Government rebates and incentives for hot water heat pumps

Since hot water heat pumps are so energy efficient, they’re a powerful technology to help address the rising cost of living and help meet climate change targets.

As a result, both state and federal governments have various incentives for upgrading to a hot water heat pump. 

This article is part of our series on hot water heat pumps. See all the other articles here.

Overview of government incentives are out there (As of 2024)

The incentives you’re eligible for depend on where you live and what hot water system you’re replacing. Each program usually has a list of approved products.

Some schemes are also means-tested and have eligibility requirements. 

You can be eligible for multiple incentives.

SchemeStateTypeApproximate amount
Small-scale Renewable Energy Scheme (SRES)All of AustraliaIncentive$800
Energy Savings SchemeNSWIncentive$250 – $500
Victorian Energy Upgrades ProgramVictoriaIncentive$500 – $1200
Retailer Energy Productivity SchemeSouth AustraliaIncentiveVaries
Solar Homes ProgramVictoriaRebateUp to $1000
Home Energy Support ProgramACTRebateUp to $2500

What’s an incentive scheme and is it a rebate?

These government schemes aren’t technically rebates, but function like one in practice.

For example, the federal government under the Small-scale Renewable Energy Scheme (SRES), gives out something called small-scale technology certificates (STCs). 

When you install an eligible renewable energy system, you receive STCs to say thanks for reducing your carbon footprint. 

In the case of hot water heat pumps, the reduction comes from upgrading from a less energy-efficient hot water system to a more efficient one. 

The amount of certificates you get is proportional to how much energy or emissions you’ll save on heating hot water over the lifetime of the hot water heat pump, which depends on things like what product you choose and what climate you live in. 

Some state governments have similar schemes:

What do I do with the certificates?

Let’s say you get 20 STCs for installing a hot water heat pump. You could sell these certificates on the STC clearing house – except nobody really does that themselves. 

For the vast majority of installations, you would assign the right to create STCs to your installer in exchange for an upfront discount. Your installer will walk you through the process and it’s pretty straightforward.

Your installer then sells these certificates later.

Are installers “pocketing” some of my rebates?

Yes, but it’s nothing too nefarious. 

For example, though VEECs are trading at over $100 per certificate in 2024, your quote might only show a discount of $50 per VEEC.

The reason for this is that installers need a margin to cover the processing of the certificates and selling them to the market. 

Installers also need to make a profit on each install, and it doesn’t make a difference to you whether they take a higher margin on the certificates or a higher margin on the installation. While some installers might show $100 per VEEC on your quote, they also probably charge a higher price on some of the other line items on the quote.

Don’t worry too much about the exact amount of the certificates. Just pay attention to the total price. 

Cash rebates

Some state governments and local councils also just offer straight-up cash rebates as well.

For example, the Solar Homes programme in Victoria offers up to $1000 if you meet a few conditions. This is paid directly to your installer, so they’ll usually make sure all the paperwork is in order.

If you’re a pensioner in the ACT, you could get up to $2500 as part of the Home Energy Support programme. This is paid directly to your bank account, so you need to make sure you’ve submitted all the right paperwork at the right times. 

Remember: You only get rebates once

Since the various rebate programmes are based on the idea of replacing less efficient systems with more efficient ones, it means you only get the rebate once. 

This is important because you want to choose a product that will last and get it installed correctly – if you need another one later, you won’t get the same rebate again.

Government incentives can change

Government incentives are constantly in flux.

For example:

  • The federal SRES scheme becomes valuable each year (you get fewer STCs)
  • NSW Energy Savings Scheme changed on the 19th June 2024
  • For the Victoria Solar Homes, programme, there are a limited amount of rebates for each release

Next steps

If you want to know which rebates you qualify for, get an instant cost, savings and rebates estimate.