How Continuous Flow Hot Water Systems Work

If you’ve ever run out of hot water mid-shower or wondered whether there’s a more efficient alternative to bulky storage tanks, you’re not alone. Continuous flow hot water systems—also known as tankless or on-demand units—are gaining popularity across Sydney for their energy efficiency, compact design, and ability to deliver hot water exactly when you need it.

In this guide, you’ll learn how these systems work, the benefits they offer, and what to consider if you’re thinking about upgrading your current setup.

Whether you’re planning a renovation or just want to understand your options, this article will help you make a confident, informed decision.

Here’s what we’ll cover:

• What Is a Continuous Flow Hot Water System?
• How Continuous Flow Systems Work
• Benefits of Continuous Flow Hot Water Systems
• Key Considerations Before Installing One
• Installation and Maintenance Tips
• Why Sydney Homes Are Choosing These Systems
  

First, let’s understand what a continuous flow hot water system actually is—and how it differs from traditional options.

What Is a Continuous Flow Hot Water System?

A continuous flow hot water system, sometimes referred to as a tankless water heater, is a modern alternative to traditional water heaters that rely on storing and reheating water in a tank. Instead of holding hot water in reserve, these systems heat water instantly as it flows through the unit—delivering hot water only when you need it.

This means you’re not paying to keep a full tank of water heated 24/7, which can translate into energy savings and greater efficiency over time. Continuous flow systems are especially popular in homes across Sydney where energy-conscious design and space-saving installations are highly valued.

For an overview of all types of hot water systems and how they compare, refer to this Australian Government guide to hot water systems.

How It Differs from Traditional Storage Tanks

The key difference between a continuous flow unit and a traditional storage system lies in how water is heated and delivered.

• Storage hot water systems use a large insulated tank—typically ranging from 50 to 300 litres—to heat and store water. The system continuously maintains the water at a set temperature, even when you’re not using it. Once the hot water in the tank is used up, you’ll need to wait for it to reheat, which can be inconvenient during periods of high demand.
  
• Continuous flow systems, on the other hand, heat water on demand. When you turn on the tap, cold water passes through a heat exchanger inside the unit, where it’s rapidly heated to the desired temperature. There’s no tank, no stored supply—just instant hot water, as long as the system is running.
  

This makes continuous flow systems ideal for larger households, busy families, or homes with multiple bathrooms where running out of hot water can be a daily frustration. Plus, the compact design frees up valuable space in your laundry, kitchen, or exterior wall.

Common Names You Might Hear

If you’ve been researching hot water solutions, you’ve likely come across different names for these systems. While they all refer to the same core technology, the terms vary by brand, region, or installer. Some of the most common include:

• Tankless water heater
  
• On-demand hot water system
  
• Instantaneous hot water heater
  
• Instant hot water unit
  
• Inline water heater
  
• Continuous hot water heater
  

Despite the variety of names, they all describe systems designed to deliver hot water instantly, without relying on a storage tank. For a detailed breakdown of how these systems work and their efficiency benefits, check out this U.S. Department of Energy guide on tankless or demand-type water heaters.

Key takeaway: A continuous flow hot water system is a compact, energy-efficient solution that heats water only when needed—offering convenience, savings, and endless hot water for Sydney homes that demand smarter plumbing choices.

How Continuous Flow Systems Work

At its core, a continuous flow hot water system is designed to do one thing exceptionally well: heat water instantly and only when you need it. Unlike traditional systems that keep a reserve of hot water in a tank, these systems activate the moment you use hot water—making them highly efficient and responsive.

What Happens When You Turn on the Tap

The beauty of a continuous flow system is in its simplicity and speed. Here’s what happens behind the scenes:

1. You turn on the tap for hot water—whether at your kitchen sink, shower, or laundry.
   
2. Cold water flows through a pipe into the unit.
   
3. A sensor detects the water flow and activates the heating process.
   
4. A heat exchanger rapidly heats the water to your pre-set temperature as it passes through the system.
   
5. Within seconds, hot water is delivered directly to your tap—no waiting, no reheating.
   

Because the water is heated on demand, you’re only using energy when you actually need hot water. This eliminates standby energy loss, which is common in storage systems that maintain water temperature around the clock.

Key Components in the System

Understanding the main parts of a continuous flow system can help you make a more informed decision when comparing units or troubleshooting an issue. Here are the essential components that make it all work:

• Heat Exchanger: This is the heart of the system. As cold water flows through the exchanger, it’s rapidly heated by either gas combustion or electric elements.
  
• Electronic Ignition: In gas models, this replaces a constantly burning pilot light, igniting the burner only when hot water is needed—saving energy and improving safety.
  
• Water Flow Sensor: Activates the heating process when it detects movement through the pipes.
  
• Temperature Control Unit: Allows you to set and adjust the desired water temperature, often through a wall-mounted controller or digital display.
  
• Internal Piping and Valves: Direct water efficiently through the system while managing flow and pressure for consistent performance.
  

