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A hot water system accounting for up to half a home's energy use, so it's worth making the right choice when it comes to which system you get.
There are two basic types of water heating systems: storage or instantaneous. If you can remember a time you ran out of hot water (probably while covered in suds!) then you have a storage tank.
Storage water heaters heat the water in batches, keeping it in a tank to be used throughout the day. Instantaneous water heaters are much smaller units, connected to the mains water supply, and they quickly heat the water on its passage from the mains to the hot water tap.
Water entering your house will usually be a chilly 5-15ºC. Hot water systems have to reach a scalding 60ºC at least once a day to kill bacteria. Choosing the right fuel to heat the water can make a huge difference to running costs and greenhouse gas emissions.
Options are electricity, gas, solar and heat pumps.
Electric water heaters have metal elements inside the water tank that heat as electricity passes through them. Heating an element is inefficient, and electricity in most cases is produced through burning coal (unless you're on GreenPower).
Therefore, electric water heaters produce significantly more greenhouse emissions than other types of water heaters. The federal government has planned to stop electric water heaters from being installed in new homes within two years. They'll also be banned as replacements by 2012.
Instantaneous electric water heaters and small electric storage tanks heat whenever the temperature drops below a set level - so they can be drawing electricity at any time of the day or night.
This matters because coal-fired power plants are slow to get started and so are kept running day and night. But hardly anyone uses the electricity at night.
To encourage the use of this night-time surplus, electricity companies flog off the power cheaply at "off-peak" times. Larger storage tanks take advantage of this scheme, keeping the tank warm during the day, but doing the hard work of heating overnight.
A gas water heater has a similar set-up to an electric one, except a gas burner is below the water instead of electric heating elements in the water.
Because gas can be switched on and off easily, gas hot water services have smaller tanks that heat on demand.
Instantaneous water heaters run most economically off gas, and have similar greenhouse emissions as heat pumps and solar water heaters. Look out for the energy rating that comes with every gas heater: the more stars, the more efficient.