How a heat pump works
A heat pump works like a fridge in reverse: a fan draws in outside air, a refrigerant absorbs its heat, and a compressor transfers that heat into the water tank. Because it moves heat rather than generating it, it can use around a third of the energy of a conventional electric storage heater — more or less depending on the model and climate.
Pair it with solar and a timer, and much of your hot water can be heated with your own daytime power.
Choosing a tank size
| Household | Typical starting point |
|---|---|
| 1–2 people | around 150–200 litres |
| 3–4 people | around 250–300 litres |
| 5+ people | 300 litres or more |
These are rough guides. Long showers, a spa bath or running hot water at the same time from several taps all push the size up — your installer should confirm.
What else to compare
- Noise (dB) — matters if the unit sits near a bedroom or neighbour's window.
- Cold-climate performance — check the rated operating temperature range if you live somewhere frosty.
- Integrated vs split — split systems put the compressor separately from the tank, useful when space is tight.
- Timer or solar-diverter support — lets the unit run when your solar is producing.
- Removal of the old system — and, if you're leaving gas, whether a gas disconnection is needed.
Heat-pump rebates and incentives
Federal — STCs. Eligible air-source heat pumps can create small-scale technology certificates, usually applied as a discount on the quote. Clean Energy Regulator — Small-scale Renewable Energy Scheme
Victoria. Solar Homes offers up to $1,400 for a locally made hot water product or up to $1,000 for other eligible products (income cap $150,000 from 1 July 2026), and the Victorian Energy Upgrades program provides discounts through accredited providers. Solar Victoria — Solar Homes Program update · Victorian Energy Upgrades program
NSW — Energy Savings Scheme. Discounts may be available for replacing an existing hot-water system with an eligible heat pump. NSW Energy Sustainability Schemes — new ESS and PDRS rules from 1 July 2026
Last checked 21 October 2026. Programs change often — always confirm eligibility with the program and your installer.
How to compare heat-pump quotes
- The installer's licence and any required accreditation, with numbers you can check.
- An itemised quote: exact brands and model numbers, quantities and what's included.
- Any rebate or certificate discount shown as a separate line, with who claims it.
- Product warranty, performance warranty (if relevant) and the installer's workmanship warranty — in writing.
- Who handles network/connection approvals and compliance certificates.
- Deposit amount, payment schedule and what happens if the job is delayed.
- Confirmation that a licensed plumber (and electrician, if needed) will do the work.
- Every incentive applied, listed separately, with who claims it.
Frequently asked questions
Do heat pumps work in winter?
Yes, but efficiency drops as air temperature falls. Models rated for cold climates keep working at lower temperatures — check the specs if you're in an alpine or frosty area.
How long does installation take?
A straight swap is often done in a day. Moving the location, gas disconnection or electrical upgrades can add time.
Are heat pumps noisy?
They make a fan and compressor sound similar to an air-conditioner's outdoor unit. Compare the decibel rating and think about placement.