longer to heat water, especially in colder climates.
• Space Requirements: Needs adequate space for installation and airflow.

Gas Water Heaters

Pros:

• Lower Upfront Cost: Generally cheaper to purchase and install than heat pumps.
• Faster Heating Time: Heats water quickly to meet high demand.
• Reliability: Proven technology with a long lifespan.

Cons:

• Higher Running Costs: Gas prices can fluctuate, leading to potentially higher operating expenses.
• Greenhouse Gas Emissions: Contributes to greenhouse gas emissions, impacting the environment.
• Safety Concerns: Requires proper installation and maintenance to avoid gas leaks and carbon monoxide risks.

Our recommendation

For Australian consumers, heat pump water heaters offer a compelling option due to their energy efficiency and potential cost savings, especially with government incentives. However, the higher upfront cost and slower heating time should be considered.

If you live in Victoria, the higher upfront cost of heat pump hot water systems can be significantly slashed by availing rebates under the Victoria government Victorian Energy Upgrades program.

Gas water heaters are a more affordable option initially but can lead to higher long-term running costs and have environmental implications.

Ultimately, the best choice depends on individual needs, budget, and priorities regarding energy efficiency and environmental impact.