Solar diverter vs heat pump hot water: making the right choice for Perth homes

If you have solar panels, your hot water system is often the biggest opportunity to increase self-consumption. Two technologies address this: a solar diverter and a heat pump hot water system. Both can cut your hot water electricity cost significantly, but they work differently and suit different households. Here's the comparison.

The core problem both solve

A standard electric hot water system heats water at night on the Synergy off-peak rate (A1: 15.9037c/kWh under the off-peak controlled load rate). If you have solar, that overnight heating is entirely grid-powered.

Shifting hot water heating to solar generation hours (9am–3pm) means using electricity you'd otherwise export at DEBS rate (2c/kWh) to heat water instead of drawing grid power at 33.2621c/kWh. That arbitrage — 31.26c/kWh saved — is the financial case for both technologies.

Option 1: solar diverter

A solar diverter is a device that monitors your net metering point and redirects surplus solar generation into your existing hot water element before it would export to the grid.

How it works: When your solar generation exceeds your home's current consumption, the diverter feeds that surplus power into the hot water element. It modulates the power continuously (using phase-angle or burst-fire control) to match exactly the surplus available — so you don't over-draw from the grid. The hot water element itself is unchanged.

What you need: A resistive electric storage hot water system (the standard "element in a tank" type). This includes most legacy continuous-supply electric systems. The diverter does NOT work with gas hot water systems, instant electric systems, or heat pump systems.

Cost: $300–$600 installed. Some installers include it as part of a solar package at lower cost.

Pros:

• Low upfront cost
• Works with existing hot water tank (no replacement)
• Minimal installation complexity
• Immediate payback when the tank needs heating

Cons:

• Only works when there is surplus solar — on days with low generation (winter, heavy overcast), the tank still heats from grid or not at all
• Relies on the existing element's efficiency (resistive = 1 kWh in → 1 kWh of heat)
• If your tank is old and leaking heat, the diverter is heating water inefficiently
• Doesn't work with gas, instant, or heat pump systems

Option 2: heat pump hot water system

A heat pump hot water system uses refrigerant technology (the same principle as a reverse-cycle air conditioner) to extract heat from the ambient air and transfer it into the water. It runs on electricity but produces 3–4 units of heat for every unit of electricity consumed (Coefficient of Performance of 3–4).

Cost: $2,000–$4,500 installed, depending on size and brand. WA does not currently offer a specific heat pump hot water rebate (unlike the federal VEET program in some states). Check for Small-scale Technology Certificates (STCs) — heat pump systems are STC-eligible, which typically reduces the cost by $200–$500.

How to combine with solar: Set the heat pump's timer to operate during peak solar hours (9am–1pm for most Perth households). On A1 tariff, the heat pump draws power at 33.2621c/kWh but produces 3–4× the heat value — net effective cost ~8–11c/kWh equivalent. Combined with solar self-consumption, the solar-powered heat pump is the most efficient hot water setup available.

Pros:

• 3–4× the heating efficiency of a resistive element
• Can work on a timer regardless of solar — benefits even on low-solar days
• Works with any electricity source (solar, grid, battery)
• Useful lifespan 10–15 years
• Eligible for STCs

Cons:

• High upfront cost ($2,000–$4,500 vs $300–$600 for a diverter)
• Requires outdoor installation space (the unit draws air from the environment)
• Makes noise (similar to a small air conditioner unit) — not suitable directly under a bedroom window
• Slower heating than a resistive element on high draw days
• Doesn't extract heat efficiently when ambient temperature drops below ~10°C — less relevant in Perth's climate but worth noting for winter mornings

Side-by-side comparison

| | Solar diverter | Heat pump hot water | |---|---|---| | Upfront cost | $300–$600 | $2,000–$4,500 | | Works with existing tank | Yes | No (is a new system) | | Efficiency | 1 kWh → 1 kWh heat | 1 kWh → 3–4 kWh heat | | Solar requirement | Needs surplus to be useful | Works on timer regardless | | Winter performance | Limited on low-solar days | Consistent year-round | | Suitable system types | Resistive electric storage | Standalone new system | | Payback (A1 tariff + solar) | 1–3 years | 5–10 years | | Noise | Silent | Low hum (like AC) |

Which is right for your situation?

Choose a solar diverter if:

• Your existing hot water tank is less than 8 years old and in good condition
• You want low upfront cost and fast payback
• You're already using an A1 tariff and generating meaningful solar midday surplus
• You don't have space for an outdoor heat pump unit

Choose a heat pump hot water if:

• Your existing hot water system is approaching replacement age (10+ years for resistive systems)
• You're replacing a gas hot water system and want to electrify
• You want the lowest possible long-term electricity cost for hot water
• You're on Midday Saver tariff where daytime electricity is 8.8511c/kWh — the heat pump timer set to 9am–3pm gives you ~2.2c/kWh effective hot water cost (8.8511c ÷ 4 COP)
• You have space for the outdoor unit

The Midday Saver + heat pump combination is particularly powerful for Perth households: 8.8511c/kWh ÷ 4 COP = ~2.2c/kWh effective hot water cost, compared to DEBS export at 2c/kWh. Your hot water essentially becomes free when run on Midday Saver solar hours.

What about solar hot water (thermal)?

Traditional solar thermal hot water (flat-plate or evacuated tube collectors on the roof) is a third option but increasingly hard to justify for new installations:

• High upfront cost ($3,000–$6,000)
• Requires a separate plumbing loop on the roof
• Performance degrades over 10–15 years as the collectors age
• Can't redirect excess capacity elsewhere on cloudy days
• STCs are lower than for heat pumps in most configurations

For new installations, heat pump hot water has largely replaced solar thermal as the preferred solar-compatible hot water system.

For Perth households with a working hot water tank under 8 years old, a solar diverter at $300–$600 is the most cost-effective immediate upgrade. For households replacing an ageing system or electrifying from gas, a heat pump hot water system paired with a Midday Saver tariff timer delivers the best long-term outcome despite the higher upfront cost.