Solar Hot Water vs Heat Pump: Which Is Best For Your Home?

Hot water can account for 15% – 30% of your electricity bill, so the system you choose will have a big impact on your household’s annual energy costs. And you’re right to consider Solar and Heat Pump hot water systems – they’re standout options for cutting that cost. Both draw on natural energy instead of pure grid power to heat your water, but one will suit your home a lot better than the other.

Let’s discuss how each system works, what setup and space they need, and what they cost upfront and to run long-term, so you can see which one makes the most sense for your home.

TL;DR

The quick verdict:

Choose solar if you have a sunny, suitable roof, a larger household with high hot water use, plans to live in your home for 15+ years and want lower long-term running costs.
Choose a heat pump if you have limited or shaded roof space, a smaller household, existing rooftop solar, or want a lower upfront cost.

What you need to know:

Upfront cost: Solar costs more upfront, typically $5,000–$10,000+ installed, while heat pumps are around $4,500–$7,500+ before rebates.
Running cost: Solar costs less to run, at $100–$300/year, compared with heat pumps at $150–$400/year.
Maintenance: Solar needs more maintenance because its solar collectors, pumps and other components are exposed to the weather. Heat pumps are easier to access and service because the heat pump unit sits on the ground.
Local performance: Both systems work well in Townsville’s sunny, warm climate. Solar systems need strong roof mounting to handle Townsville’s harsh cyclonic conditions.
Home suitability: Solar needs suitable roof space, good sunlight and a roof that can support the system. Heat pumps only need suitable ground-level space with enough airflow.
Payback time: Solar has a longer payback period compared to heat pumps because of its higher upfront cost.
Consult a pro: Have a licensed plumber assess your home, roof and hot water needs before installing a new hot water system.

What Is a Solar (Thermal) Hot Water System?

A solar thermal hot water system uses direct energy from the sun to heat the water your household uses every day.

Sunlight hits the roof-mounted solar collectors, usually flat-plate or evacuated tube collectors. Copper pipes inside the collectors absorb heat from the sun and transfer it to the water flowing through them. The heated water then moves into the storage tank, ready for use.

During cloudy weather or the wet season, solar heating drops because there is less sunlight, so an electric booster automatically switches on to heat the water to 60°C, as required by Queensland law, to prevent bacterial growth and keep your hot water supply reliable.

What Is a Heat Pump?

A heat pump hot water system is a refrigerator in reverse. It extracts heat from the air, transfers it into your water, and releases cool air into the environment.

A fan draws in warm air and passes it over an evaporator coil containing refrigerant. The refrigerant absorbs heat from the air and changes from a liquid into a low-pressure gas. The gas then passes through a rotary compressor, which increases its pressure and temperature. The hot, high-pressure refrigerant moves through a heat exchanger, where it transfers its heat to the water inside the storage tank.

Once the refrigerant releases its heat, it cools and condenses back into a liquid. It then passes through an expansion valve, which lowers its pressure and prepares it to absorb heat from the air again.

Solar vs Heat Pump Hot Water Systems: What’s Best for You in Townsville?

The right choice between solar and heat pump for your home depends on a few different factors, as we have discussed below:

Upfront Costs: What You’ll Pay to Install

Solar Hot Water System

Typical Installed Cost (Before Rebates): $5,000–$10,000+

A solar thermal hot water system costs more upfront because you install a complete roof heating system that includes:

Storage Tank ($2,000–$4,000): The storage tank is your biggest expense. The exact price depends on the tank’s capacity, construction, brand, warranty and corrosion protection.
Roof Collectors & Pumps ($1,200–$2,500): This includes solar collectors, temperature sensors, solar controllers and a circulation pump in a split system to move water between the collectors and storage tank.
Plumbing & Electrical Labour: Solar installations require a full day or more from two licensed trades:
- Licensed Plumber ($120/hr average): Handles roof pipework, ground tank positioning, cold water connections, and drainage lines.
- Licensed Electrician ($120/hr average): Connects the dedicated circuit for the electric booster element, configures smart solar controllers, and wires external temperature sensors.
Cyclone Region C Mounting ($400–$800): If you choose an integrated roof-mounted solar system, with both the storage tank and collectors on the roof, you must install heavy-duty mounting brackets and cyclone tie-downs. Queensland Building Regulation requires this to ensure your roof can support the system and withstand Townsville’s high-wind conditions.
Valves & Compliance ($300–$500): Every hot water storage system requires safety valves like a tempering valve, pressure-limiting valve and TPR valve. Your plumber also submits a QBCC Form 4 for the water heater replacement, which costs $36.88 online or $49.80 manually.
Old System Removal & Disposal ($110–$300): If you’re replacing an existing system, the plumber charges to disconnect, drain, remove, and dispose of the old electric or gas hot water system.

Heat Pump Hot Water System

Typical Installed Cost (Before Rebates): $4,500–$7,500+

A heat pump system costs less upfront than solar thermal because the heat pump unit sits at ground level, which keeps installation simpler. You pay for:

The Compressor & Tank Unit ($2,800–$4,800): You can choose an integrated heat pump or a separate compressor and tank, with a little price difference between the two. The final cost depends on the tank size, materials, compressor technology and refrigerant type.
Plumbing Labour ($600–$1,200): If you’re replacing an old hot water system in the same location and can reuse a suitable existing concrete pad (a stable base for the heat pump unit), labour costs remain low. Costs increase if you need a new pad, move the unit to a different location, or extend water pipes and drainage.
Electrical Work & Switchboard Prep ($400–$800): An electrician installs a dedicated circuit and outdoor weatherproof isolation switch if you don’t already have one.
Valves & QBCC Compliance ($300–$500): Like solar, a heat pump installation includes the cost of safety valves and QBCC compliance.
Old System Removal & Disposal ($110–$300): The same removal and disposal cost applies as with solar when replacing your existing hot water system.

Operating Cost: What You’ll Pay to Run It

Solar Hot Water System

Typical Running Cost: $100–$300 per year

Solar hot water systems have very low running costs in Townsville and can cover up to 90% of your hot water needs with little reliance on grid electricity.

The small running cost comes from:

Booster Element Use: The electric booster turns on when sunlight is limited, or your household uses more hot water than the solar system can provide.
Circulation Pump: In a split solar system, a small circulation pump moves water between the roof collectors and the ground-level storage tank. It uses very little electricity, adding around $15–$25 a year to your power bill.

You can reduce running costs further by connecting your electric booster to the Ergon Energy Tariff 33 that provides cheaper electricity for 16 hours a day.

Heat Pump Hot Water System

Typical Running Cost: $150–$400 per year

A heat pump costs a little more to run than solar thermal, but it still uses 60% to 75% less electricity than a standard electric storage system. This makes it a little less cost-efficient than a solar thermal system but still much more than a traditional electric system.

The running cost comes from:

Compressor & Fan Electricity: The rotary compressor and fan use electricity during heating cycles.
Backup Heating: Some heat pumps use an electric booster element when hot water demand is high.

You can lower your heat pump’s running costs by:

Using your solar power: If you have rooftop solar, schedule the heat pump to heat the water during the day when your solar PV system is generating electricity, then store the hot water for later so you use more free solar electricity and less grid electricity.
Using cheaper Tariff 33 power: Like solar, you can run your heat pump for 16 hours on Tariff 33, which costs 16.764 cents/kWh – 42% cheaper than standard tariff 11, which costs 28.895 cents/kWh.

Performance & Reliability: How It Handles Townsville Conditions

Solar Hot Water Systems

With 300+ sunny days a year and an average of 8.5 hours of sunshine a day, there’s enough sunlight to heat your water for most of the year. So safe to say it’s a great match for most Townsville homes. During winter and the wet season, solar output drops, so the electric booster turns on to bring the water up to the required temperature.

