Question 1

00:00 — Welcome: hot water, NZ’s hidden energy cost

Accepted Answer

Carolyn: Morena, and welcome to our session on hot water heat pumps. Hot water is one of the biggest hidden energy costs in our homes. In New Zealand we have over two million water heating systems, and hot water typically accounts for about 30% of our energy bills.

We’ve really embraced heat pumps for space heating and cooling — but using heat pump technology for hot water hasn’t taken off in the same way yet. Fewer than 15,000 hot water heat pump systems have been installed here so far, despite them being the most energy-efficient option available. In Australia, uptake is climbing quickly, driven by policy support, subsidies and rising gas prices.

With gas supply uncertainty and price rises here, more and more of us are asking whether we should be getting off gas — and those of us concerned about climate really want to, to reduce our emissions. So today I’m thrilled to be joined by Annie Jefferson, co-founder of A2W Hot Water Heat Pumps, based in Carterton.

Question 2

01:00 — From gas fitter to heat-pump specialist: Annie’s story

Accepted Answer

Carolyn: Annie and her husband Anthony started A2W just three years ago, but it’s grown rapidly and is now one of the most trusted hot water heat pump specialists in the lower North Island — servicing Wellington, Hutt Valley, Wairarapa, Kapiti, Horowhenua and Manawatu. Annie, I’d love to hear your story, because your husband started out in gas and you’ve made the big switch. Tell us about the business and why you set it up.

Annie: Thanks for having us, Carolyn. We both come from a gas background — we had a gas-fitting business in the Hutt Valley for about 12 years, and we sold it when we moved to Carterton.

Once the dust had settled, Anthony went to work for a plumbing firm in Masterton and I went to work for a hot water heat pump supplier in Wellington. We’d come across hot water heat pumps before and we were both pretty sceptical — when they first came out they were extremely expensive, and the technology was okay but not fantastic.

But working for that company I learned a lot, and realised pretty quickly it was simply the best way to heat water there is. In the past, gas definitely was — it was cheap. But looking to the future, I realised this was the way forward, not just on cost but environmentally and on climate too. So I came home to Anthony one day and said, I think we should seriously look at starting a business focused on hot water heat pump installation.

We spent about six months researching all the different products — a bit of trial and error to find the right ones.

I always say, if I could convince a dyed-in-the-wall gas fitter like my husband and my father, there must be something to it.

Question 3

03:30 — What’s really driving the switch

Accepted Answer

Carolyn: From what you’re seeing with customers — you’ve been out at a lot of the home shows — what’s really driving people to look at hot water heat pumps? Is it cost, climate, uncertainty about gas, or just that their old system’s carked it?

Annie: I’d say about 80% of our customers are coming off gas, and the main reason is line charges. People are seeing big increases in the daily rate they pay just to have gas coming into the property — I’ve heard some shockers, one customer paying about $700 a year just for the gas line. Part of it is concern about gas supply too, and whether they’ll be left holding the baby if supply gets worse and the unit price rises even more. So cost and supply go together. Interestingly, the emissions reduction is a happy bonus — for most customers, that’s not what’s driving the decision. It’s economics.

Carolyn: That’s something we’ve talked about in sustainability for a while — the risk of stranded assets and the cost of being tied to fossil fuels. Now it’s actually happening in the market, and people are thinking, this is costing me more, I don’t want to get stuck.

Annie: Absolutely.

Question 4

05:50 — How a hot water heat pump works — and why it’s so efficient

Accepted Answer

Carolyn: Refrigeration and heat pumps can feel a bit like Merlin magic. Can you explain in simple terms how a hot water heat pump works?

Annie: For anyone used to a heat pump for space heating, it’s actually not that different. A hot water heat pump takes warmth from the outside air and uses a refrigerant to concentrate that heat, then transfers it into the water, which is stored in a highly insulated cylinder. Different brands work in slightly different ways, but essentially they move heat rather than create it.

Carolyn: So is that why they’re more efficient than a traditional electric or gas system — they’re capturing existing heat rather than making it from scratch?

Annie: The key is how the heat is produced. In an electric cylinder or a gas continuous system, the unit uses power — an electric element or a gas flame — to heat the water directly. It’s generating heat. A heat pump transfers heat from an external source, in this case the air. Transferring heat is far more efficient than creating it. Like a heat pump for space heating, about one kilowatt of power produces about three or four kilowatts of output.

