Gas vs Electric Hot Water NZ: Which Is Cheaper to Run?

Gas vs electric hot water NZ homeowners weigh up usually comes down to two questions: what will it cost to install, and what will it cost every month after that.

A third option, the hot water heat pump, has changed the answer for a lot of households. This guide compares all three on running costs, upfront price and day-to-day practicality, so you can make the call before your old cylinder makes it for you. It's aimed at Auckland homeowners replacing a cylinder, renovating or simply fed up with the power bill.

The three main options

Most New Zealand homes heat water one of three ways:



• Electric cylinder: a tank with an element inside, heated by mains electricity. The most common setup in the country and the simplest to replace.
• Gas: either a continuous flow unit that heats water on demand, or a gas storage cylinder with a burner underneath. Runs on piped natural gas or LPG bottles.
• Heat pump: a storage cylinder heated by a unit that draws warmth from the outside air, using far less electricity than an element.

Each has a place. The right pick depends on your energy prices, how much hot water you use, the space you have and how long you're staying in the house.

Running costs: what the numbers say

Hot water is a big line on the household energy bill, which is why the running cost matters more than the sticker price over the life of a system.

According to EECA, the government's energy efficiency agency, a hot water heat pump costs roughly 60% less to run than either a standard electric cylinder or piped gas, and about 75% less than LPG. On those figures, the heat pump wins clearly on running costs.

The gas vs electric hot water comparison is closer and depends on your tariffs:

• Piped natural gas: the unit price can compete with electricity, but you also pay a daily fixed charge for the gas connection, which adds up if hot water is your only gas appliance.
• LPG bottles: BRANZ's [Level comparison of water heating energy sources] notes that heating stored water with LPG costs much more than with natural gas.
• Electric on a controlled rate: many power retailers offer a cheaper rate for hot water heated during off-peak times. If your cylinder is on one, a standard electric system can be more economical than people expect.

EECA also has a home energy savings calculator that estimates costs using your own household size and energy prices. It's worth ten minutes before you commit to anything.

Upfront costs

Here's what each option typically costs to install in Auckland in 2026, including GST:



• Electric mains pressure cylinder, like for like: roughly $2,500 to $4,000.
• Gas storage cylinder, like for like: roughly $3,500 to $5,500.
• Heat pump: around $7,000 on EECA's estimate, with most installs falling between $6,000 and $9,000.

Converting from one fuel to another adds cost. Going from electric to gas may mean a new gas line and flue, while a heat pump needs an outdoor spot and sometimes electrical upgrades.

Hot water cylinder vs gas: the practical differences

Comparing an electric hot water cylinder vs gas goes beyond price. Here's how they differ day to day:



• Running out: a cylinder holds a fixed amount of hot water and can run dry with heavy use. Continuous flow gas heats as you go, so it doesn't run out, although flow rate limits how many taps can run at once.
• Space: a cylinder needs a cupboard or outdoor spot. A continuous flow unit is compact and mounts on an outside wall.
• Reheat speed: once an electric cylinder is empty, it takes a while to recover. A gas storage cylinder can reheat faster.
• Installation rules: any gas work has to be done and certified by a licensed gasfitter. Electric cylinders need a plumber and an electrician for the wiring.
• Maintenance: gas appliances need regular servicing to stay safe. Electric cylinders need less routine servicing.

If you're looking at an electric hot water cylinder for a straight swap, it's usually the quickest and simplest job of the three.

Hot water heat pump vs gas

This is the comparison more Auckland homeowners are making now, especially when an old gas unit needs replacing.

On running costs, EECA's figures favour the heat pump, by around 60% against piped gas and more against LPG. On emissions, EECA estimates a heat pump saves about 7,000 kg of CO2 over 15 years compared with a gas or LPG heater. Gas still has its fans: continuous flow never runs out, the units are small, and they're quick to install where gas is already connected.

Hot water heat pump efficiency explained

The reason for the gap is hot water heat pump efficiency. An element turns electricity directly into heat. A heat pump uses electricity to move heat from the outside air into the water, which takes far less power. EECA puts the saving at around 60 to 75% less electricity than a conventional electric system. Output does dip on colder days, but Auckland's mild climate works in its favour.

For more on how they work and what's involved, see our page on heat pump hot water cylinder installation.

Which suits your home?

As a rough guide:



• Choose electric if you want the lowest upfront cost, a straightforward swap, or your cylinder is on a cheap controlled rate.
• Choose gas if you already have piped gas, you want hot water that never runs out, or space is too tight for a cylinder.
• Choose a heat pump if your cylinder is due for replacement anyway, your household uses a lot of hot water, and you plan to stay long enough for the savings to add up.

Two other things worth thinking about. BRANZ notes there are questions about the long-term security of gas supply in New Zealand and the likelihood of rising costs, which matters for a system you'll keep for 15 years. And if you have rooftop solar, an electric or heat pump system can make better use of the power you generate.

Get advice for your home

Pipe Fix's licensed plumbers and gasfitters install and repair all three types across Auckland, so we're not trying to push one over another. We'll look at your current setup, your household and your energy bills, and give you a straight recommendation with a quote for each option that makes sense.

Call 021 217 2782 any time, day or night. Prefer to start with a photo? Email your current cylinder or gas unit and its label to info@pipefixplumbing.co.nz and we'll come back with options.

Frequently asked questions