What's Included
A standard replacement quote covers removal and disposal of the old unit, supply of the new system, installation labour, and plumbing connections compliant with AS/NZS 3500:2025 Plumbing and Drainage (updated April 2025, mandatory from October 2025). The price includes a tempering valve to meet AS 3498 requirements (hot water must be stored at 60°C minimum to prevent Legionella, but delivered below 50°C at bathroom fixtures), pressure/temperature relief valve, and a compliance certificate. If switching fuel types (e.g. gas to heat pump), expect additional costs for electrical work, gas disconnection, and potentially a new circuit.
System Types and What They Cost
| System Type | Installed Cost | Running Cost/Year | Lifespan | Example Brands |
|---|---|---|---|---|
| Electric storage | ~$1,200–$3,000 | $600–$1,500 | 10–15 years | Rheem Optima, Rinnai Hotflo |
| Gas continuous flow | ~$1,400–$2,500 | $400–$700 | 15–20 years | Rinnai Infinity 26, Rheem Metro 26 |
| Heat pump | ~$3,000–$6,500 (before rebates), ~$1,500–$4,000 (after rebates) | $200–$450 | 10–15 years | iStore 270L, Rheem AmbiHeat, Reclaim Energy, Sanden Eco |
| Solar hot water | ~$3,000–$8,000 | $150–$300 | 20+ years (panels), 10–15 years (tank) | Flat plate (electric boost), Evacuated tube (gas boost) |
Electric storage is the budget option. A 250L unit suits 3–4 people (~$1,300–$2,800 installed). Simple installation, no gas connection needed, but the highest running costs. Off-peak tariffs reduce running costs by 30–40% but the tank only heats overnight, so large households may run out by evening.
Gas continuous flow units are compact wall-mounted systems that provide unlimited hot water. The Rinnai Infinity 26 (suits 1–2 bathrooms) runs ~$1,500–$1,900 installed. Note: Victoria will ban gas hot water replacements in existing homes from March 2027.
Heat pump systems work like a reverse-cycle air conditioner for water. The iStore 270L is the most popular mid-range unit (~$2,200–$3,000 after STCs). Rheem AmbiHeat runs ~$3,000–$4,000. Premium CO2 refrigerant models (Reclaim Energy, Sanden Eco) run $5,000–$6,500 but perform better in cold climates. The noise level (35–55 dB, comparable to a fridge) is worth considering for placement near bedrooms or boundaries.
Solar hot water flat plate collectors with electric boost start at ~$3,000. Evacuated tube systems with gas boost run $5,000–$8,000+. Requires a suitable north-facing roof section with minimal shading. Performs best in Brisbane, Perth, and regional QLD/WA.
Government Rebates: STCs and State Programs
Federal STCs (Small-scale Technology Certificates) apply to heat pumps and solar hot water. Each STC is worth ~$36–$40 (clearing house price is $40), and a typical heat pump generates 20–30 STCs, translating to a $700–$1,200 discount applied as a point-of-sale deduction. Your installer assigns the STCs to a registered agent and passes the value on to you as a lower price. STC values decrease annually as the scheme approaches its 2030 end date.
State rebate programs stack on top of STCs:
- VIC: Victorian Energy Upgrades (VEU) up to $1,000 off + Solar Victoria rebate up to $1,000 (or $1,400 for eligible Australian-made units from mid-2025). Eligibility: owner-occupier, combined household income under $210,000/year, existing system 3+ years old. From 31 March 2025, all VEU-installed products must include a 5-year warranty. Combined with STCs, a heat pump in Victoria can cost as little as $1,500–$2,500 after all rebates.
- NSW: Energy Savings Scheme (ESS) provides $400–$670 when replacing electric storage with a heat pump, or $190–$300 when replacing gas. Gas-related ESS activities end 30 June 2026.
- SA: Retailer Energy Productivity Scheme (REPS) worth $1,000–$1,300 if not connected to gas (or disconnecting gas same day), or $300–$450 if connected to gas. REPS Phase 2 runs 2026–2030. Note: activities generally permitted only once per address.