Carolyn: And that’s the magic bit — you get that gain in energy.

Question 5

08:20 — Integrated vs split systems: which suits your home

Accepted Answer

Carolyn: I’ve heard there are two types of system. Where would you use one and not the other — and if people already have a hot water tank, can they just add a heat pump to it?

Annie: Two questions in one — that’s fine. You’ve got integrated and split.

An integrated system is all-in-one — the heat pump sits on top of the tank. It’s great when you’re coming off a gas continuous unit, because it can often go in the same place. Its footprint is a little bigger than a split system, and it does tend to be a bit noisier.

A split system does the same thing, but the components are separate, so you can have the compressor outside and the cylinder inside or outside. We’d generally go split where the kitchen’s at one end of the house and the bathroom at the other and we need the hot water source centralised; or where noise is a factor, because split systems are generally quieter; or for very high hot-water users, because a split generally recovers faster.

The trade-off is that an integrated system is a lot cheaper to buy and easier to install.

About 90% of our installations are integrated — taking off a gas continuous unit or removing an electric cylinder, putting in an integrated system and connecting to the existing plumbing. And no — you can’t just add a heat pump to an existing tank. It’s really about understanding the individual home.

Question 6

11:57 — When a heat pump isn’t the right call

Accepted Answer

Carolyn: Are there homes where a hot water heat pump just isn’t going to work?

Annie: We’ve done over 200 installations now and come across very few where it won’t work, but there are a couple of situations.

One is a really large house with hot water outlets spread across the whole house and high usage — we had a property with four teenagers and three gas continuous units around the house. For them, financially, switching now would mean three systems, or a massive pipework change with long runs. In that case we’d say stay with what you’ve got for now, and switch when the system needs replacing.

The other end of the scale is really small users — often a retired couple on an electric cylinder. If they’re on electric, we’d say don’t change until your existing system fails. If they’re on gas and want off gas, that’s a slightly different conversation. But for almost everyone else, it’s a viable option.

Question 7

13:30 — Where to start, and why whole-of-life cost matters

Accepted Answer

Carolyn: I just bought a microphone and felt out of my depth — I’m the same with hot water systems. What’s the very first step for someone thinking about getting off gas?

Annie: I’d point people to do some research first. Sites like Genless — run by EECA — and Rewiring Aotearoa have fantastic information about hot water heat pumps and the other water heating options. The great thing is they’re not commercial — they’re neutral, focused on energy efficiency. It’s not me telling you to buy a heat pump; it’s a reliable source. Both have calculators where you put your details in and get cost scenarios. I also say to people: think about future-proofing. There’s a cost to going to a heat pump, but you have to balance the upfront cost against future-proofing your home and running costs over the lifetime of the product.

Carolyn: That whole-of-life cost is the thing we forget when we get the credit card out — we compare two or three prices and forget what it’ll cost over its life.

Annie: Exactly.

Question 8

16:00 — Will it save you money — and how fast?

Accepted Answer

Carolyn: Is a hot water heat pump actually going to save me money — and how long until it shows on my power bill?

Annie: Short answer, yes. The longer answer is it varies with your situation. One thing to be aware of is that, like any heat pump, it loses efficiency as it gets colder — so to judge your savings you really want to see running costs over a full year, because it’s less efficient in winter and more efficient in summer. That said, I’ve had customers come back after a month and already see the savings, particularly coming off gas — because a big chunk of a gas bill is the line charge, not the usage. So if you’re getting rid of that, you’ll see a saving more or less straight away.

Question 9

18:00 — Noise, placement, lifespan and warranties

Accepted Answer

Carolyn: You mentioned noise — are they noisier than the heat pumps we already have on our houses? Are the neighbours going to complain?

Annie: They’re similar — generally a little quieter than the compressor on a space-heating heat pump. What’s really important is that your installer does a proper site visit and thinks about where the unit goes: close enough to the hot water outlets — you don’t want a 30-metre pipe run — but away from bedrooms and living areas, and mindful of proximity to neighbours. Noise is hard to quantify — one person finds it noisy, another doesn’t notice. You can also ask your installer if they have an installation you can visit to hear the unit running.

Carolyn: How long do they last, and what are the warranties?

