Vapour compression heat pumps can upgrade ambient heat sources to match the desired heating load temperature. They can offer considerable increase in operational energy efficiency compared to current water heating systems. Solar heat pumps collect energy not only from solar radiation but also from the ambient air. They can operate even at night or in totally overcast conditions. Since the evaporator/collector operates at temperatures lower than ambient air temperature it does not need glazing or a selective coating to prevent losses. Currently, however, they are not used much at all in domestic or commercial water heating systems. In this paper comparison is made of a conventional solar hot water system, a conventional air source heat pump hot water system and a solar heat pump water heating system based on various capital city locations in Australia. A summary is given of specific electricity consumption, initial and operating costs, and greenhouse gas generation of the three systems dealt with in this paper. The ultimate choice of unit for a particular location will depend heavily on the solar radiation, climate and the local price paid for electricity to drive or boost the unit chosen. (C) 2002 Elsevier Science Ltd. All rights reserved.