- QLD: Federal STCs only. State rebates have closed.
- WA: Federal STCs only. No state-specific program currently. WA's higher STC zone allocation means STCs are worth ~$1,500–$1,800 for heat pumps.
What Affects the Cost
- System type. Electric storage is cheapest to install (~$1,200–$3,000). Heat pumps cost more upfront (~$3,000–$6,500) but qualify for rebates and have the lowest running costs. The payback period for upgrading from electric storage to heat pump is typically 3–5 years.
- Fuel changeover. Switching from gas to electric heat pump requires both a plumber and an electrician (new dedicated circuit, possibly switchboard upgrade at $500–$3,500). Gas disconnection costs ~$150–$300 for meter capping. Full gas abolishment currently costs ~$1,400 but drops to ~$260 from July 2026 under an AER ruling.
- Tank location and access. Roof-mounted tanks need structural assessment. Ground-level installs with clear access are simplest. Heat pumps need outdoor placement with adequate airflow. Tight courtyards in inner-city terraces add labour time.
- Right-sizing. Rule of thumb: 50 litres per person per day. A 3–4 person household needs a 250–315L electric storage, 270–315L heat pump, or 20–26L/min gas continuous flow. Heat pumps need larger tanks than electric because they heat more slowly.
- Anode rod condition. Sacrificial anodes in storage tanks protect against corrosion and need replacing every 3–5 years (~$150–$300). In hard water areas (Perth, parts of Adelaide), anodes corrode faster and may need replacement every 2–3 years. Regular anode maintenance extends tank life by 5+ years.
- Strata restrictions. Some buildings limit system types or outdoor unit placement for heat pumps (noise concerns).
A straightforward like-for-like electric storage replacement in a ground-level location with good access sits toward $1,500. A gas-to-heat-pump changeover in an inner-city property with limited outdoor space, switchboard upgrade, and ageing plumbing pushes toward $4,500.
Signs You Need a Replacement
- Tank leaking from the body (always replacement, no repair possible)
- Unit over 10 years old (8+ for gas storage)
- Rusty or discoloured hot water (anode failing, tank corroding internally)
- Running out of hot water much faster than before
- Frequent pilot light failures on gas systems
- Visible corrosion on external fittings or tank body
- Repair cost exceeds 30–40% of a new system price
Emergency vs Planned Replacement
Hot water failure is one of the more common plumbing emergencies, particularly in winter. After-hours callouts carry a 50–100% premium over business-hours rates (call-out fee alone can be $200–$700 vs $60–$150). If the system is failing but still producing some hot water, booking during business hours saves money. Under NCC provisions, a temporary electric system (up to 55L) can be used for up to 60 days while a permanent system is sourced.
Like-for-like electric storage and gas continuous flow replacements are most likely available same day (plumbers carry common sizes on vans). Heat pump installations typically take 1–5 days to coordinate due to electrical work and stock availability.
City and Regional Price Comparison
City-level: Sydney (NSW) serves as the baseline at $1,500–$4,500 per job. Melbourne tracks close to Sydney, with Victoria's gas ban (from March 2027, failed gas hot water must be replaced with electric) driving rapid heat pump adoption. Brisbane sits at or slightly below Sydney, with the subtropical climate delivering the best heat pump performance in Australia. Perth and Adelaide run 10–15% higher due to smaller trade pools. Adelaide has the highest electricity prices nationally (~$0.44/kWh), making the solar PV + heat pump combination the strongest economic argument of any city.
Suburb and regional level: Within any city, the spread depends on the property. Older inner suburbs with tanks in tight courtyards or on roofs push toward the upper end. Newer estates with modern infrastructure sit closer to $1,500. Properties with galvanised steel pipework connecting to the hot water system will need section replacements. Perth's hard water (121–180+ mg/L) shortens tank lifespan compared to soft-water cities.
How We Calculate
Estimates are based on current trade rates for licensed plumbers in each state, adjusted for regional labour costs and typical material prices. All figures include GST. Ranges reflect the spread between a straightforward like-for-like replacement and a more complex changeover or upgrade installation.