Annie: We’ve replaced some older units that were around 15 years old. We’re expecting a lifespan of about 10 to 15 years. Interestingly, when gas continuous units first came out, manufacturers only expected them to last seven years — and we still take out units that are 25 years old. So we don’t know for certain yet, but 10 to 15 years is realistic. Warranties vary from about five to seven years depending on the brand. One of the brands we install, the Carrier Blue, offers a 10-year warranty, which is a robust indication of how long they expect them to last.

Question 10

20:50 — Getting tank size and recovery right

Accepted Answer

Carolyn: How big does the tank need to be — say, for a retired couple versus a house full of teenagers?

Annie: Your installer should be asking how many people live in the house and about your lifestyle — four teenagers taking half-hour showers is very different from a couple. And it’s not just cylinder size, it’s recovery: if you have, say, a 300-litre cylinder and run out, how quickly does it reheat? EECA suggests about 50 litres of hot water per person per day on average, though that varies widely. You can go up to very large sizes — it’s about understanding how you use hot water.

Question 11

22:30 — Cold climates, the South Island, and install mistakes to avoid

Accepted Answer

Carolyn: For any South Islanders — colder temperatures affect heat pumps. How do you deal with that?

Annie: Colder temperatures do reduce efficiency, and where you get heavy frosts or snow there are things you need to do to protect the unit. We don’t install in the South Island, but installers down there often move towards a split system with the cylinder inside, to protect the stored heat. Your local installer will understand the temperatures in your region. But yes, they lose some efficiency in colder weather — there’s no getting away from that.

Carolyn: What are the biggest mistakes you’ve seen with systems poorly specified or installed?

Annie: The biggest is a cylinder incorrectly sized — too big or too small for the household. Then location — a very long pipe run, or a noisier unit sitting right outside a bedroom window. Ventilation matters too; they need airflow to operate correctly, and we’ve seen a unit installed in a corner without the clearance it needs. And uninsulated pipework and fittings — all the pipework and fittings should be insulated and protected. A good, experienced installer will help you configure the system to avoid those problems.

Question 12

25:38 — How to choose a good installer

Accepted Answer

Carolyn: If I’m choosing an installer, what questions do I need to ask to get a good one?

Annie: It’s not so much whether they’ve installed a hot water heat pump before — it’s still relatively new, so you may find good plumbers who haven’t done one yet.

The key is: are they just telling you to go with one brand or model because it’s the only one they know, or are they looking at your individual needs and giving you a range of options?

They should do a site visit and talk about lifestyle, number of people, and where the unit will be sited. They should talk about electrical, because a hot water heat pump needs a dedicated circuit back to your switchboard — you often can’t just reuse the plug the gas unit was on.

They should walk you through the basic operation and any app, and explain why they’ve chosen a specific make and model for you.

And find out if they have a local service agent and whether spare parts are held in New Zealand — the last thing you want is to wait six weeks for parts flown in from overseas.

Question 13

27:57 — Apps, timers and pairing with solar

Accepted Answer

Carolyn: If I’m choosing an installer, what questions do I need to ask to get a good one?

Annie: It’s not so much whether they’ve installed a hot water heat pump before — it’s still relatively new, so you may find good plumbers who haven’t done one yet.

The key is: are they just telling you to go with one brand or model because it’s the only one they know, or are they looking at your individual needs and giving you a range of options?

They should do a site visit and talk about lifestyle, number of people, and where the unit will be sited. They should talk about electrical, because a hot water heat pump needs a dedicated circuit back to your switchboard — you often can’t just reuse the plug the gas unit was on.

They should walk you through the basic operation and any app, and explain why they’ve chosen a specific make and model for you.

And find out if they have a local service agent and whether spare parts are held in New Zealand — the last thing you want is to wait six weeks for parts flown in from overseas.

Question 14

30:21 — Getting off gas: disconnection and the retailer grey area

Accepted Answer

Carolyn: I put a post on LinkedIn about wanting to get off gas and got heaps of comments — one person was quoted $15,000, another was disconnected and still charged three months of the daily charge and had to push to get it removed. How do you disconnect physically, and how do you navigate it with your gas supplier to keep costs down?

Annie: It’s a huge grey area right now — the Commerce Commission are watching it.

From a gas fitter’s point of view, disconnecting you is easy: we cap the gas at the meter on your side, and it’s off. You can take the pipework out if you want, but most people leave it — there’s no gas in it.

The tricky part is dealing with the retailers. Removing the meter is where it gets expensive — they have to send someone to site, dig up pipework and so on.

