Solar and Electric Hot Water: The Best Pairing

Most Australian homes with electric hot water are heating that tank at the worst possible time: overnight, on grid electricity, while the solar panels sit idle. It's a hangover from the old off-peak tariff era, when night rates were the cheapest power available.

With solar on the roof, the maths flips. The cheapest electricity you'll ever use is the solar you generate at midday and would otherwise export for a modest feed-in credit. Moving your hot water load into that window is one of the highest-return, lowest-cost solar upgrades available — and it doesn't require a battery.

Why hot water is the load worth shifting

Water heating is typically one of the largest energy users in an Australian home, often sitting behind only heating and cooling. A standard electric resistive tank draws a solid, predictable load for a few hours until the thermostat is satisfied.

That predictability is what makes it so useful. Unlike a dishwasher or a load of washing, a hot water tank is effectively a thermal battery. It stores energy as heat and holds it for hours. If you can charge it with daytime solar, you're using your own generation instead of paying retail rates — and hot water in the tank at 4pm is still hot at 7pm when the family showers.

Compare the value of a kilowatt-hour three ways:

How you use a solar kWh	Relative value to you
Exported to the grid	Lowest — you receive a feed-in credit only
Offsets daytime appliance use	Higher — avoids the full retail rate
Heats your hot water tank	Higher — avoids the full retail rate and stores the energy for later

Every kWh your hot water system takes from the roof instead of the grid is a kWh you don't buy at retail prices. The gap between a typical feed-in credit and a typical retail rate is where the savings live, and that gap has widened in most states as feed-in tariffs have come down.

The three ways to shift hot water onto solar

1. A simple timer

The cheapest approach is a timer on the hot water circuit that switches heating to the middle of the day — commonly a window somewhere between late morning and mid-afternoon, when solar output is strongest.

A solar hot water timer is a dumb device: it doesn't know whether the sun is shining. On a clear day it works beautifully. On an overcast day, the tank still heats, just partly from the grid. For most households that trade-off is fine, because the majority of days deliver enough generation to cover a good share of the heating cycle.

A key detail: if your hot water is currently on a dedicated controlled load tariff (sometimes called off-peak, or tariff 31/33 in Queensland and similar arrangements elsewhere), it may be metered separately and only energised at times your network chooses. Shifting to daytime heating usually means moving that circuit onto your main tariff so it can draw from your solar. Whether that's a net win depends on your controlled load rate, your retail rate, your feed-in tariff and how much surplus solar you actually have — which is exactly the sort of thing worth checking with an installer who can look at your bill.

2. A solar diverter

A diverter is smarter. It monitors your meter in real time and sends only genuine surplus solar — energy that would otherwise be exported — to the hot water element. If a cloud passes or the air conditioner kicks in, it backs off.

The upside is that you almost never import grid power for hot water. The downside is cost and complexity: it's an additional device, it needs to be wired and commissioned properly, and on a run of gloomy days you may need a boost. Most diverters include a scheduled backup boost so you're never left with a cold tank.

Diverters tend to make the most sense on systems with meaningful surplus export, and where the household uses relatively little power during the day.

3. A heat pump hot water system

A heat pump water heater works like a reverse-cycle air conditioner, moving ambient heat into the water rather than generating it with a resistive element. It uses substantially less electricity for the same amount of hot water.

Pair a heat pump with a daytime timer and you get the best of both: a smaller load, running on free solar. Because the load is smaller, a modest solar system can cover it comfortably. Heat pumps also attract federal STC support as an eligible upgrade, and several states and territories run their own hot water incentive programs — but eligibility, amounts and product lists change, so treat any figure you see online as indicative only and confirm what applies to your address at quote stage.

Things to weigh up with heat pumps: they cost more upfront than a resistive tank, they make some noise (siting matters if you're close to a neighbour's bedroom window), and performance varies with ambient temperature, so cold-climate homes should check specifications carefully.

What this means for sizing your solar system

If you're planning to shift hot water onto solar, tell your installer up front. It changes the calculation.

A resistive tank is a chunky load. Heating it during the day means your system needs enough headroom in the middle of the day to cover the element and your other daytime use. Undersize the array and you'll simply import the difference, which defeats the purpose.

A heat pump is a much gentler load, so it slots into a smaller system more easily.

A few practical sizing considerations:

• Roof orientation matters more. A west-facing string extends useful generation into the afternoon, which helps if your heating window runs late. A split east–west layout flattens the curve rather than peaking sharply at noon.
• Winter is the constraint. Generation drops and cold inlet water means the tank needs more energy. A system that comfortably covers hot water in November may fall short in June.
• Household size drives tank size. Larger families need bigger tanks and longer heating cycles, which pushes the solar requirement up.
• Check your export limit. In some network areas, export limits mean surplus solar has nowhere to go — which makes self-consumption via hot water even more valuable.

Do you still need a battery?

Hot water shifting and batteries solve overlapping problems, but not the same one.

A timer or diverter is far cheaper and targets one large, flexible load. A battery is more expensive but covers everything — lighting, fridge, TV, evening cooking — and can offer backup during outages depending on the setup.

For a lot of households, the sensible order of operations is:

1. Get the solar array sized properly for your actual usage.
2. Shift hot water (and where practical, pool pumps and EV charging) into daylight hours.
3. Then assess whether a battery stacks up on the remaining evening load.

By the time you've shifted the big flexible loads, your evening consumption is smaller and clearer — which makes battery sizing a much more informed decision rather than a guess.

Getting the wiring and metering right

This is not a DIY job. Changing how your hot water circuit is controlled and metered involves licensed electrical work, and in many cases a metering change with your retailer or a request to your distributor.

What a good installer will do:

• Read your recent bills to see how much energy your hot water actually consumes and what tariff it sits on.
• Confirm whether your existing tank and element are suitable for daytime operation.
• Model whether moving off a controlled load tariff genuinely saves you money on your rates.
• Coordinate any metering reconfiguration with your retailer.
• Set the heating window to match your real generation profile, not a generic default.

Ask for the assumptions in writing. Any installer quoting you a savings figure should be able to show which retail rate, feed-in tariff and usage pattern they used to get there.

Frequently asked questions

Will I run out of hot water if it only heats during the day?

Usually no. A correctly sized tank holds enough hot water to cover an evening and the following morning. The common failure mode isn't the timing, it's an undersized tank for the household. If you already run out of hot water occasionally, fix the tank sizing before changing the schedule.

Is a timer or a diverter better?

A timer is cheaper and simpler and captures most of the benefit if your solar system has decent midday output. A diverter squeezes out more by using only true surplus, and suits homes with high export and low daytime consumption. Your installer can advise based on your generation and usage data.

Does this work with gas hot water?

Not directly — gas heating doesn't use your solar. Homes with gas hot water sometimes look at switching to a heat pump to bring that load onto the roof, particularly if they're already paying a daily gas supply charge for little else. Whether that's worthwhile depends on your gas usage and rates.

Can I do this on an existing solar system?

Often yes. If your array has surplus midday generation, adding a timer or diverter to an existing system is a straightforward upgrade. If your system is small or heavily self-consumed already, you may need extra panels first.

Where to start

The honest answer to "how much will this save me?" is that it depends on your hot water usage, your tariff, your feed-in rate, your roof and your postcode. Anyone quoting a single national figure is guessing.

The fastest way to find out is to have a SAA-accredited installer look at your bills and your roof and model it properly. Get your free solar quote and ask specifically about hot water timing and heat pump options — it's one of the cheapest ways to get more out of a solar system, and it's easy to miss if you don't raise it.