Solar hot water and heat pumps compared
Solar hot water
Roof collectors- Uses the sun's heat directly
- Very low running cost in sunny climates
- Expensive to buy and install
- Needs a booster in cold, dull weather
- Roof space competes with solar panels
Heat pump
Air source- About 30% of the energy of electric storage
- Can run on a timer at midday from rooftop solar
- No roof space needed
- Compressor noise, like an air conditioner
- Not every model suits places below 5°C
With so many homes now owning rooftop solar panels, a heat pump on a timer often makes more sense than a separate solar hot water system: it runs on cheap midday solar power and leaves the roof free for panels.
Rebates for solar and heat pump hot water
| Program | Where | What it offers |
|---|---|---|
| STCs | Australia | A discount based on the system's deemed energy savings, which falls each year to 2030 |
| Hot water upgrade incentive | NSW | Up to about $640 when replacing electric, $330 when replacing gas |
| Solar Homes hot water rebate | VIC | 50% of the price after other discounts, up to $1,000, or $1,400 for eligible locally made products |
| Victorian Energy Upgrades | VIC | Discounts from approved providers |
Victorian gas hot water rules
From 1 March 2027, Victorian homes replacing a gas hot water system at the end of its life must install an efficient electric alternative, such as a heat pump, according to Solar Victoria.
Running costs
A heat pump uses about a third of the electricity of an electric storage heater for the same hot water. Set it to run in the middle of the day and much of that power can come straight from your panels. Our hot water running cost calculator compares the types on your state's power prices.
Common questions
For most homes with rooftop solar panels, a heat pump on a timer is the simpler choice. It uses about 30% of the energy of electric storage, needs no roof space and can run on midday solar.
Yes. Air source heat pumps and solar water heaters both earn STCs under the Small-scale Renewable Energy Scheme, scaled down each year until 2030.
Many do, but energy.gov.au notes not all models are designed for places that regularly drop below 5°C in winter. Choose a model rated for your climate.
Sources
Rules and program details come from government sources. Prices are industry averages, named and dated where used. Last checked October 2026. Prices include GST unless we say otherwise.