Pairing Solar with a Hot Water Diverter in Tasmania — A 2026 Guide

Yes, for most households, solar is an excellent investment. The key is to use the power you generate yourself, because buying electricity from the grid costs much more than what you get paid for selling it. With power prices from Aurora Energy sitting around 28-30 cents per kilowatt-hour (c/kWh) to buy, and the solar feed-in tariff you receive for exports being a more modest 9.276 c/kWh, the biggest savings come from running your appliances during the day when the sun is shining. This is called ‘self-consumption’.

A well-sized solar system can significantly reduce your power bills, and with the federal Small-scale Technology Certificate (STC) rebate still available to discount the upfront cost, the payback period for the panels can often be in the range of 4-6 years.

What size solar system should I get?

For a typical Tasmanian home looking to future-proof, a system with around 13kW of panels paired with a 10kW inverter is becoming the new standard. This might sound big compared to the 6.6kW systems that were common a few years ago, but our homes are using more electricity. With many of us shifting to electric vehicles, heat pump hot water, and induction cooktops, that extra generation capacity is incredibly valuable.

The good news is that TasNetworks, our electricity distributor, allows a 10kW inverter on a standard single-phase connection, which most Tasmanian homes have. This means you can install a powerful system without the extra cost and hassle of upgrading to a three-phase connection.

Of course, not everyone needs a system this large. If you have a smaller household with low electricity usage and no plans to get an EV or electrify your heating, a smaller system might be a more suitable and cost-effective choice.

What is a hot water diverter and do I need one?

A hot water diverter is a clever little box that sends your excess, unused solar power directly to your electric hot water cylinder’s heating element. Instead of exporting that valuable energy to the grid for a small return, the diverter uses it to heat your water for free. It’s a simple, effective way to maximise your self-consumption without needing a battery.

Think of it like this:

Your solar panels power your home first.
If there’s more solar power being generated than your home is using, the diverter kicks in.
It gradually ‘ramps up’ the power sent to your hot water tank, using only the spare solar.
Once the water is hot, any further excess solar is then exported to the grid as normal.

This makes your hot water system act like a ‘thermal battery’, storing the sun’s energy as hot water. For many homes, heating water is the single biggest chunk of their power bill, so using free solar energy to do it can lead to significant savings.

Is a diverter better than a battery or a heat pump?

A hot water diverter, a home battery, and a heat pump hot water system all help you use your solar power better, but they do it in different ways. There’s no single ‘best’ option; it depends on your home, budget, and goals.

Feature	Hot Water Diverter	Home Battery	Heat Pump Hot Water
Main Job	Uses excess solar to heat water in your existing electric tank.	Stores excess solar electricity for you to use at any time, day or night.	Heats water very efficiently, using about 70% less energy than a standard electric tank.
Upfront Cost	Low. The cheapest of the three options.	High. The most expensive option, though rebates can help.	Medium. More than a diverter, but much less than a battery.
How it Saves	By shifting your water heating energy usage to free solar power.	By letting you use stored solar power at night, avoiding high grid import costs. Also provides backup in a blackout.	Through its high energy efficiency, slashing water heating costs regardless of the power source.
Best For	Homes with an existing, relatively new electric hot water cylinder and a desire for a simple, low-cost way to boost solar self-consumption.	Homes wanting to maximise energy independence, get backup power for outages, and significantly reduce evening/overnight grid usage.	Homes needing to replace an old hot water cylinder anyway. It offers huge efficiency gains and can be run on a timer during the day to use solar.

A diverter is a fantastic, affordable upgrade. A battery offers complete energy flexibility and backup. A heat pump is a super-efficient appliance upgrade. Sometimes, a heat pump and a diverter can even be used together.

What about the new federal battery rebate?

From 1 July 2025, the federal government’s Cheaper Home Batteries Program is available, which can reduce the upfront cost of an eligible battery system when it’s installed with solar. For Tasmanians, this could take around 30% off the cost of a typical battery, potentially reducing the price by thousands of dollars. Eligibility conditions will apply, so it’s important to check the specific requirements.

However, it’s important to be realistic about battery payback in Tasmania. Because our electricity prices are lower than on the mainland and our solar feed-in tariff is reasonable, the financial case for a battery is less urgent here. The payback period for a battery is often in the 7-12 year range, even with the rebate.

For most Tasmanian households on a standard Aurora tariff, the main benefits of a battery are using your own stored solar power in the evening and having backup power during a blackout. While some energy plans allow you to take advantage of volatile wholesale electricity prices, this is less common. For now, a battery is often a lifestyle choice as much as a purely financial one.

So, what’s the smartest first step?

For most Tasmanian households, the journey to cutting power bills starts with the sun.

Get the right-sized solar system: Don’t just think about your power use today. Consider your future plans for an electric car or heating. A system with around 13kW of panels and a 10kW inverter is a solid, future-proof starting point.
Tackle your hot water: This is your biggest energy user. If you have a standard electric hot water cylinder, adding a solar hot water diverter is one of the most cost-effective ways to immediately boost your solar self-consumption and slash your bills. It’s a simple, powerful addition that puts your excess solar to work.
Consider a battery later: Once your solar and hot water are sorted, you can assess your energy use. A battery is a significant investment, and while the new rebate helps, it’s worth making sure the other pieces are in place first.

By focusing on generating your own power and then using as much of it as possible—starting with your hot water—you can create a highly efficient home that’s cheaper to run and ready for the future.

This guide was written by the local team at Solar Generation Tasmania. We’re always happy to help our fellow Tasmanians understand their energy options.

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Published by Solar Generation Tasmania. General information current as at publication — rebates, tariffs and prices change, so confirm current figures before deciding.