These components work in harmony to deliver hot water in real-time, with precise control and minimal waste.

Gas vs. Electric Models

One of the most important decisions when choosing a continuous flow system is whether to go with gas or electric.

Gas Continuous Flow Systems

• Typically powered by natural gas or LPG (liquefied petroleum gas)
  
• Often preferred for larger households or homes with higher water usage
  
• Known for quick heat-up times and lower running costs in areas with affordable gas supply
  
• Gas water heater models are particularly popular in Sydney due to energy efficiency benefits. Popular models in Australia include the Rinnai Infinity, Rheem, Bosch, and Thermann lines
  

Electric Tankless Water Heaters

• Ideal for smaller households or homes without gas access
  
• Require a strong electrical circuit (often a dedicated one)
  
• May have slightly slower flow rates, but still offer on-demand performance
  
• Often easier and less costly to install compared to gas systems
  

In Sydney, your choice may depend on access to gas lines, energy tariffs, household size, and preferences around energy efficiency or carbon footprint.

Key takeaway: Whether powered by gas or electricity, continuous flow systems heat water only as needed—using smart sensors, precise temperature controls, and efficient internal components to deliver hot water exactly when (and where) you want it.

Benefits of Continuous Flow Hot Water Systems

Whether you’re upgrading an outdated system or building a new home, continuous flow hot water systems offer a range of practical benefits that make them an increasingly popular choice for Sydney households and small businesses.

From energy efficiency to modern design, here’s why many are making the switch.

Never Run Out of Hot Water

One of the biggest advantages of a continuous flow system is in the name—it provides hot water on demand, without the limitations of a storage tank. If your current setup has frequent issues, you may need to consider emergency hot water repairs or a complete upgrade.

Traditional systems can run out of heated water, especially during back-to-back showers or when multiple taps are in use. Continuous flow systems, on the other hand, heat water as it’s needed, so there’s virtually no risk of running out of hot water, even in busy family homes or properties with multiple bathrooms.

This is particularly useful for:

• Large households with high water usage
  
• Homes with ensuite bathrooms, laundry, and kitchen use at once
  
• Airbnb or rental properties that cater to multiple guests
  

If your current system leaves you waiting for the water to reheat, a continuous flow unit may be the upgrade you didn’t know you needed.

Energy and Cost Efficiency

Heating water can account for a significant portion of your energy bills, especially if your system is older or poorly insulated. Continuous flow units are designed to be energy-efficient by only heating water when a tap is turned on—eliminating the energy loss that comes with maintaining hot water in a tank around the clock.

Other efficiency benefits include:

• Smart temperature control to avoid overheating and reduce wastage
  
• High energy ratings on many models, particularly gas units
  
• No energy consumed during standby periods
  
• Lower long-term running costs, especially in homes with moderate water usage
  

Over time, these features can lead to noticeable savings on utility bills, making continuous flow systems not just an environmentally sound choice, but a financially smart one as well.

Space-Saving and Modern Design

Space is a premium in many Sydney homes. Traditional water heaters with large tanks can be bulky and difficult to position. Continuous flow systems offer a compact hot water solution—perfect for modern renovations or smart upgrades. If you’re evaluating your options, browse our services for more choices that may suit your needs.

Continuous flow systems offer a compact hot water solution that can be:

• Wall-mounted externally or internally
  
• Tucked into narrow side access areas or small utility spaces
  
• Designed to blend in with modern aesthetics
  

Because there’s no storage tank, you get more flexibility in placement and design—making these units ideal for both new builds and home renovations.

Key takeaway: With benefits like unlimited hot water, lower energy bills, and a space-saving design, continuous flow hot water systems are a future-ready option that meets both functional and lifestyle needs for modern Sydney living.

Key Considerations Before Installing One

Before you commit to installing a continuous flow hot water system, it’s worth taking a moment to consider a few practical factors. While these systems offer excellent performance and efficiency, the right model—and setup—depends on your home, household usage, and long-term needs. 

Here’s what to keep in mind.

Compatibility with Your Household Usage

Not all homes have the same hot water needs, so understanding your household’s usage patterns is essential when choosing the right system.

• Flow rate refers to how much hot water a unit can deliver per minute, usually measured in litres. A single bathroom apartment may be fine with a lower flow rate, while a multi-bathroom family home might need a high-capacity system to maintain strong water flow across several outlets at once.
  
• Consider how many people live in your home and how often multiple taps or appliances are used at the same time.
  
• Think about your desired temperature settings, especially if you have young children or elderly residents who may need safer, pre-set temperatures.
  

A professional assessment—like the ones offered by In House Plumbing—can help you match the right continuous flow system to your lifestyle and water usage profile.

Solar-Compatible or Smart Home Options

If you’re planning a new build or looking to upgrade to a more sustainable setup, many continuous flow systems now offer tech-forward features and compatibility with other eco-friendly home improvements.

• Solar-compatible water heaters allow you to connect the unit to a solar energy system, reducing reliance on grid power and lowering running costs.
  
