When an ageing water heater fails, it’s rarely at a convenient time. A freezing shower on a Monday morning is bad enough; a leaking tank can be much worse. A small puddle can spread into flooring or cabinetry before anyone notices, especially when a bathroom renovation is already under way. If your old system has been showing signs of trouble, it may be worth planning a replacement rather than waiting for the leak that finally forces your hand.
1. Treat age as a countdown, not a maybe
Storage tanks have a lifespan, and the risk of faults tends to increase as they age. Sediment can collect at the bottom, corrosion can weaken the tank and fittings, and valves or connections may start to leak. But none of this sends you a warning text. One day the tank appears to be working normally; the next, you’re dealing with water where it shouldn’t be.
If you’re in the middle of a reno when this occurs, the damage goes beyond the appliance. The brand new waterproofing membrane, high-end tiling, and custom cabinetry you just put your hand in your pocket for, can all be ruined by a slow leak you weren’t even aware was occurring inside a wall or below the floor. Remove that risk altogether by replacing an aging unit before you start, rather than crossing your fingers that it holds out against the build. It’s cheap insurance against a costly mistake.
2. Size by flow rate, not tank volume
Many homeowners struggle with this decision. Storage systems are usually assessed by tank capacity and how quickly they can replenish hot water. Instantaneous heaters don’t hold a reserve of heated water; they heat it as you use it. Their capacity is better judged by the flow rate they can deliver, in litres per minute, at a specified rise in water temperature.
There is no single flow rate that applies to every tankless heater. The amount of hot water a unit can deliver depends on its power, the incoming water temperature and the temperature you need at the tap. A model that comfortably supplies one shower might struggle when a second outlet is opened. Storage tanks work differently: they provide a finite supply of preheated water and need time to recover once that reserve runs low.
With a tankless system, water is heated as it passes through the unit, but the outlet temperature can drop if demand exceeds its heating capacity. Water pressure and simultaneous use elsewhere in the house also affect what comes out of the tap. If the unit cannot meet peak demand, it may be undersized. Paying for far more capacity than your household needs, however, can make installation unnecessarily expensive.
3. Factor in incoming water temperature, not just climate averages
One factor that probably doesn’t occur to most people – I certainly wasn’t aware of it when I installed my first unit – is that the temperature of the water you’re heating has a big influence on the flow rate.
Incoming water temperature changes how much heating work the unit has to do. If mains water arrives at 15°C, raising it to a 50°C outlet temperature requires a 35°C increase. At an incoming temperature of 25°C, the rise is only 25°C. A colder inlet therefore means less hot-water flow at the target temperature from the same heating capacity. Check a model’s performance figures against local inlet temperatures, not just the headline flow rate.
4. Check your switchboard before you fall in love with a unit
Electric instantaneous water heaters are not always a simple swap-and-go job. Power requirements vary considerably between models, and larger units may need a high-current supply or three-phase electricity. Some installations require a dedicated circuit or electrical upgrades, while others can work with an existing suitable supply. Have a licensed electrician assess the property and the proposed unit before you commit.
This is the step people skip, and it’s the one that causes budget blowouts. You pick a unit, get excited about the install date, and then an electrician tells you the switchboard needs upgrading before anything can go in. Get this checked early – ideally before you’ve committed to a specific model – so the switchboard assessment is priced into the renovation from day one, not discovered halfway through as a surprise variation.
Gas instantaneous units avoid much of the electric heating load, but they have their own requirements: an adequate gas supply and compliant flue or ventilation arrangements. Adding gas infrastructure to a home that does not already have it can be costly. Depending on the property’s electrical supply, compact wall-mounted electric instantaneous hot water systems can offer space-saving, on-demand hot water without requiring a gas flue. That does not make electric the automatic choice for every renovation: ask a qualified installer to check the electrical and plumbing requirements first.
5. Recognise the real prize: floor space
Most installation guides treat the choice of a water heater as a decision about the appliance alone. But a lot of Australian homes have a storage tank tucked into a corner, cupboard or alcove. If that tank occupies usable interior space, replacing it with a suitably positioned wall-mounted unit may free up room for something else. The actual space gained depends on where the existing heater is installed and what clearances the replacement needs.
This really is where bathroom layout optimisation happens. It may mean a larger shower recess. It could translate into the linen cupboard you never had but always wanted. It could be just enough space to move the vanity clear of the edge of the bathtub and finally get a door that opens properly. Some of these design choices become easier when a bulky tank no longer needs to occupy the same spot. If a reno is on the cards anyway, ask your plumber and designer: what could this space become if the heater wasn’t there?
This is also where compact hot water solutions make sense in small homes and apartments. A conventional storage system needs room for an insulated cylinder, while some instantaneous models fit into a much smaller wall-mounted space. They are not all the size of a chopping board, though, and each has its own clearance, access and electrical requirements. In a tight bathroom renovation, checking those dimensions before finalising the layout can open up useful options without creating installation problems later.
6. Maintenance and whole-of-life cost tell the real story
The price you pay for the unit is only one part of the comparison. Storage tanks can provide many years of service, but their lifespan depends on installation quality, water conditions, usage and maintenance. The same goes for instantaneous systems: it is not safe to assume that every model will last well over 20 years. In a hard-water area, mineral build-up may shorten service life or increase the maintenance needed. Look at the manufacturer’s guidance and the cost of keeping the particular unit in good condition.
Minerals can collect inside an instantaneous heater, particularly around its heating surfaces, and affect performance over time. The need for descaling depends on the model and local water quality, so follow the manufacturer’s maintenance advice rather than guessing at a fixed schedule. Excessively hot water is a different concern: it creates a scalding risk, particularly for children. Bathroom outlets must meet the applicable delivery-temperature requirements, which a qualified installer can explain and check.
Which brings us back to operating cost. Overseas efficiency figures cannot simply be applied to every Australian home, and a tankless heater is not automatically cheaper to run than a storage system. Electricity tariffs, demand, standby heat losses, the appliance’s performance and installation costs all matter. Compare estimated annual energy use and servicing costs alongside the purchase and electrical-work quotes. You might come out ahead over time, or you might find that the space-saving benefit matters more than any expected bill reduction.
Don’t forget the compliance details
None of this counts for much if the installation isn’t compliant. Australian heated-water services must meet the Plumbing Code of Australia and relevant standards, including AS/NZS 3500.4 where applicable. Electric instantaneous water heaters do not have mandatory GEMS energy star labels, so compare models using their specifications and advice from a qualified installer rather than assuming a star rating will be available. Gas work must be carried out by an appropriately licensed tradesperson; keep the installation and compliance paperwork for future reference.
For scald protection, ask your plumber how the new installation will meet the required temperature limit at bathroom outlets, generally no more than 50°C in Australian homes. Depending on the system, this may involve a tempering valve, a thermostatic mixing valve or a compliant temperature-limited water heater. Make that decision while planning the plumbing rather than after the walls have been finished, especially if children or older people use the bathroom.
Before you sign off, it’s also worth considering a heat pump or solar hot water system. These use different approaches to heating water and may suit your climate, property and household demand better than an instantaneous unit. A licensed plumber familiar with the available options can help you compare them before you commit.
A dying water heater is annoying. A renovation that reclaims floor space and fixes a layout you’ve been annoyed by for years is a win you’ll notice every single day after.
