A real example of saving money with a hot water heat pump

I recently came across a real-world example that demonstrates how a hot water heat pump significantly reduced a homeowner's energy bill, and the findings are based on real bills!

For quick context, I heard about this heat pump example during the Electrify Boroondara expo, I met a guy named Tim Johnston who owns and runs a heatpump company called Powrhouse here in Melbourne. Definitely not a sales focused guy, Tim and I got along great, chatting about all the cool electrification technologies and possibilities on the horizon for home energy.

He also told me that he recently ran the numbers for a past client, and after a year, he estimates they're saving over $500 on their energy bill. I needed to know more!

Tims's client, Vijay, saved roughly $540 in his first year by swapping over to a hot water heat pump

By swapping out the ancient gas water heater and replacing it with a high-efficiency reverse cycle air conditioner Vijay decreased his Summer gas consumption by 87%. In comparison, his electricity usage increased by only 7% over that same period!

This kind of savings tracks with the 2024 Sustainability Victoria estimates where they calculate the running costs of each type of hot water heater available on the market. Heat pumps are at the bottom of the graph among the cheapest forms of hot water out there!

But before we get too deep into the numbers and this home if you’d like more information on what is a heat pump or why they are so good check out my past article where I covered more about heatpumps.

Vijay had an old gas water heater he needed to replace

Back in November of 2023, Tim visited Vijay’s house and recommended that he swap out his gas water heater with an energy efficient 270-litre heat pump for him and his partner. Tim suggested he go a bit bigger with the capacity because Vijay would occasionally have family visit, so those extra litres would cover any future shower marathons.

Vijay agreed and the installation took less than a day! The total equivalent cost of the heat pump today would be around $1,900.

How to calculate the hot water savings of gas vs electricity

Figuring out heat pump vs gas savings is not simple. To give it a fair shot we have to compare past gas bills with current electricity bills. Then, we also need to figure out which portion of each bill was actually used for heating water. Easier said than done.

The simplest way to compare a gas bill with an electricity bill is to focus on the summer months. Summer is best because it's generally the only time gas is used to heat your water and for cooking, or at least for Vijay. This way, we can say with some confidence that most of Vijay's gas bills in the summer are for heating water.

You then might be asking what about gas cooking. Well Vijay cooks in the summer and he cooks in the winter, and unless he eats in grizzly bear hibernation cycles we are going to assume he uses gas for cooking at the same rate throughout the year, so we can assume that any decrease in gas consumption will because of upgrading the hot water.

So the next step is to figure out what Vijay was using before swapping out the gas.

In the summer of 2022 to ‘23 Vijays gas bill was 7,020 MJ of gas consumption. In the summer of 2023 to ‘24 Vijay used 896 MJ! That's huge! But to be expected, he did just replace one of the biggest gas consuming devices in his home.

For his electricity, Vijay consumed 1,475 kWh in the summer of 2022 to ‘23, and a year later, in the summer of 2023 to ‘24, he consumed 1,572 kWh — a measly increase of only 97 kWh.

The end result is that the savings earned from the gas reduction far outweighs the cost of the electricity increase, this is how Vijay was able to save $540 a year on his energy bills. Taking into account the cost to install is around $1,900, Vijay has a payback period of about 3.5 years!

Granted these calculations are a bit rough as there are more variables at play in a home throughout the year. Still, given the massive gap between the gas decline and the small energy increase, there's a lot of room to wiggle around in before the heat pump loses its stellar savings.

Tim and Powerhouse are a great heatpump choice here in Melbourne

I think Tim is doing some great work here in Melbourne, installing quality products and genuinely following up with clients to see if they are happy with their savings! Try to find that level of customer care with a big name installer.

If you're thinking about switching out your gas to a heat pump then let me or Tim know. The savings are a clear winner and I’d be happy to help coordinate some savings and cost analysis with Tim if you're keen to figure out costs and potential savings.

A lot of people wait until their gas hot water heater dies on them and they are faced with the coldest shower of their lives. If your gas hot water heater is 20+ years old we should be thinking about the savings you could unlock today by replacing that relic, not to mention that your home will be burning significantly less fossil fuel.

If you’re in Melbourne and want to explore some heat pump options, I’d encourage you to reach out to Tim and have a chat.

You can get your own solar and heat pump analysis without getting off the sofa

SolvingZero is purpose-built to make analysing your energy as easy as possible. The dream is you can connect to your energy without getting up from your sofa, no need to connect a device or have someone visit your home.

While we are still working on making a heat pump analysis open to everyone, we already have a solar analysis tool available to use right now. If you want to see how much you can save by installing solar then take one minute to link your energy to your own SolvingZero dashboard, its free!