Australian solar owners are now paid a median of just 1.5c/kWh for the power they export, while paying about 32.3c/kWh to buy it back, according to EnergyPlans. That gap has reopened an old question: heat pump vs solar diverter, which is the cheaper way to heat water if you already have rooftop solar?
Heat pumps are the standard recommendation. They use about a third of the electricity of a standard electric tank and attract federal rebates. But a solar diverter, a small device that sends surplus solar into your existing tank, costs a fraction of the price and runs on power that’s worth almost nothing on the grid.
The right choice depends on how much solar you have, where you live, how much hot water your household uses and whether you own a battery. This guide compares upfront costs, running costs and state-by-state rates to help you decide.
Quick summary
- A solar diverter ($1,000 to $2,250 installed) is usually the cheaper choice for sunny, solar-rich households with no battery and a working electric tank.
- A heat pump ($2,800 to $5,000 before rebates) usually wins in cooler climates, larger households and homes with a battery or EV.
- On sunny days the running cost difference is only a few cents; the heat pump’s advantage shows up on cloudy and winter days.
What’s the difference between a heat pump and a solar diverter?
A heat pump saves money by using less power. A diverter saves money by using power that’s nearly free.
Heat pump hot water: A heat pump works like a reverse-cycle air conditioner. Instead of heating water directly with an element, it pulls warmth from the surrounding air and moves it into the tank. That means it typically uses about a third of the electricity of a standard electric tank to deliver the same hot water. It replaces your existing hot water system entirely.
Solar diverter: A diverter is a small box an electrician installs between your solar system and your existing electric hot water tank. It watches how much spare solar you’re about to export to the grid and redirects it into the tank’s heating element instead.
The clever part is that a diverter only uses what’s genuinely spare. If you have a little surplus solar, the tank gets a little. If the kettle or washing machine switches on, the diverter backs off so the house gets the power first. That stops you accidentally buying grid power to heat water.
Think of it like a hose overflowing into the gutter. The diverter points that water into a bucket instead. It was going to waste anyway; now it’s doing something useful.
Expert tip
Before deciding, check your solar app or inverter monitoring for how much you export on a typical day. If you regularly export 8 kWh or more around midday, you likely have enough surplus to heat a standard tank with a diverter.
How much do a heat pump and a solar diverter cost?
A diverter costs roughly $1,000 to $2,250 installed, while a mid-range heat pump runs about $3,000 to $5,000 before rebates. Prices for the same product vary by hundreds of dollars between sellers, so get at least two quotes.
| Option | Hardware price | Typical installed price | Notes |
| Catch Power Green CATCH | $685 (manufacturer) | About $1,000 to $1,550 | Australian-made, budget option |
| myenergi eddi | $995 (manufacturer) | About $1,200 to $1,500 | 3-year warranty, app control |
| Fronius Ohmpilot | About $1,500 to $1,930 (retail) | About $1,850 to $2,250 | Handles up to 9 kW, suits Fronius inverter owners |
| iStore heat pump (180L or 270L) | n/a | $2,800 to $4,400 before rebates | The most popular budget to mid-range heat pump |
| Premium heat pump (Sanden, Reclaim, Stiebel Eltron) | n/a | $5,000 to $8,000 before rebates | Quieter, longer warranties |
Installed diverter prices are based on Infinity Hot Water’s 2026 Sydney guide and retailer listings. CHOICE puts diverters at $1,000 to $2,000. Premium heat pump pricing comes from Western Sydney Trades.
Rebates narrow the gap. Heat pumps attract the federal STC discount, typically worth about $400 to $1,200, plus state incentives in some areas. After rebates, an iStore can cost as little as $800 to $3,340 out of pocket. Diverters don’t attract STCs.
Two timing points matter. The STC discount steps down every 1 January and the scheme ends in 2030, so heat pump rebates are shrinking. And if your existing electric tank is near the end of its life, add the cost of a new tank to the diverter option. CHOICE puts a conventional electric tank at $2,000 to $3,000 fully installed.
Expert tip
Get the installed price in writing, including any switchboard work. A diverter needs a current sensor on your main supply, and a heat pump may need a new dedicated circuit. Either can add a few hundred dollars.
Which is cheaper to run?
On sunny days, a diverter and a heat pump cost almost the same to run. The heat pump’s advantage shows up on cloudy and winter days, when the tank has to top up from the grid.