The other option is to leave the meter in situ but disconnect supply.

That’s where the grey area sits — our argument is that if you sold the house and stopped supply, you wouldn’t be charged an ongoing monthly fee.

I’ve heard wildly varying costs. Talk to your retailer early and ask for a price just to stop supply.

And if you’re not getting any joy, contact Utilities Disputes — Google them; they’re not-for-profit and they’re dealing with a lot of these, so they can help you navigate it. There really needs to be some standardised regulation around how it’s done.

Question 15

34:00 — Refrigerants and the brands Annie trusts

Accepted Answer

Carolyn: Which specific brands and technologies do you trust, after all your due diligence?

Annie: We made a decision very early on only to install units with R290 and CO₂ refrigerants.

Every unit has a tiny amount of refrigerant — even less than what’s in your kitchen fridge — but R290 and CO₂ have very low global warming potential.

That’s a measure of the impact if the refrigerant is released. Traditional refrigerants have been in the thousands, and quite a few have been banned.

CO₂ is about one — pretty much no impact — and R290 is about three. Some old systems used R410A, which is around 2,088. So there’s a huge difference.

And R290 and CO₂ aren’t just better on global warming potential — they’re more efficient at heating water, and cope better in colder climates.

We also chose brands with an established presence in New Zealand, easy access to parts, and that back their warranties.

You sometimes hear of a cheap product flooding the market and then the business disappears, leaving no warranty support.

So the three brands we mainly use are Carrier, Rinnai and Panasonic — well established here and internationally, good reputations, spare parts held in the country, and they back their products.

Carolyn: Are some brands better at different sizes, or is it more about the model?

Annie: More about the model. For a retired couple we’d generally look at a Carrier Blue 190-litre unit — a smaller system; 190 litres is usually more than enough, and it’s one of the most cost-effective units on the market.

For a family of four or five we’d go bigger, like a Rinnai 340-litre, or a Panasonic split system with a bigger cylinder. And there’s a whole range that falls in between.

Question 16

38:00 — What it costs, and the 15-year comparison

Accepted Answer

Carolyn: The question everyone wants answered — how much does it cost?

Annie: I always talk about the fully installed price, including GST, so you get an accurate figure. Our prices range from around $6,500 to around $11,500 depending on the unit and what’s involved — that’s the unit, all the pipework and fittings, plumbing, electrical and GST. They’ve come down in price quite quickly. When we started, we were hard-pushed to do an installation under $9,000; now we’re getting closer to $6,500.

Carolyn: That’s the same pattern we’ve seen with solar — as the scale of installation goes up, prices come down. I’ve got a diagram we can share comparing the cost over 15 years — I’ll link the Rewiring Aotearoa figures. Do you want to talk through it?

Annie: The interesting thing about Rewiring Aotearoa’s work here is it’s based on averages, so for some people it’ll be a bit less and for others more — a rule of thumb.

You can see straight away that LPG and gas are about the most expensive way to heat water. Twenty years ago this graph would have been the opposite.

With LPG your cost per unit is much higher than natural gas — so if you switch from natural gas to LPG because “we’ve got plenty of LPG,” your running costs go up. It’s a false economy.

Below that you’ve got resistive — a standard electric cylinder on the grid with ripple control, where the grid manages when your cylinder comes on and off to flatten the peaks.

Then resistive with solar and grid, which is a really good option — for a couple or small family on an electric cylinder, I’d generally say stay put until it needs replacing, because their emissions are tiny even compared to a heat pump.

Then heat pump on grid, and the gold standard, heat pump with solar — the lowest expense and lowest emissions by far.

Question 17

44:00 — Solar + hot water heat pump: better together

Accepted Answer

Carolyn: That brings me to a question we get a lot — we’re getting solar, should we bother with a hot water heat pump?

Annie: It depends on your situation. If you’re on gas for hot water and going solar, it’s a no-brainer — moving from gas to a standard electric cylinder doesn’t cost much more than putting in a heat pump, but your running costs will be much higher.

If you’ve already got an electric cylinder and you’re putting in solar, I’d look at your usage — if you’re a high user it’s really worth considering a heat pump at the same time as solar; if you’re a small user, stick with the cylinder until it dies.

The other thing: you can set solar up so that when you’re generating more than you’re using, you divert that power to the hot water heat pump, and it acts like a thermal store or battery, holding the hot water until you need it. Your solar installer configures that, and most heat pumps on the market now support it.

