Heat Pump vs Cylinder vs Gas: Which Hot Water System is Best?
An independent, data-driven comparison of every hot water option available in New Zealand: costs, 15-year total, environmental impact, and who each system suits best.
By Carolyn Cox · Sustainability Expert, 25+ years · Updated August 2026
The short version
If you're replacing your hot water system and want to know which option to choose, the answer for most NZ households is a hot water heat pump. It costs more upfront than a standard electric cylinder, but uses 60–75% less electricity, saves $5,000–$12,000 over its lifetime, and has the lowest carbon footprint of any option. Gas is now the most expensive way to heat water in New Zealand when you include the daily fixed connection charge.
But every household is different. Here's the full comparison so you can make the right call for your situation.
Head-to-head comparison
All figures based on a typical 3–4 person NZ household.
Sources: EECA, Rewiring Aotearoa, Goes Electric installer data.
| Electric Cylinder | Gas (Mains / LPG) | Hot Water Heat Pump | |
|---|---|---|---|
| Upfront cost | $1,500–$2,500 | $2,500–$4,500 | $6,399–$9,700 |
| Annual running cost | ~$1,020/yr | ~$780–$1,040/yr | ~$200–$400/yr |
| 15-year total cost | ~$15,300 | ~$15,594 (mains) / $18,200 (LPG) | ~$10,297 (grid) / $8,111 (solar) |
| Energy efficiency | COP 1.0 | 80–90% (no COP advantage) | COP 3.5–5.2 |
| Carbon emissions | Low (NZ grid is 85% renewable) | High — fossil fuel | Lowest of all options |
| Lifespan | 15–20 years | 10–15 years | 15–20 years |
| Hot water delivery | Tank — size-dependent | Continuous (instantaneous) | Tank — size generously |
| Daily fixed charge | — | $1.25–$2.00/day ($456–$730/yr) | — |
| Noise | Silent | Silent | 45–52 dB(A) — like a quiet fridge |
| Score | 5/10 | 3/10 | 9/10 ⭐ Our recommendation |
| Verdict | Cheap to buy, expensive to run | Most expensive over 15 years | Cheapest over 15 years, lowest emissions |
The 15-year picture — what you'll actually spend
Upfront cost is what you pay today. Total cost of ownership is what you actually spend over the system's life. They tell very different stories.
Source: Rewiring Aotearoa Electric Homes Technical Report, March 2024. Includes purchase, installation, and energy costs.
How the savings build over time
A heat pump costs more in Year 1, but the crossover comes fast. Here's how a heat pump compares to a standard electric cylinder over 15 years.
The payback timeline
- Years 1–2 — higher upfront costYou've paid $4,000–$7,000 more than a standard electric cylinder.You've paid $4,000–$7,000 more
- Years 3–5 — savings accumulatingThe gap narrows by $620–$820 every year as lower running costs stack up.Gap narrowing by $620–$820/yr
- Years 5–8 — breakeven pointYou've paid off the premium. From here the heat pump is pure savings.You've paid off the premium
- Years 8–15 — pure savingsYou're $5,000–$7,000 ahead of where you'd be with an electric cylinder.+$5,000–$7,000 ahead
Which system is right for you?
Three households, three different starting points. Find yours.
Choose an electric cylinder if…
The pragmatic short-term option — but the most expensive over 15 years.
- Your budget is genuinely tight right now - You need a replacement today and can't wait for scheduling.
- You're selling within 2 years - You won't be in the home long enough to benefit from the savings.
- Know the trade-off - You're locking in 15 years of high running costs — this is the most expensive option long-term.
Choose a heat pump if…
The right choice for the vast majority of NZ homeowners. It's what we'd install in our own homes.
- You can invest $6,400–$9,700 upfront - Or access green finance to spread the cost.
- You'll stay 5+ years - Long enough to comfortably reach payback and save every year after.
- You want the lowest bills and carbon - Lowest ongoing running costs and the smallest carbon footprint of any option.
Myths vs facts
We hear these from NZ homeowners every week. Let's sort out what's true.
“Gas is cheaper than electricity for hot water”
This was true 10 years ago. It's not anymore. Gas prices have risen significantly while electricity has remained relatively stable. When you include the daily gas fixed charge ($456–$730/year), gas is now the most expensive way to heat water in NZ. A heat pump uses electricity at roughly 7.5c per kWh of delivered heat; gas costs 12–15c.
“Heat pumps don't work in cold weather”
Modern heat pump water heaters work efficiently down to −5°C to −10°C ambient temperature. The Rinnai HydraHeat operates in heat pump mode down to −10°C. NZ's climate is mild compared to where these systems are designed to operate. Even in Queenstown's coldest nights, a properly sized system will perform well — the COP drops slightly in cold weather, but it's still 2–3x more efficient than a standard cylinder.
“You'll run out of hot water with a heat pump”
Only if the tank is too small. Size it for your household: 180L for 1–2 people, 270–300L for 3–5 people. A 280L tank gives a family of four roughly 400–500 litres of usable hot water per day (the heat pump reheats the tank throughout the day). Most systems also have a fast boost mode for peak demand.
Heat pumps are noisier than a cylinder
Yes — a standard cylinder is silent, and a heat pump generates 45–52 dB(A), comparable to a quiet fridge or a conversation. This matters for placement: don't put it directly under a bedroom window. Most NZ councils have no specific noise restrictions for hot water heat pumps, but good placement makes it a non-issue for you and your neighbours.
A heat pump needs a dedicated electrical circuit
Yes. Unlike a gas system (which uses no electricity) or swapping a like-for-like cylinder (same circuit), a heat pump typically needs a new dedicated circuit from your switchboard. Your installer will arrange this. Cost is $400–$1,200 and should be included in any good installed quote. Older switchboards may need an upgrade ($300–$800 extra).
Heat pumps pair brilliantly with solar
A heat pump + rooftop solar is the cheapest way to heat water in NZ. Programme the heat pump to run during peak solar generation (10am–2pm) and your effective electricity cost drops from 30c/kWh to near-zero. Rewiring Aotearoa data shows the 15-year cost drops from $10,297 (grid) to $8,111 (with solar) — a further 21% saving.
The decision in three questions
Most homeowners can decide with these three questions.
Three questions to decide
- Are you replacing an existing system, or is this a new build?Replacing: a heat pump retrofit is straightforward — your installer removes the old unit and installs the new one, usually in a single day. New build: specify a heat pump from the start; there's no reason to install new gas or a standard electric cylinder in 2026, and the incremental cost during a build is much less than a standalone retrofit.
- Can you invest $6,400–$9,700 upfront (or access green finance)?Yes: choose a heat pump. Not right now: check green finance options — most NZ banks offer green home loans at reduced rates. If finance truly isn't an option, a standard electric cylinder is the pragmatic second choice (never gas).
- How long do you plan to stay in this home?5+ years: you'll comfortably reach payback and save money every year after — a heat pump is the clear choice. 2–5 years: you'll likely reach payback, and a heat pump adds value when you sell. Under 2 years: an electric cylinder may make more financial sense, though a heat pump still adds resale appeal to sustainability-conscious buyers.
Ready to switch to a heat pump?
Compare every model available in New Zealand, or go straight to a quote from a trusted installer.
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