Take a typical household whose electric tank uses 8 kWh a day. A heat pump doing the same job would use about 2.7 kWh. We’ll use the national medians of 1.5c/kWh for exported solar and 32.3c/kWh for grid power.
| Scenario | Diverter + electric tank | Heat pump | Heat pump saves |
| Sunny day, all surplus solar | 12c | 4c | 8c a day |
| Cloudy day, all grid power | $2.58 | 87c | $1.71 a day |
Over a year, the result depends on how many days the diverter can’t cover. These are simplified estimates; real households often get a partial top-up rather than a full grid day.
| Days a year relying on the grid | Heat pump saves per year | Over 10 years |
| 0 (sunny climate, large solar system) | About $29 | About $290 |
| 60 | About $127 | About $1,270 |
| 120 (cooler climate or smaller system) | About $225 | About $2,250 |
Compare those savings with the upfront gap. A diverter at around $1,200 installed versus an iStore at roughly $2,500 after rebates leaves a gap of about $1,300. In a sunny climate with plenty of solar, a heat pump may never earn that back. In a cloudier climate, it can pay for itself within the life of the system.
One caveat helps diverter owners: many set the tank to top up overnight on a cheaper off-peak or controlled load tariff rather than the full grid rate, which shrinks the heat pump’s advantage on bad days.
Expert tip
If your tank currently runs on an overnight controlled load tariff, ask your electrician to keep a short off-peak boost as a backup when fitting a diverter. You’ll get solar hot water on good days and cheap top-ups on bad ones.
Feed-in tariffs and electricity prices by state
Feed-in tariffs and grid prices vary a lot by state, and both shift the result.
| State | Typical feed-in tariff (2026-27) | Grid usage rate, flat default offer (2026-27) |
| NSW | 3.4c to 6.5c (IPART benchmark, not mandatory) | 33.14c to 35.01c |
| Victoria | Median 1c, no minimum | About 26c to 32c; midday solar soak 16.59c on time-of-use |
| Queensland | South-east median 2c; regional 6.006c | 27.97c (Energex area) |
| South Australia | Median 1c; exports may be charged 10am to 4pm | 41.91c |
| Western Australia | 2c daytime, 10c from 3pm to 9pm (DEBS) | 33.26c; Midday Saver 8.85c from 9am to 3pm |
| Tasmania | 9.276c regulated minimum | Check Aurora Energy |
Feed-in tariffs from EnergyPlans, verified 28 September 2026, and state regulators: IPART (NSW), the Essential Services Commission (Victoria), the Queensland Competition Authority and the Office of the Tasmanian Economic Regulator. Grid rates are regulated default offers, which act as price caps; most market offers are cheaper. Grid rate sources: Essential Services Commission, Synergy and AER default market offer rates via EcoFlow.
Expert reference
NSW’s independent pricing regulator, IPART, cut its 2026–27 solar feed-in tariff benchmark to 3.4–6.5c/kWh, down from 4.8–7.3c/kWh the year before, reflecting lower expected wholesale prices at midday when most solar is exported. The lower feed-in tariffs fall, the more each kWh of solar used at home is worth.
The pattern is clear. South Australia’s very high grid price and low feed-in tariff make self-using solar extremely valuable, which favours a diverter on sunny days. Tasmania’s 9.276c minimum feed-in tariff makes exported solar worth far more, and its cooler climate means more grid top-ups, which favours a heat pump.
Expert tip
Check your actual feed-in tariff on your latest bill rather than relying on state averages. Rates vary widely between retailers, and switching plans can change which option comes out ahead.
When is a solar diverter the better choice?
A diverter is usually the better buy when you have lots of spare solar and few reasons to value it highly.
- You have a large solar system. Around 6 kW or more gives enough midday surplus to heat a tank on most days.
- You live somewhere sunny. Queensland, WA, SA and northern NSW have fewer days when the solar falls short.
- Your household is small. Lower hot water use means a smaller daily gap for the solar to fill.
- You have no battery or EV. Without one, your surplus solar is only worth the feed-in tariff, so using it to heat water costs almost nothing.
- Your existing tank is in good condition. A diverter works with the tank you already have, so there’s no replacement cost.
- Your exports are limited or penalised. If your network caps your exports, or charges for them in the middle of the day as can happen in SA, a diverter puts that otherwise wasted solar to use.
Diverters are also silent and have no moving parts, which means fewer things to go wrong.
Expert tip
Check that your tank’s heating element is within the diverter’s limit. Most tanks use a 3.6 kW element, which suits the major models, but the myenergi eddi tops out at 3.68 kW, while the Green CATCH handles up to 4.8 kW.
Make more of your rooftop solar
The right solar setup can help you use more of your own energy and rely less on the grid. Compare residential solar options and request a free quote for your home below.
When is a heat pump the better choice?
A heat pump usually wins when you’d be leaning on the grid often, or when your spare solar has better uses.
- Your solar system is small or your roof space is limited. Less surplus means more days of grid top-ups.
- You live somewhere cooler or cloudier. Victoria, Tasmania, the ACT and inland areas have long stretches of weak winter solar.
- Your household uses a lot of hot water. Bigger families multiply the heat pump’s daily savings.
- You have a battery or an EV. Spare solar stored in a battery offsets evening power at the full retail rate, so it’s worth far more than the feed-in tariff. Using a third as much of it to heat water matters.