• Smart temperature control options give you greater precision over water temperature and usage, often through remote digital panels or app integrations.
  
• Systems can also be installed with consideration for smart power points, energy usage tracking, or timers—helping you maximise both convenience and efficiency.
  

These features are particularly appealing to Sydney homeowners looking to future-proof their homes with environmentally conscious, high-performing plumbing solutions.

Costs, Brands, and Warranties

Continuous flow systems come in a variety of models and price points, so it’s important to evaluate not just upfront costs, but also brand reputation, longevity, and warranty coverage.

Some of the most trusted brands in Australia include:

• Rinnai – Known for its Infinity range, ideal for families seeking reliability and performance
  
• Bosch – Offers compact and durable gas units, popular for renovations
  
• Rheem – Australian-made, with wide availability and trusted service network
  
• Thermann – Sold through Reece and well-regarded for affordability and efficiency
  
• Stiebel Eltron – German engineering, often chosen for high-end electric systems and sleek design
  

Be sure to check what kind of warranty is included—most quality systems offer between 10–12 years on the heat exchanger and 3–5 years on parts and labour. You can view more details on available brands and compare specifications through this comprehensive list of hot water system brands.

Key takeaway: To get the most from your continuous flow hot water system, choose a unit that aligns with your household’s water usage, future eco-friendly upgrades, and a reliable brand backed by a solid warranty. A bit of upfront planning ensures lasting comfort, efficiency, and value.

Installation and Maintenance Tips

A well-chosen continuous flow hot water system is only as good as its installation and ongoing care. Fortunately, these systems are designed for long-term performance with minimal hassle—especially when installed and maintained by experienced professionals.

Here’s what you should know about getting set up and keeping things running smoothly.

What to Expect During Installation

Installing a continuous flow system is typically straightforward, but there are a few key steps to be aware of:

• Site assessment: A licensed plumber will inspect your property to determine the best location for the unit—often on an exterior wall or in a utility area to allow for proper ventilation and water flow.
  
• System selection: Based on your household needs, they’ll recommend a unit with the right capacity and features. This includes choosing between gas (natural gas or LPG) and electric models.
  
• Installation process: The system is then plumbed into your existing water and energy supply. This involves connecting pipes, mounting the unit, and linking it to gas or power sources.
  
• Testing and commissioning: Once the system is installed, the plumber will check that water flow, temperature control, and safety mechanisms are working as expected.
  

Most installations can be completed within a day—though more complex setups may take longer. If you’re ready to move forward, get a quote or book an installation with our experienced team.

In House Plumbing ensures Sydney homes meet all relevant plumbing codes and energy efficiency standards during installation.

Maintenance Requirements

One of the major advantages of a continuous flow unit is that it’s a low-maintenance water heater by design. However, regular checks help preserve performance and avoid surprises down the line.

Here’s what to keep in mind:

• Annual servicing is recommended to flush out any mineral buildup and inspect the heat exchanger, valves, and ignition components.
  
• Electronic settings and temperature controls should be checked periodically to ensure the system is running efficiently and safely.
  
• In areas with hard water, a filter or softener may be advised to reduce limescale buildup over time.
  

Many newer units also come with diagnostic features or alerts, letting you know when servicing is needed—further simplifying upkeep.

Key takeaway: Professional installation and simple yearly maintenance can keep your continuous flow system running efficiently for years. With proper setup and occasional servicing, you’ll enjoy reliable, energy-smart hot water with minimal effort.

Why Sydney Homes Are Choosing These Systems

From heritage terraces in the Inner West to modern family homes in the Hills District, continuous flow hot water systems are becoming a preferred choice for many Sydney residents. The reasons go beyond convenience—they’re a smart response to the city’s unique mix of infrastructure, climate, and household needs.

Ideal for Modern Urban Homes

Sydney’s housing landscape is diverse, and that presents both challenges and opportunities when it comes to plumbing upgrades.

• Older homes often come with outdated or oversized storage systems that are inefficient and take up too much space. Continuous flow units provide a compact solution that fits neatly into tight service areas or wall-mounted enclosures.
  
• Newer builds and renovations benefit from space-saving designs and the ability to integrate with smart home systems or solar-compatible setups.
  
• Water pressure and usage demands in multi-storey homes or duplexes are better served by the steady, on-demand supply these systems provide—no more waiting for tanks to refill or dealing with inconsistent temperatures.
  

As Sydney’s homes continue to modernise, homeowners are increasingly opting for systems that align with both energy-efficient living and practical daily performance.

Considering a system upgrade? Book a consultation with In House Plumbing to explore the best continuous flow solution for your Sydney home. Our experienced team can assess your current setup, recommend the right system, and ensure seamless, code-compliant installation with no mess left behind.

Frequently Asked Questions

Here are some of the most common questions Sydney homeowners ask when considering a switch to a continuous flow hot water system:

Still have questions? Feel free to reach out to In House Plumbing for expert advice tailored to your home, budget, and energy goals.