Electrifying Australia’s Domestic Hot Water

Using smart electric water heaters can help Australia reduce emissions and save consumers billions.

Project summary

Domestic hot water use contributes significantly to residential carbon emissions and energy consumption. Electric water heating technologies, such as heat pumps and flexible electric storage heaters, are vital for reaching net zero emissions targets by displacing gas and supporting renewable energy integration. However, a balanced approach is required that provides for a mix of heat pumps and smart resistance storage technologies. While the former offer significant energy savings, they are not suitable for all homes. Resistance heaters, though less efficient, can support renewables through increased demand flexibility.

Australian Renewable Energy Agency (ARENA) commissioned the UTS Institute for Sustainable Futures (ISF) to investigate hot water’s potential role in achieving net-zero goals. The resulting study modelled several scenarios, including a business-as-usual baseline, and scenarios involving rapid replacement of gas domestic water heaters with a varying mix of heat pumps and resistance units, finding that electrifying domestic water heating would save Australians billions annually. It would substantially reduce carbon emissions while supporting more renewable energy through better matching of demand and supply across Australia’s electricity networks.

water heating benefits graph — *Projected NEM-wide CO2 emissions from domestic water heating. (left) Business-as-usual scenario. (right) Rapid electrification scenario.*

The study also examined transition pathways towards more flexible and efficient domestic electric water heating. These pathways involve reducing gas water heater installations, increasing heat pump uptake, optimising existing systems, and increasing demand flexibility. Overcoming barriers to hot water electrification requires improving customer awareness, developing supply chains, investing in R&D, and fostering innovation. This integrated approach aligns with national energy efficiency, renewable energy, and net-zero emissions targets. ISF’s work produce recommendations for a coherent policy approach to residential water heating that addresses a range of market, technical and policy challenges.

Project timeframe

2023

SDG targets addressed by this project

Affordable and clean energy:

7.2 - By 2030, increase substantially the share of renewable energy in the global energy mix

7.3 - By 2030, double the global rate of improvement in energy efficiency.

Sustainable cities and communities:

11.b - By 2020, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, resilience to disasters, and develop and implement, in line with the Sendai Framework for Disaster Risk Reduction 2015–2030, holistic disaster risk management at all levels