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Types of Systems
Hot water systems come in two main types, instantaneous and storage. Both can be suitable for most households, although there are restrictions on the installation of gas hot water systems indoors. Consult with your gas system retailer/supplier to ensure the safety of installing any gas hot water system indoors.

Instantaneous (continuous flow) hot water systems
Water is heated as needed and therefore a storage tank is not required, saving on purchase cost and energy losses.
As water is heated instantaneously, these systems do not run out of hot water.
Their size is smaller than storage systems and they can be mounted on a wall or in a cupboard.
They can be installed externally or internally, with restrictions on internal gas hot water systems.
Hot water is delivered at a slightly reduced pressure.
Standard units can generally deliver adequate hot water to only one tap at a time. When a second tap is turned on, the pressure and temperature of the water will drop somewhat.
High powered units are available which can service larger flow rates and several taps.
They can operate on natural gas, LPG or three phase electricity (single phase units are very low powered).

Storage hot water systems
Hot water is stored in an insulated tank ready for use throughout the day. The tank size is important and you should discuss with your supplier your specific size requirement.
If the tank is too small for the number of people in the house, hot water can temporarily run out. If the tank is too large, operating costs will be higher than required.
Heat will be lost from the tank. Losses depend on the temperature setting, the tank size and insulation of the tank. The smaller your tank the less your daily tank heat losses will be.
Solar hot water systems use solar thermal collectors (basically black pipes in an insulated box with a glass lid) to heat the water, with a booster inside the tank.
Other storage hot water systems have only the one heat source, which can be an electric element similar to that in a kettle, a heat pump or a gas or wood burner with a heat exchanger.
Heat pump storage hot water systems use less electricity than electric element storage hot water systems. They use an electrically powered compressor and a refrigerant gas to extract heat from the air (in much the same way as heat is extracted from your refrigerator) to heat the water stored in the tank. They make a low noise in operation, similar to a fridge.
Mains pressure or reduced pressure (gravity feed) systems are available.