However, Townsville’s coastal salt spray and strong UV exposure can wear down solar outdoor components over time. Choose a Grade 316 stainless steel storage tank and corrosion-resistant collector materials to protect your solar system and keep it reliable for longer.

Heat Pump Hot Water Systems

Heat pumps are also well suited to Townsville, as the daytime temperatures exceed 30°C in summer and stay around 24–27°C in winter, so the system has plenty of warm air to draw heat from year-round. And unlike solar, a hot water heat pump doesn’t need direct sunlight, so it can heat the water at night and on rainy or cloudy days.

The only concern is (same as it is for solar thermal) Townsville’s salty coastal air and high humidity. Salt and moisture can corrode the outdoor evaporator coil over time, so choose a quality heat pump with an anti-corrosion coil coating to maintain efficient heat transfer.

Maintenance & Lifespan: What to Expect Over the Years

Solar Hot Water System

Expected Lifespan: 15–20+ years

A solar hot water system is high maintenance because its collectors and other outdoor components are exposed to Townsville’s weather, which can cause them to degrade faster.

The maintenance includes:

Anode Replacement Inspection: The storage tank has a sacrificial anode rod that protects the tank from corrosion. Inspect it every 3–5 years and replace it when needed.
Collector Cleaning: Remove dust, leaves, debris and salt buildup on flat-plate collectors or evacuated tubes to maintain performance.
Tank Flushing: Flush the storage tank every 3–5 years to remove sediment and mineral buildup.
Component Checks: Inspect the circulation pump, sensors, wiring and safety valves for wear, as they may need replacement around 7–10 years.

Heat Pump Hot Water System

Expected Lifespan: 10–15 years

A heat pump has more moving parts than a solar system, but servicing is simpler because the entire unit sits at ground level and technicians can access it easily.

The maintenance includes:

Airflow & Coil Cleaning: Remove leaves, dirt, and debris from the evaporator coil, air intake, and fan guard to maintain efficiency.
Anode Replacement: Like solar, the sacrificial anode rod needs inspection every 3–5 years and replacement when necessary.
Coil & Refrigerant Checks: Inspect the evaporator coil, refrigerant system and anti-corrosion coating to keep the heat pump efficiency high.
Drainage & Safety Checks: Keep the condensate drain (the pipe that carries away water produced during operation) clear of blockages, and make sure the temperature and pressure relief valve is working properly.

Space & Roof Suitability: Will It Fit Your Home?

Solar Hot Water System

With solar thermal, your roof matters the most because the system needs enough sunny, usable space for the collectors. You must consider:

Roof Orientation: Ideally, you’ll want an unshaded, true-north-facing roof section for the collectors to capture the most sunlight throughout the day. An east- or west-facing roof can still work, but it receives less sunlight.
Shade Boundaries: Look at what surrounds your roof. Trees, neighbouring buildings, or higher roof sections can cast shade over the collectors and reduce the solar energy they capture, potentially making the system less effective.
Roof Load Weight & Engineering: If you’re considering a close-coupled thermosiphon system, where the tank and collectors sit on the roof, keep in mind that it can weigh around 350–450 kg when full. Your roof needs to be strong enough to support the weight.

Heat Pump Hot Water System

A heat pump is easier to fit in most Townsville homes, especially those with limited or unsuitable roof space, because it has no rooftop equipment. You just need:

Ground-Level Space & Air Circulation: You need a small, level concrete pad or stable mounting base for the unit, with enough open space around it for the heat pump to draw air.
Proximity & Decibel Ratings: The compressor and fan make some noise while the heat pump runs. Choose a heat pump unit rated 48 dB or lower and position it away from bedroom windows and neighbouring boundaries to keep the noise low.

