Choosing between gas and electric hot water is one of the most common decisions NZ homeowners face — and it's not as straightforward as it might seem. Energy prices, your household size, your location, and even your hot water habits all play a role. This guide breaks down the real trade-offs so you can make a confident, informed decision.
How Each System Works
Gas hot water systems (either natural gas or LPG) heat water on demand (instantaneous/continuous flow) or store it in an insulated cylinder. Instantaneous gas heaters are popular in NZ because they only heat water when you need it, avoiding standby heat loss.
Electric hot water systems are most commonly storage cylinders (the classic 180–300 litre tank), though heat pump hot water systems — which run on electricity but are far more efficient — are rapidly growing in popularity. Standard electric elements heat water and keep it hot around the clock, which can be costly unless you're on a controlled (ripple) tariff.
Head-to-Head Comparison
| Criteria | Natural Gas | LPG | Standard Electric Cylinder | Heat Pump Hot Water |
|---|---|---|---|---|
| Running cost (guide only) | Low–moderate | Moderate–high | Moderate | Low |
| Upfront / install cost | Moderate | Moderate | Low | Moderate–high |
| Efficiency | Good (instantaneous) | Good (instantaneous) | Moderate | Excellent (3–4× more efficient) |
| Availability in NZ | Main centres only | Nationwide | Nationwide | Nationwide |
| Hot water supply | Unlimited (instantaneous) | Unlimited (instantaneous) | Limited by tank size | Limited by tank size |
| Environmental impact | Moderate (fossil fuel) | Higher (fossil fuel) | Depends on grid mix | Low (uses ambient heat) |
| Maintenance | Annual service recommended | Annual service recommended | Low | Low–moderate |
| DIY-friendly? | No — licensed gasfitter required | No — licensed gasfitter required | Partial (element swap is restricted) | Partial |
| NZ climate suitability | All regions | All regions | All regions | Best in warmer regions; works in most |
Natural Gas: Pros, Cons, and NZ Realities
Natural gas is only available in certain parts of NZ — mainly Auckland, Hamilton, Wellington, Palmerston North, and a few other centres. If you're not already connected to the gas network, connection costs can be significant and may not be worthwhile.
When gas prices are low relative to electricity, an instantaneous gas water heater can be cheaper to run than a standard electric cylinder — particularly for larger households with high hot water demand. However, gas prices in NZ have risen considerably in recent years, and the gap has narrowed. You'll also pay a daily line charge regardless of how much gas you use.
All gas work — installation, repairs, and alterations — is restricted work under NZ law and must be carried out by a licensed gasfitter registered with the Plumbers, Gasfitters and Drainlayers Board (PGDB). Never attempt gas work yourself.
LPG: Flexibility With a Cost Premium
LPG (bottled or bulk tank) is available nationwide, making it an option for rural homes off the gas network. However, LPG is generally more expensive per kilowatt-hour than natural gas or electricity, so running costs tend to be higher. It suits homes where no other energy source is practical, or where the convenience of instant hot water is a priority.
As with natural gas, all LPG installation and servicing must be done by a licensed gasfitter.
Standard Electric Cylinders: Familiar but Costly
The traditional electric hot water cylinder is found in the majority of NZ homes. It's reliable and relatively cheap to install, but it runs an element continuously to keep a large tank of water hot — meaning you're paying for heat even when no one's showering.
If you're on a controlled (ripple) electricity tariff, your cylinder heats water during off-peak hours at a lower rate, which can reduce running costs meaningfully. Check with your power retailer whether this is available in your area.
Replacing an element or thermostat in an electric cylinder is restricted electrical work and must be done by a registered electrician under the Electrical Workers Registration Board (EWRB) rules. Homeowners can do minor tasks like adjusting the thermostat setting, but internal wiring and element replacement require a professional.
Heat Pump Hot Water: The Efficient Alternative
Heat pump hot water systems extract heat from the surrounding air to heat water, using roughly a third of the electricity of a standard element. They're increasingly popular in NZ and are strongly recommended by Energywise as one of the most cost-effective upgrades a homeowner can make.
The upfront cost is higher than a standard cylinder, but running cost savings can be substantial — particularly for families with high hot water use. They work best in garages or utility rooms with good airflow and perform well in most NZ climates, though efficiency drops slightly in very cold regions.
BRANZ research supports heat pump hot water as one of the highest-impact energy efficiency improvements available to NZ homeowners.
Cost Considerations
Running costs depend on your energy tariff, household size, and usage habits — so treat any figures as a rough guide only:
- Natural gas instantaneous systems tend to have low-to-moderate running costs but include a daily line charge.
- LPG is typically the most expensive fuel source per unit of heat.
- Standard electric cylinders on a controlled tariff can be reasonably affordable; on a standard tariff, they're often the most expensive option.
- Heat pump hot water generally has the lowest running costs of any electric option and often beats gas over time.
For current energy price comparisons, Consumer NZ periodically publishes useful guides on power and gas costs.
NZ Building Code and Compliance
Any new hot water installation or significant alteration must comply with the NZ Building Code, particularly G12 (Water Supplies), which covers hot water temperature, Legionella risk, and delivery requirements. A Licensed Building Practitioner (LBP) or licensed plumber/gasfitter should handle any work requiring a building consent.
For rental properties, the Healthy Homes Standards require that hot water be available at an adequate temperature — another reason to ensure your system is properly installed and maintained.
Our Recommendation
For most NZ homeowners, especially those not already on the gas network, a heat pump hot water system offers the best long-term value — lower running costs, lower emissions, and good reliability. If you have a large family and high hot water demand, the payback period is even shorter.
If you're already connected to natural gas and have an instantaneous system working well, it may not be worth switching unless your system is ageing. Compare your actual energy bills and get quotes before committing.
LPG is best reserved for situations where no other option is practical — the running costs are simply too high for most households to justify as a primary hot water source.
Standard electric cylinders are fine if you're on a controlled tariff and have a well-insulated tank, but if yours is old and inefficient, upgrading to a heat pump system is worth serious consideration.
Whatever you decide, always use a qualified, licensed plumber or gasfitter for installation. You can find experienced local hot water specialists on tradedirectory.co.nz.
Master Plumbers
