A heat pump works like a reverse-cycle air conditioner, but instead of heating air, it heats water. It extracts thermal energy from the ambient air — even in cold weather — and uses that energy to heat water stored in an insulated tank.
Because a heat pump moves heat rather than generating it from scratch, it uses significantly less electricity than a standard electric element. For every 1kW of electricity consumed, a heat pump typically produces 3–4kW of heat energy. This is known as a Coefficient of Performance (COP) of 3–4.
A single indoor unit connected to a single outdoor unit. Heats and cools one room or area.
| Factor | Heat Pump | Gas Storage | Gas Continuous Flow |
| Running cost (annual) | $150–$300 | $500–$800 | $400–$700 |
| Energy efficiency | COP 3–4 (300–400% efficient) | ~80% efficient | ~85% efficient |
| Government rebates | Yes — STCs, VEU, Solar Vic | No | No |
| Upfront cost (installed) | $3,000–$4,500 (after rebates) | $1,800–$3,000 | $2,200–$3,500 |
| Gas connection required | No | Yes | Yes |
| Solar compatible | Yes (run on daytime solar) | No | No |
| Lifespan | 10–15 years | 8–12 years | 12–20 years |
| Emissions | Low (zero with solar) | Moderate | Moderate |
For most Melbourne homeowners — especially those with solar panels or considering electrification — a heat pump is the strongest long-term option. The higher upfront cost is largely offset by rebates, and the ongoing running costs are substantially lower.
Gas hot water still has a role for homes without solar, without sufficient switchboard capacity, or where replacing a functioning gas system is not cost-effective right now.
After all available rebates, the installed cost of a heat pump hot water system in Melbourne typically falls to $2,000–$3,500.
Given annual running cost savings of $300–$600 compared to gas, most heat pumps pay for themselves within 3–6 years.
A heat pump running on solar power produces hot water at essentially zero cost. By setting the heat pump to run during peak solar generation hours (typically 10am–2pm), Melbourne homeowners can heat a full tank of water using energy that would otherwise be exported to the grid at 5 cents per kWh.
Most modern heat pumps can be connected to a timer or smart controller that aligns operation with solar production. Zap Tech Energy configures this during installation for customers with existing or new solar systems.
