Hon Shane Jones
Minister for Building and Construction
Associate Minister in Charge of Treaty of Waitangi Negotiations
Associate Minister of Immigration
Associate Minister of Trade

27 April 2008 Media Statement

Lower hot water bills on the way

Home owners are set to save money through strengthened energy efficiency rules for new hot water systems.

From December 2008, all new domestic hot water systems in either new or refurbished homes will need to meet more stringent energy efficiency standards.

The new Building Code requirements are expected to save the average homeowner at least 13 percent in water heating costs, with minimal extra investment needed up front.

Most homeowners with average-sized homes will be able to comply by installing water efficient showerheads. These can halve the amount of hot water used, with no noticeable loss in the quality of the shower.

Other options for complying include modern technologies such as solar water heating; instantaneous gas hot water and shower drain heat recovery units (a device that recovers heat from hot water going down the drain).

No single option will be compulsory. Homeowners will be able to choose from a variety of options, ranging from the basic (bringing good savings) to the advanced (bringing excellent savings). With each option chosen, the savings add up, and the payback periods on the extra initial investment needed are short.

Building and Construction Minister Shane Jones said, “Even with basic measures, people stand to save hundreds of dollars a year in water heating costs. Reducing carbon emissions from water heating, which consumes about a third of our domestic energy use, will also be good for the environment.”

To make compliance easier, the Department of Building and Housing will publish a simple computer programme that homeowners and designers will be able to use to work out if their system complies with the new requirements. The programme will be available on the internet.

As part of the same package, other changes to the Building Code will also require new heating, ventilation and air-conditioning systems in commercial buildings to be energy efficient, potentially saving commercial building owners and tenants thousands in unnecessary energy bills.

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Notes for editors

The fictitious case-studies below are aimed at illustrating how simple energy-saving measures can reduce power bills (and water bills where water is metered).

Case study 1:

John and Mary are rebuilding a 100 m2 cottage in Wellington. This involves changing the existing low-pressure water system to high pressure. Without energy efficiency measures, this would change the shower flow rate from 3 L/min to 15 L/minute, resulting in a huge increase in the cost of hot water – by about $600 per year. However, with the new Building Code requirement to use a basic energy saving measure (a water efficient showerhead delivering 7.5 L/min), their total hot water bill would be $530, saving $350 per year. The cost of the water efficient showerhead is $120, giving a payback period of four months.

Case study 2:

Hone and Tracey are building a new 200 m2 home in Whangarei, with four bedrooms. The builder suggests a gas storage water heater, but it turns out this would be an inefficient system, with an estimated annual running cost of $880. The new Building Code requirements mean that, in their circumstances, such a system does not meet the benchmark. However, Hone and Tracey decide to investigate instantaneous gas, and find that this option would reduce the running cost to $620 per year. Their new choice complies easily with the proposed Building Code requirements. The instantaneous water heater is actually cheaper to install than the one suggested by their builder, thereby making their building project cheaper as well as delivering ongoing savings. The payback period is nil.

Case study 3:

The Smith family want to bring a large homestead near Dunedin up to present day standards. Using a conventional electric storage system would not meet the new Building Code requirements, and would cost $1,500 per year to run. The Joneses look at the other options. They decide to fit a shower drain heat recovery system for $700 that will save them nearly $400 per year. They also add a solid fuel hot water booster (wetback) to their new wood burner at an extra cost of $300, thereby saving $200 per year. They prefer these two options to a heat pump water heater, which would save an equivalent amount (just over $600 per year), but has a higher initial cost. When both their choices are installed (at a total extra cost of $1,000), the resulting cost of a year’s water heating for their homestead will be $900 per year, giving a payback period of less than two years.

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Hotwater savings Q&As

What are the changes?
The New Zealand Building Code, which sets the standards that all new building work must meet, will be changed to require new domestic hot water systems (in either new or refurbished homes) to be energy efficient. At present, only system components must be energy efficient, not whole systems. Because system efficiency is determined by the complex interplay of their components, the new measure will bring significant cost and carbon emission savings by mandating systems that are efficient overall.

When will the changes take effect?
The changes will become effective in December 2008. From then, all new systems will have to be energy efficient. Existing systems are unaffected.

Will homeowners still be able to choose their preferred water heating option, for example, a standard cylinder water heater?
Yes. No option will be compulsory or prohibited. Homeowners will still be able to choose whatever system option they like, provided it meets the new, basic energy efficiency benchmark.

What are some of the options that homeowners will be able to choose?
There are many. Options include water efficient showerheads, solar water heating, wetbacks, and shower drain heat recovery units (devices that recover heat from hot water going down the drain).

How much do people stand to save, and what are the extra initial costs?
The following table illustrates the costs and savings of the more common options. If more than one option is chosen, the savings will add up. Most systems will only need option 1 (water efficient showerhead) to comply.

Measure / Possible annual energy cost saving* / One-off extra cost / Maximum payback period (years)
Fit a water efficient shower head (these provide an excellent shower while cutting water use from 10-20l per minute to 6-10l per minute) / $80-100 (plus savings in water costs if water is metered) / $0 to $235 / 3
Install a shower drain heat recovery unit (a device that recovers heat from hot water going down the shower drain) / $120-$160 / $700 / 6
Install a solar water heater instead of an electrical storage one / $350-$450 / $4,000 - $5,000 / 14
Include a “wetback” option with a planned solid fuel space heater / $130-$240 / $300 (plus ongoing fuel cost, if any) / 2
Install a heat pump water heater instead of an electrical storage one / $270-$375 / $1,160 – $2,390 / 9

What will be the impact on housing affordability?
The extra initial investment needed to comply with the new requirements is small (or in some cases, nil). In addition, new homes with efficient hot water systems will cost less to run, thereby lowering ongoing costs for both owners and tenants.

What will be the impact on the industry and makers of hot water systems?
No changes to existing products will be needed. Any system option, including traditional electrical storage water heaters, will be able to be used, provided basic energy efficiency measures are taken elsewhere in the system. New Zealand already requires new storage water heaters to be insulated (“A Grade”). There will be greater demand for water efficient showers, energy efficient water heaters and heat recovery units. Manufacturers and suppliers of gas water heaters will be expected to state the efficiency of their products. Manufacturers and suppliers of shower units will be expected to declare their flow rates; this will also be required by the forthcoming water efficiency regulations (being prepared by the Ministry for the Environment).

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