Choosing the Best Hot Water System for Your Home. Deciding on a water heating system is no small task. One way or another, your choice will have a huge impact on your long-term finances. An electric hot water system can make up a large one-third of your energy bill, yet many households could easily avoid it by using a different method. It's vital to take your time and learn the facts. One of the most common mistakes when picking a new hot water system is to rush the decision. If your existing water heating isn't working, there can be a lot of pressure to get things underway as fast as possible. Do your research and carefully consider the long- and short-term pros and cons. A little extra effort now will pay for itself many times over. The following guide will walk you through all available options to help you pick the most practical, affordable and energy-efficient water heating system for your needs. Storage vs. Continuous Flow You have two methods of delivery to pick from, both rather self-explanatory in name and function. Storage hot water systems will, of course, store hot water before use. It has the most potential to be practical for larger households with higher water use. Continuous flow (a.k.a. instant or instantaneous) hot water systems will heat as needed. The major perk is that you will never run out of hot water. In many cases, it's considered the most economical choice for smaller households with lower water use. Choosing a Power Supply: Gas, Electric or Solar Hot Water? The following options are presented in a rough order of preference, starting with the ideal option. However, circumstances will vary wildly from home to home, so be sure to read on for other factors that may affect your decision. Solar By far the best long-term cost-saver, but also the most expensive up-front. If you're able to meet the extra AU$1500 - $2000 cost in your initial investment, you'll find yourself making savings after 5-10 years.