If your old electric storage hot water tank in Shellharbour, Albion Park, Warilla or Wollongong is on its last legs, a heat pump hot water system is almost always the smartest replacement in 2025. They use roughly a quarter of the electricity of a conventional electric tank, qualify for a substantial NSW Energy Savings Scheme rebate, and pair perfectly with solar.
How a heat pump hot water system actually works
Think of it as a fridge running in reverse. A small compressor pulls heat out of the surrounding air and pumps it into the water tank. Even on a cold Illawarra winter morning there's enough ambient heat in the air to heat the tank — it just runs a little longer.
Because they move heat instead of generating it, heat pumps are 3–4× more efficient than a standard electric element. Across a year that's a big drop in running cost compared to electric storage or instantaneous gas.
The NSW heat pump rebate (Energy Savings Scheme)
Under the NSW Energy Savings Scheme (ESS), eligible heat pump installs are heavily discounted at the point of sale via Energy Savings Certificates (ESCs). We handle the paperwork — you don't deal with the scheme directly. The discount is applied before you pay, and the size of the discount depends on the model, your postcode and the system being replaced.
If you're replacing an electric tank with a heat pump, the rebate is usually significant. Replacing a gas system also qualifies in most cases. Bring us a photo of your existing nameplate and we'll quote you net of the rebate.
Brands we install
- Reclaim — Australian-assembled CO₂ heat pump, separate tank, best cold-climate performance, premium tier
- Sanden — Japanese-made CO₂ split system, very quiet, premium tier
- iStore — Australian-designed integrated unit, strong value, popular under the rebate
- Rheem Ambiheat — integrated unit, big brand backup, easy parts supply
- Chromagen Midea — entry-level integrated unit, lowest upfront after rebate
What changes on install day
A heat pump is a bit larger than a conventional electric tank and needs at least 300mm of clear air around the intake. If your current tank is in a tight cupboard or alcove, we may need to relocate it to an external wall — which is usually a quick job but worth knowing about before quote day.
Most installs take 4–6 hours. We isolate the water and power, remove the old tank, plumb in the new unit (often with a tempering valve to meet the 50°C delivery rule), commission it, and walk you through the controller. If we're replacing gas, we cap the gas line and lodge the certificate of compliance.
Will it work with my solar?
Yes — and this is where heat pumps shine. We can set the unit to run only during the day, soaking up your solar export and storing it as hot water. That's effectively free hot water for most of the year. Pair it with a smart controller and the savings get bigger again.
Other guides
Not sure if it's repair or replace time? Read our piece on hot water repair vs replace. Curious how long different systems last? See our Illawarra hot water lifespan guide. If you're stuck between brands, our Rheem vs Rinnai vs Dux comparison covers gas and electric units too.
Frequently asked questions
- Is a heat pump hot water system worth it in the Illawarra?
- For most Shellharbour, Wollongong and Kiama homes, yes. The combination of cooler-than-Sydney mornings being well within the operating range, the NSW Energy Savings Scheme rebate, and the running cost being a fraction of a conventional electric tank means the payback is usually a few years — and shorter again if you have solar.
- How much rebate do I get on a heat pump hot water install in NSW?
- The NSW Energy Savings Scheme discount is applied at the point of sale by the installer (us). The amount depends on the model, your postcode, and what you're replacing. We always quote you the net price after the rebate has been applied so there's no chasing reimbursements.
- Can a heat pump replace my gas hot water?
- Yes. Gas-to-heat-pump swaps are common and usually qualify for the rebate. We cap the gas line, fit the new unit, and lodge the gas certificate of compliance for the disconnection.
- Are heat pumps noisy?
- Modern split-system units (Sanden, Reclaim) are very quiet — around 37dB at one metre, quieter than a fridge. Integrated all-in-one units are a little louder during their compressor cycle but still within the range that local councils allow next to a neighbouring boundary.
- Do I need a tempering valve fitted?
- Yes. NSW plumbing regulations require hot water delivered to bathroom outlets at no more than 50°C. We fit a tempering valve as part of every install — it's included in the quoted price.