Benefits of Heat Pump Hot Water Systems

Key Benefits of Heat Pump Systems for Strata

Strata committees and owners looking to reduce costs and improve sustainability should consider switching to a heat pump hot water system (HWS). These systems offer substantial savings and environmental benefits compared to traditional gas or electric water heaters.

Significant cost savings

Most strata schemes use gas hot water systems, which have high fuel costs. A heat pump HWS can reduce hot water heating costs to approximately $180 per apartment per year, resulting in savings of up to $420 per apartment annually. The payback period for a heat pump system is between 5 and 10 years, while its lifespan extends up to 15 years.

Improved energy efficiency

• Heat pumps use ambient air temperature to heat water, making them far more efficient than gas or resistive electric systems.
• Gas boilers: COP (Coefficient of Performance) ~ 0.75
• Electric resistance HWS: COP ~ 1.0
• Heat pumps: COP ranges from 3 to 6 (higher in summer, slightly lower in winter)

Sustainability and compliance

• Heat pumps reduce greenhouse gas emissions significantly.
• Strata buildings cannot achieve the highest sustainability ratings (e.g., Green Star) if they are connected to gas.
• Many modern sustainability frameworks push towards electrification, and heat pumps align with these goals.

Government incentives

Heat pumps in NSW are currently eligible for three rebates, with some council areas offering a fourth: 

• Federal Small Scale Technology Certificates (STCs) 
• NSW Energy Savings Certificates (ESCs) 
• NSW Peak Demand Reduction Scheme 
• Local Council Rebates (available in areas such as North Sydney, Lane Cove, Waverley, and Randwick, depending on funding availability through the Rebately system)

Types of Heat Pump Hot Water Systems

Integrated systems

The evaporator and fan are mounted on top of the water tank (which requires more space).

Split systems

The evaporator and fan (which resemble an air conditioner) are separated from the storage tank, allowing for flexible installation in strata buildings.

Installation considerations for strata committees

• Heat pumps need adequate ventilation and positioning away from cold airflow.
• Most systems range from 25-50 dB, similar to an air conditioner. Check specifications before installation.
• Many traditional plumbers recommend gas systems out of familiarity, so strata committees should research experienced heat pump installers.

Maintenance & ongoing costs

• Regular servicing is required to maintain efficiency.
• Typical service costs: $1,200 yearly for two maintenance checks in a 40-apartment complex.
• Like reverse-cycle air conditioners, heat pumps require filter cleaning and system inspections.
• Metering Challenges & Disconnection from Gas

Transitioning from gas

If transitioning from gas, strata committees must: 

• • Gain owner consent before removing hot water meters, which can cost $25 to $175 per lot. 
  • Notify the relevant gas retailer(s) if billing automatically continues and there are no other uses for gas in the building (e.g. cooktops, BBQs, space heating bayonets).
  • Factor in potential gas meter decommissioning fees ($2,000-$3,000 for a volume boundary gas meter).
  • Inform owners of additional connection fee savings of $240 per apartment per year by fully disconnecting from gas in individual apartments through switching from gas cooktops to induction cooktops.

Additional savings from electrification 

When a strata scheme moves to an electric heat pump and an individual owner retrofits an induction cooktop, they can eliminate gas usage entirely, saving on daily gas network connection fees (e.g., $0.63 per day or $230-$240 per year).

Why now is the right time to switch

• Rising gas prices make heat pumps a financially attractive alternative.
• Energy efficiency and sustainability targets are shifting towards electrification.
• Government incentives and rebates can significantly lower the upfront cost.

Final thoughts

Heat pumps are a cost-effective, energy-efficient, and future-proof solution for strata hot water needs. With significant savings, government incentives, and reduced environmental impact, now is the perfect time for strata committees to consider transitioning away from gas.

Wattblock

This information has been kindly provided by Brent Clark, CEO and Founder of Wattblock. Brent has 13 years of experience assisting strata committees, strata managers, facilities managers, local councils, state governments, electric vehicle companies, the solar industry, and the hot water heat pump industry in electrifying apartment buildings.

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Read more about the benefits of heat pump hot water systems on ieefa

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