Hot water systems

Small scale technology certificates

The Clean Energy Regulator rates solar hot water systems and heat pump hot water systems by awarding Small-scale Technology Certificates (STCs) to each available model.

Note that STCs were previously called Renewable Energy Certificates (RECs), and BASIX still uses the term RECs.

BASIX assesses the performance of solar and heat-pump hot water systems based on the number of STCs; the more STCs, the better the system.

For solar (gas or electric boosted) hot water systems, more STCs are generally awarded for larger collector areas, more efficient collectors, and better thermal insulation of the tank and pipes.

For heat pump hot water systems, more STCs are generally awarded for better tank insulation and higher efficiency compressors.

Typically, gas-boosted solar hot water systems will score more STCs than electric-boosted solar systems, which in turn will usually score more than electric heat pump hot water systems.


A solar hot water system uses specially designed collector panels to convert sunlight into heat for hot water. Water is cycled between the solar collector, which is situated out in the sun on the roof of the building, and a storage tank.

The storage tank can be installed on the roof of the building with the collector, or situated inside the building to reduce visual impact. Water is heated as it passes through the collector and returned as hot water to the storage tank.

To ensure adequate hot water at night or on overcast days, solar hot water systems are 'boosted' with either an electric or gas heater. For gas boosted systems, two types of solar collectors are available for selection:

  • flat plate collectors
  • evacuated tubes

Only one selection is available for electric boosted systems regardless of the type of solar collectors.

You will need to nominate the number Small-scale Technology Certificates (STCs - previously known as Renewable Energy Certificates, RECs) of the solar hot water system.

Note: From 1 January 2011 RECs were split into two types: small-scale technology certificates (STCs) and large-scale generation certificates (LGCs). RECs is still used as a general term covering both STCs and LGCs. STCs apply to domestic solar hot water systems, but some BASIX certificates may still refer to the term RECs.

In some instances, you may find that the BASIX energy score decreases slightly as you increase the STCs of a solar hot water system. Calculations of STCs in BASIX follow the relevant Australian standards and calculation methodology. The methodology generally associates a larger system with higher hot water output and a higher STC.

For houses with lower hot water demand, increasing the STCs may in some cases result in a reduction in energy efficiency of the hot water system, as the system is overdesigned for the likely hot water demand, resulting in a decrease in energy score.

Electric hot water systems

Electric hot water systems use large amounts of electricity and are very greenhouse-gas intensive.

Therefore, if you nominate an electric hot water system in your New Dwelling BASIX project, you will usually need to include an onsite solar photovoltaic (PV) system to achieve the BASIX Energy target.

If you are installing an electric hot water system as part of an Alterations and Additions BASIX project, it is mandatory to include a new or existing onsite solar PV system. The PV system must (at least) offset the electricity used by the new electric hot water system.

  • If you are including a new PV system, the BASIX Tool will calculate the minimum size of the system required
  • If you are including an existing PV system, you need to apply for an Alternative Assessment and provide details of the existing PV system

Wood combustion

Wood burning contributes significantly to air pollution. Check with your council on local air quality controls and whether wood heating is permissible in your area.

Domestic solid fuel heaters such as wood heaters need to be installed in accordance with the Local Government Act, the Environmental Planning and Assessment Act, the Building Code of Australia and Australian Standard AS/NZS 2918.

Gas hot water systems

Instantaneous and storage gas hot water systems have gas star ratings. The larger the number of stars, the more efficient the system.

You will need to nominate the star rating of the gas hot water system.

Heat pump

How does a heat pump hot water system work?

A heat pump works like a refrigerator in reverse. It extracts heat from the air to heat water. Electricity is only used to operate the pump to move the heat; it is not used to create the heat.

For air sourced heat pumps that extract heat from the air, you will need to nominate the number of Small-scale Technology Certificates (STCs). You will also need to check if heat pumps with the nominated STCs are available at the location of the proposed dwelling. Information on the number of registered STCs of various heat pump models is available at the Clean Energy Regulator’s website.

For ground source heat pumps that extract heat from the ground, BASIX requires the system to be used for space heating or cooling. BASIX recognises ground source heat pumps for single dwellings only.

Hot water diversion and recirculation

BASIX recognises the following types of hot water management systems:

  • Hot water diversion systems - diverts cold water in the hot water pipe to a tank
  • Hot water recirculation systems (on-demand) - circulates cold water in the hot water pipe back to the water heater in response to a switch or sensor
  • Hot water recirculation systems (continuous/timed) - circulates cold water in the hot water pipe back to the water heater continuously or in response to a timer

The installation of a hot water management system will require discussion with your plumber/hydraulic designer, to ensure they understand the plumbing requirements for these systems, and factor this in during design/installation stages of the development. The system must be permanently connected to every hot water-using fixture located within the dwelling.

Further information and installation advice is available from the respective manufacturers of these systems.

Note: a hot water diversion system or recirculation system is NOT an instantaneous hot water system. For further information on hot water systems, refer to the help notes within the 'Energy' section.