Heat Pump Hot Water or Solar Panels: Which to Buy First (2026)

Everyone has been told the answer is on the roof. For about half the country it is in the laundry. Rooftop solar is a good buy, but it only cuts the electricity you use while the sun is up. If your hot water is gas, the biggest single energy bill in the house is untouched. A heat pump hot water unit moves that load onto electricity and does it with about a third of the energy of an old element, so the bill it replaces shrinks instead of moving.

That is why, for a gas-hot-water home with no panels, the heat pump comes first. For an electric-tank home with no panels it is close, and the age of the tank decides it. For a home that already has solar, the heat pump is the cheapest "battery" you can add. The rest of this guide walks through each case.

Hot water is about a quarter of a typical home's energy use. It is the second biggest load after heating and cooling, and in a large household with teenagers it can be the biggest.

Solar panels reduce one thing: grid electricity used during the day. They do not reduce a gas bill, and they do not reduce overnight electricity, which is when most hot water tanks reheat on a controlled load tariff.

A heat pump reduces the hot water bill itself. It replaces a gas unit or an electric element and uses about a third of the energy for the same hot water. Put it on a timer and it can run in the middle of the day, when power is cheapest, or free under the Solar Sharer Offer in New South Wales, South Australia and South East Queensland.

Prices are PumpSwap's modelled installed ranges by suburb, not quotes. See the heat pump cost index and the solar cost index for your suburb. The heat pump saving is largest for gas homes because the whole gas bill goes, and it is largest for big households because they use the most hot water.

Gas hot water, no solar. Heat pump first. Your gas bill drops to near zero for hot water, the daily gas supply charge can go with it if hot water was the last gas appliance, and the heat pump runs on cheap or free daytime power. Panels come second, and they then run the heat pump for nothing.

Electric storage tank, no solar. If the tank is eight years or older, heat pump first: it is in the replacement window anyway and the rebate is worth more now than after 1 January. If it is newer, do the free things first (below) and put the panels in; swap to a heat pump when the tank reaches the end of its life.

Already have solar. Heat pump next, on a timer set for late morning. Your surplus solar is worth a few cents a kilowatt hour exported and 30 cents or more when you use it yourself. A tank that heats on your own panels is storage you already own. See our guide on the hot water system as a battery.

Renting. You cannot install either, but you can still cut the bill. Ask for the hot water circuit on controlled load if it is not already, put a timer on the tank if the lease allows, and in New South Wales, South Australia and South East Queensland opt in to the Solar Sharer Offer through your retailer: three free hours a day, no panels needed, renters eligible.

Large household. Heat pump first, sized for the household, before anything else. The more hot water you use, the more the heat pump saves, and the less the panels matter by comparison.

1. Check the tariff. If the hot water is on a controlled load it already gets a cheaper rate. If not, ask the retailer.
2. Put a timer on an electric tank, or use the built-in timer on a heat pump, and run it in the cheapest window.
3. Opt in to the Solar Sharer Offer if you are in an eligible area. Smart meter required, free through most retailers.
4. Turn the thermostat down to 60 degrees on a storage tank. Hotter than that is wasted heat.

The federal small-scale certificate discount on heat pump water heaters steps down on 1 January 2027, which for a typical unit means a few hundred dollars less off the price. State schemes stack on top. Victorian households can take up to $2,830 off a heat pump install today, and from 1 March 2027 Victorian law requires a failed mains gas hot water unit in an existing home to be replaced with an electric one. Current figures by state, each with its official source, are on our heat pump rebates page.

Half of all heat pump hot water quote requests on PumpSwap between April and October 2026 came from homes replacing gas. In Victoria it was 7 out of 10, nearly double the rest of the country, and most of those households moved while the old unit still worked. The full state breakdown is in our November data release.

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