Incentives & Tariffs: Rebates and Energy Savings Available to You

Solar Hot Water System

The upfront cost of solar hot water is high, but rebates and electricity tariffs can reduce what you pay. Some of these incentives are:

Zone 1 STC Discounts: Townsville sits in Zone 1, Australia’s highest solar radiation zone, so eligible solar hot water systems can qualify for federal Small-scale Technology Certificates (STCs). Your installer applies the STCs as an upfront discount, reducing your installation cost by hundreds or thousands of dollars.
Supercharged Solar for Renters: If you rent out your property, the Supercharged Solar for Renters programme provides eligible landlords with up to $3,500 in financial support, which helps your tenants save on their energy bills while adding value to your property.

Heat Pump Hot Water System

Like solar systems, eligible heat pumps qualify for Small-scale Technology Certificates (STCs), which can reduce the upfront cost.

Payback Period: When the Savings Start to Show

Solar Hot Water System

To calculate the payback period, compare the solar system with the standard electric storage system it replaces.

Let’s say your existing electric hot water system costs around $850 a year to run, while a solar system costs around $150. That gives you an annual saving of about $700.

For a solar system costing around $7,500 before rebates:

Gross Supply & Installation: ~$7,500
Upfront STC Rebate Discount: -$1,200
Net Out-of-Pocket Cost: ~$6,300
Conventional Electric System Running Cost: ~$850/year
Solar System Running Cost: ~$150/year
Estimated Annual Saving: ~$700
Estimated Payback: ~9 years

The exact payback depends on your hot water consumption, electricity rates and installation cost. A larger household that uses more hot water can save more on electricity, helping the system pay for itself faster. For a 5–6 person household, the payback could be around 5–6 years.

Heat Pump Hot Water System

You can use the same calculation for a heat pump water heater. If your old electric system costs around $850 a year to run and the heat pump costs around $200, you save about $650 each year.

For a heat pump system costing around $6,000 before rebates:

Gross Supply & Installation: ~$6,000
Upfront STC Rebate Discount: -$1,100
Net Out-of-Pocket Cost: ~$4,900
Conventional Electric System Running Cost: ~850/year
Heat Pump Running Cost: ~$200/year
Estimated Annual Saving: ~$650
Estimated Payback: ~ 7.5 years

If you have rooftop solar PV, you can run the heat pump on your excess solar energy, instead of buying as much power from the grid, which lowers your annual running cost and shortens your payback period.

When a Solar Hot Water System Is More Suitable

A solar hot water system makes more sense for your Townsville home if you have:

Unshaded North-Facing Roof Space: If you have a clear, unshaded north- or north-west-facing roof that gets direct sunlight between around 9 AM and 3 PM, solar thermal will work best.
High Daily Hot Water Demand & Large Families: If you have a family of 4–6+ people or use a lot of hot water, solar hot water can make more sense. The more hot water you use, the more electricity your solar system can replace, which gives you greater energy savings.
Prioritising Long-Term Asset Lifespan: If you’re planning to stay in your home for 15+ years, solar thermal is a strong option, as it can last 15–20+ years with proper maintenance, giving you a long period of low-cost hot water.
Properties Without Existing Rooftop Solar PV: Solar thermal gives you a direct way to use sunlight to heat your water. You don’t need a separate solar PV system or inverter just for your hot water.
Have a Strong Roof: If your roof can safely support the full tank and collectors, an integrated solar system is a good option. If your roof can’t support the weight, choose a split solar system instead.

When a Heat Pump Hot Water System Is More Suitable

A heat pump is often the more practical choice in the following situations:

Existing Rooftop Solar PV System Installed: If you already have rooftop solar panels, you can schedule the heat pump to heat your water during the day, like between 10 AM and 3 PM, and store it for later. This lets you use free solar electricity.
Smaller Households & Moderate Hot Water Demand: If you’re in a 1–3 person household with moderate hot water usage, a heat pump makes more financial sense because a solar thermal system may not generate enough savings to justify its higher upfront cost.
Shaded, Complex, or Roof Space-Constrained Homes: If trees, neighbouring buildings, or your roof design limit sunlight, choose a heat pump, as roof-related factors don’t affect its performance.
Lower Initial Upfront Budget: If you want to replace an inefficient electric or gas system without paying the higher upfront cost of solar thermal, then opt for a heat pump, as it is $1,000–$2,500 cheaper before rebates.
Avoiding Heavy Rooftop Loads in Cyclone Region C: If you’re concerned about adding the heavy weight of a storage tank and collectors to your roof, install a heat pump, as it keeps the entire system on the ground.

