There are basically 5 different options you have to select from when buying a new hot water system.
Natural Gas, Liquid Petroleum Gas (LPG), Heat pump, Electric, Solar.
1) Natural Gas : This is actually the best option to go for if you have natural gas available in your area. It is pretty cheap and environment friendly.
2) Liquid Petroleum Gas : LPG is actually the most expensive to run. Even though it is not so bad for the environment, it is pretty steep on the pocket.
3) Heat Pump: Heat pumps while save you a lot, are expensive to buy. Generally they are useful only if you have a very high usage of hot water.
4) Electric: Electric hot water systems are the most common ones. While they are cheap to run, it is not so good for the environment unless you are on a cheaper tariff. If you are on a cheaper tariff you are actually using the electricity that is going to waste! Mainly there are 3 tariff options to choose from. A11, T31, T33. By law if you have natural gas in your area then you are not allowed to have an electric hot water system .
A11: This is your normal power that is turned on 24 hours a day.
T33: This means that your hot water system is turned on for 18 hours a day. Your electricity to the hot water system will be turned off during the peak periods, generally in the afternoon. You need at least a 125LT hot water system to be on this tariff.
T31: This means that your hot water system is turned on for 10 hours a day. Your hot water system heats up during the nighttime. This tariff is the cheapest and less than half price compared to the A11. It is also better for the environment because you are using the electricity without raising the peak demand. You need at least a 250LT hot water system to go on this tariff.
The information above was only for Queensland. You should contact your retail electricity supplier for the latest and detailed accurate information.
5) Solar : Solar hot waters systems are pretty expensive to buy and moderately expensive to run. They run from the power of the sun, but need to be boosted sometimes when you run out of hot water, or when there is no sun. So for about a quarter of an year be prepared to boost your hot water system. You can have it boosted by electricity or gas.
Below is a graph that shows how much different types of systems cost :
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