What is the most sustainable choice for a domestic hot water system in temperate, coastal Australia?

6. Electric Tank

The technology is tried and tested, and the tanks are cheap. Take the money you save and increase the size of your planned solar array. Tilt your (north) array string a little bit more towards the horizon to increase winter generation. Put your (300+L) electric tank on a timer so that it only comes on between, say 11:00 and 15:00. (Increasing solar self-consumption is better than any feed-in tariff that you're going to get nowadays.) Surplus power from your larger array can go to charging your EV or be sold back out to the grid.

There are fancy options, but you don't need fancy options.

Note: Any arguments about efficiency are moot when you generate your own power and have a regular surplus during the day.

Note 2: Heat pumps have noisy fans that can run for hours on end. (Solar) Electric tanks are completely silent. That may also matter to you.

Electric is probably the best bet. YOU ALready get electricity, and electric water heaters have evolved alot since then to be vastly more efficient. Gas heating is pretty reliable and not to mention VERy hot if you like the heat or take long showers. Point is solar hot water is only efficient if you live in a climate where it's cool year round. Basically if you live below 40 degrees latitude. Solar panels must be angled based on what latitude you reside. If you live up north, passive solar is way more practical if it's built already. -electric: emission free

• natural gas: Probably more efficient, certainly better temp quality.
• solar: questionable economics

Heat pump water heaters are powered by externalities

A heat-pump water heater warms water by chilling the room the water heater is in. On a sweltering hot day, that helps air conditioning load somewhat. But the rest of the time, it is adding cold and draft to a house you are trying to heat. So you pay twice: to run the heat pump itself, and then to replace the heat stolen by the heat pump. If your heat source is electric resistive heat, this is wholly worse than a normal water heater.

Further, the heat pump water heater will perform poorly if it is in a closed space. It will turn that space into a refrigerator, and then run inefficiently because it can't pump heat that doesn't exist. Of course all that inefficient pumping makes heat, and it will have that heat, at least. Hard on the machine and no cheaper than resistive heating.

Tanked heaters need to be kept at 60C/140F for legionella

In recent years, it was discovered that the bacterium which causes Legionnaire's Disease, among others, can thrive and reproduce in a water heater that is too cool. Because of that, the gold-standard advice of health departments is to set the knob at 60C/140F.

Meanwhile, we have the plumbing safety people saying that 60C/140F is too hot, and can cause scalding. That is also true. The only way to not find yourself in a dilemma is to have thermostatic mixing valves at every human-accessed hot water outlet. This is provided by most joystick faucets, and almost any modern style shower valve.

This higher temperature requires more standby power 24x7.

Electric tankless requires really big service

In Europe, they have "electric showers" which are an electric tankless water heater built into the shower and serving only the shower. These are modestly sized, on the order of 20-25A at 230V. It would not be hard for such an electric shower to support the bathroom faucets as well (though, not at the same time). The upshot is that electric demands for a single point of use are not extreme.

However, the public expectation is that a tankless is a "simple unit drop-in" for a tanked heater: that it installs in the same location and simply works the same way - i.e. all outlets can use water at once at high flow rates, until it runs out, only now, it doesn't run out! This is the expectation. The high flow rate expectation creates a serious problem that can only be solved by an ostentatiously large tankless heater - Americans are fond of 18KW, 27KW or even 36KW units. A typical American electric service is 24KW or 48KW. And since the huge heater runs at max power when it runs, a truly staggering amount of electric service must be provisioned for this heater.

This works much better with "point-of-use" heaters such as that electric shower. Imagine a house with four 30A heaters: one in each bathroom, one kitchen, and one for the laundry room. This is not provisioned the same as a 120A heater -- this is provisioned on the assumption that they won't all be running at once. This greatly reduces the house's design load to within the realm of the reasonable.

Note that most on-demand water heaters are fuel or inefficient resistive units - I'm not aware of any "heat pump" on-demand heaters.

Depends on where you live.

The problem with solar hot water in climates where real winter occurs every year is that you don't have enough sun in the winter. Thus, a solar hot water system always requires a backup, some source that is able to provide the heat. What is your backup? I suspect in most cases, it's electric resistance heating and that alone if less efficient than heat pump.

The problem with solar hot water, thus, is exactly the same as the problem with wind power or solar power. Many people have selected wind electricity as their electricity plan. When the wind stops and it's calm, they don't experience a power blackout. Thus, this simple tough experiment shows that wind power is a massive con. The same is true for solar power. If you do not have the possibility to adjust your electricity use according to the available renewable energy, your marginal energy comes from coal or natural gas.

However, if you have a heat pump based water heater, most likely it has some insulated storage. This storage allows you to run the heat pump when it's windy. It is often windy during the winters too, when there is not enough sunshine.

Thus, if you live in a cold climate, do by all means select the heat pump based system, but ensure you have a huge amount of heat storage built in. Adapt the heating based on the spot electricity price. When renewables are plentiful, electricity is cheap. You save money and the power comes from clean sources.

However, I wouldn't be surprised to find if in a hot climate solar hot water wins in terms of sustainability.