- Your tank is due for replacement anyway. If you’re buying a new system regardless, the extra cost of a heat pump over a new electric tank is smaller, especially with rebates.
- You don’t have solar at all. A heat pump works in any weather and doesn’t need panels; a diverter does.
Expert tip
Set your heat pump’s timer to run in the middle of the day. It will use your own solar, and the warmer daytime air helps it run more efficiently than it would overnight.
What else should you consider?
Reliability matters as much as efficiency. A heat pump’s savings only add up if it lasts. Heat pumps have compressors and fans, and quality varies widely between brands. A cheap unit that fails after a few years can wipe out its savings, while an electric tank with a diverter has very few parts to break. If you choose a heat pump, weigh the warranty and the brand’s service record as heavily as the efficiency figure.
New efficiency rules won’t solve that. The federal government has proposed a minimum efficiency standard for heat pump water heaters, with consultation closing on 5 October 2026. It would set a floor and require standardised performance figures, making products easier to compare. But it deals with efficiency, not reliability or after-sales service, so buyers will still need to check those themselves.
Batteries are changing the picture. CHOICE notes that diverters are becoming less common as more households, helped by the federal battery rebate, store surplus solar instead. If you’re planning a battery, factor that in before buying a diverter: the two compete for the same spare solar.
Cheap midday tariffs help both options. Some plans now make midday grid power very cheap, such as Victoria’s 16.59c solar soak rate on the default time-of-use offer and Synergy’s 8.85c Midday Saver in WA. On those plans, even cloudy days cost a diverter household less, and a heat pump on a midday timer costs very little to run.
Noise and placement. Heat pumps sit outside and make a noise similar to an air conditioner. Check where it will go relative to bedrooms and neighbours. Diverters are silent.
Building rules. Some states restrict standard electric hot water in new homes under energy efficiency rules. Check your state’s requirements before choosing a resistive tank for a new build.
Expert tip
Compare warranties on the compressor, not just the tank. A long tank warranty means little if the compressor, the part most likely to fail, is only covered for a few years.
Heat pump or solar diverter: a quick checklist
A diverter is likely the better choice if most of these are true:
- I have 6 kW or more of solar and export plenty at midday
- I live in a sunny part of Australia
- My household is one to three people
- I don’t have, and don’t plan to buy, a battery or EV
- My electric hot water tank is in good condition
- My feed-in tariff is 2c/kWh or less
A heat pump is likely the better choice if most of these are true:
- My solar system is under 6 kW, or I have no solar
- I live in a cooler or cloudier area
- My household is four or more people
- I have a battery or EV, or plan to get one
- My hot water system needs replacing soon
- My feed-in tariff is relatively high, such as in Tasmania
Expert tip
If you plan to add a battery in the next couple of years, factor that in now. A diverter bought today could become redundant once your surplus solar goes into storage instead.
Frequently asked questions
Is a solar diverter better than a heat pump?
It depends on your home. A solar diverter is usually cheaper for households with 6 kW or more of solar, a sunny climate, a small household and no battery. A heat pump usually wins in cooler climates, larger households and homes with a battery or EV, because it uses about a third of the electricity.
How much does a solar diverter cost in Australia?
Diverter hardware costs about $685 to $1,930, depending on the brand. Catch Power’s Green CATCH lists at $685 and the myenergi eddi at $995, while the Fronius Ohmpilot retails for about $1,500 to $1,930. Expect to pay roughly $1,000 to $2,250 installed, as a licensed electrician must fit it.
Can a solar diverter heat all my hot water?
On sunny days, a well-sized solar system can usually heat the whole tank. In winter or cloudy weather there may not be enough surplus, so the tank tops up from the grid. Many owners schedule that top-up overnight on a cheaper off-peak tariff to keep costs down.
Can I use a solar diverter with a heat pump?
Generally no. A diverter feeds a varying amount of power to a simple heating element, which a heat pump’s compressor isn’t designed to accept. Instead, most heat pumps have a timer, so you can schedule them to run in the middle of the day while your solar is producing.
Is a solar diverter still worth it if I get a battery?
Often not. A battery stores surplus solar to use in the evening instead of buying grid power at the full retail rate, so that solar becomes worth far more than the feed-in tariff. Using it to heat water with an element then costs about three times as much as running a heat pump.
Key takeaways
- With feed-in tariffs at a median of 1.5c/kWh, surplus solar is worth very little exported, which makes a solar diverter a serious option for heating water.
- A diverter costs roughly $1,000 to $2,250 installed and works with your existing electric tank; a mid-range heat pump costs about $2,800 to $5,000 before rebates.
- On sunny days the two cost almost the same to run; a heat pump saves money mainly on cloudy and winter days when the grid tops up the tank.
- Diverters suit sunny, solar-rich, smaller households without a battery; heat pumps suit cooler climates, larger households and homes with a battery or EV.
- Heat pump rebates step down every year until 2030, and reliability matters as much as efficiency, so compare warranties as well as prices.
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