Remember, a standard hot water cylinder is probably the single biggest energy drain of any one appliance in your house — so if you’re investing in solar, you want your appliances as efficient as possible to make the most of that investment.

Question 18

47:30 — Green finance: loans and the Ratepayer Assistance Scheme

Accepted Answer

Carolyn: You’ve talked about the cost range. One great thing we’ve seen is banks putting their money where their mouth is on energy efficiency. Can you talk about the green loans?

Annie: Every bank calls it something slightly different, but it’s essentially a green loan, with some variation depending on who you bank with. I think Westpac allows up to five years at a 1% interest rate, and ANZ around three years — but don’t quote me, check the individual bank websites.

Essentially it’s very low-interest finance to help people upgrade to more efficient appliances.

There’s also the Ratepayer Assistance Scheme in the works — a lot of background work has been done, championed by Rewiring Aotearoa and others. Without going into detail, it would let homeowners — and they’re looking at renters too — access low-interest finance paid back over a longer period, so you’re cash-flow positive from day one: the amount you save is more than it costs.

Carolyn: The bank rates look like they run between zero and one percent depending on the term, versus maybe 5% for a normal loan — a big saving. When I looked into it, though, you basically have to go through the financial process again, almost like applying for a new mortgage.

Annie: Yes — the great thing is most will lend up to $80,000, so you could do solar, battery, hot water heat pump and insulation all at once. But you’ll have to go through your income and expenditure to justify it — it’s a new financial arrangement, not just tacked onto your mortgage, and some have equity rules.

A common issue is people buy a house and want to do upgrades straight away — the Kiwi way — but that’s often the hardest time to access this finance, because you don’t have the equity yet, so they wait a couple of years. That’s where something like the Ratepayer Assistance Scheme will fill the gap — and for lower-income families, who benefit most from these technologies but are currently pretty much locked out because of the upfront cost.

Question 19

52:00 — The one thing to remember before you upgrade

Accepted Answer

Carolyn: If people remember just one thing before upgrading their hot water, what would you want it to be?

Annie: Think about the lifetime of the appliance — that would be my number one. Don’t just look at the capital cost. I acknowledge that’s a barrier for people right now, but if you’re in a position to, look at the lifetime of the appliance and what you’re tying yourself into 15 years down the track.

Carolyn: Kiwis sell their homes on average every seven years, so maybe it’s something to think about when we buy a new home — what we’re locking ourselves into in terms of energy costs. In Australia, in Victoria, they’re doing an efficiency certificate for homes, so a buyer can see how efficient a home is and its running costs. We don’t have that here yet, but I think it’s coming — more people asking, “this is a lovely home, but how much will it cost me to live here?” It’s not just about tying yourself in; it’s the future value of your property.

Annie: Exactly.

Hot Water Heat Pumps Explained

Everything you need to know before you spend a cent on a hot water heat pump from one of New Zealand’s most respected hot water heat pump experts.

Key takeaways

Transcript

Expert in this interview

Annie Jefferson

Annie's recommendations

In the interview, Annie names the brands A2W prefers

Carrier Blue DHW-190N7

Rinnai Hydraheat - 275 & 340 litre

Panasonic CO₂ Split System

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Everything you need to know before you spend a cent on a hot water heat pump from one of New Zealand’s most respected hot water heat pump experts.

Key takeaways

Transcript

00:00Welcome: hot water, NZ’s hidden energy cost

01:00From gas fitter to heat-pump specialist: Annie’s story

03:30What’s really driving the switch

05:50How a hot water heat pump works — and why it’s so efficient

08:20Integrated vs split systems: which suits your home

11:57When a heat pump isn’t the right call

13:30Where to start, and why whole-of-life cost matters

16:00Will it save you money — and how fast?

18:00Noise, placement, lifespan and warranties

20:50Getting tank size and recovery right

22:30Cold climates, the South Island, and install mistakes to avoid

25:38How to choose a good installer

27:57Apps, timers and pairing with solar

30:21Getting off gas: disconnection and the retailer grey area

34:00Refrigerants and the brands Annie trusts

38:00What it costs, and the 15-year comparison

44:00Solar + hot water heat pump: better together

47:30Green finance: loans and the Ratepayer Assistance Scheme

52:00The one thing to remember before you upgrade