Are Hot Water Cylinders Expensive to Run?

The running cost of a hot water cylinder depends on several key factors, including the energy source, cylinder size, insulation quality, and your daily hot water usage. Hot water accounts for around 35% of a household’s energy bill in New Zealand.

Electric cylinders can be affordable if connected to off-peak electricity plans or solar PV. Heat pump and solar hot water systems are more expensive upfront but significantly cheaper to run over time, thanks to their energy efficiency and use of renewable sources.

Older systems with poor insulation often lead to heat loss, meaning the system must work harder to maintain temperature—raising running costs. Similarly, energy use increases unnecessarily if your thermostat is set too high (above 65°C).

To reduce costs, you can install a cylinder wrap for better insulation, lower the thermostat (but not below 60°C for safety), and fix any dripping hot water taps. Using a timer to heat water only when needed can also help. For households with high usage or outdated systems, upgrading to a more efficient model may result in significant long-term savings.