The 5-Minute Check: Decide Which Side You Are On

Now that you know how both systems work, it’s time to see which one makes more sense for your home. Use this simple checklist to work out whether solar thermal or a heat pump is the better choice for you.

The Decide Now Checklist

Review each question carefully, then answer yes/no. Each “No” is a potential red flag for solar thermal viability.

☐ Do you have an unshaded, north- or north-west-facing roof area that receives direct sunlight between 9 AM and 3 PM?

☐ Can your roof trusses support 350 kg to 450 kg under Townsville’s Cyclone Region C wind loading standards?

☐ Does your household have 4 to 6+ people or heavy daily water usage to justify the higher upfront investment?

☐ Are you planning to stay in your home long-term to benefit from a 15–20+ year system lifespan?

☐ Is your roof free of solar PV panels, making a dedicated thermal collector the best use of your roof space?

No matter which system you choose, our team at 1Touch Plumbing can supply and install both solar hot water systems and heat pumps across Townsville to help lower your hot water energy costs and keep your system running reliably.

Final Thoughts

Both solar hot water and heat pump systems are highly energy-efficient options for cutting your hot water running costs and lowering your energy bills. But that doesn’t mean you can just choose any system. The right choice depends on your roof, household size, hot water use, budget and existing solar PV system.

If your roof is shaded or can’t safely support a solar system, a heat pump might make more sense. But if you are a larger family with plenty of suitable roof space, you can get more value from solar hot water.

To help you decide, our licensed plumbers at 1Touch Plumbing can visit and assess your existing set-up (if you have one), roof space, and hot water needs. We’ll also help you compare the upfront cost, running costs and expected payback of each system so you can choose the one that best works for your home.

Reach out to us today to discuss your hot water options.

FAQs

Does a heat pump produce cold air, and can it be used to cool a space?

Yes, a heat pump produces cold air and can cool a space. A hot water heat pump takes heat from the surrounding air and transfers it to the water, so the air leaving the unit is cooler. If you install it in a garage, the cooling effect might be noticeable, but it won’t provide the controlled cooling you get from a split-system air conditioner.

What happens to heat pumps and solar hot water systems during a blackout?

During a blackout, a heat pump stops working because its fan and compressor need electricity. A split solar hot water system also stops heating because its circulation pump needs power.

An integrated solar system is different. It can still heat water using sunlight because it doesn’t rely on an electric pump to circulate the water.

Are heat pumps noisy enough to disturb neighbours or fail council noise limits?

No, modern residential heat pumps typically produce 40–60 decibels (dB) of noise, so a properly installed unit won’t disturb you or your neighbours. To be safe, choose a low-noise heat pump unit and position it away from bedroom windows and neighbouring boundaries.

Is a heat pump or solar hot water better for eco-friendly homes?

A heat pump paired with rooftop solar PV is the better choice for eco-minded homes. A heat pump extracts heat from the air and keeps working in cloudy or rainy conditions when solar hot water relies on an electric or gas booster.

Plus, when the hot water tank is full, your solar PV system can use excess solar power elsewhere in your home or send it to the grid instead of letting that energy go unused.

Can I run a heat pump exclusively on my existing solar PV without drawing from the grid?

Yes, you can power your heat pump with solar electricity during the day when your solar PV system produces enough electricity. For example, if your heat pump needs 1 kW to run and your solar panels are producing 2 kW, your solar system can power the heat pump without using grid electricity.

However, your solar panels don’t produce enough power at night and on cloudy days, so in these cases the heat pump will draw the remaining electricity from the grid unless you have battery storage.