Gas Wall Heater Replacement Under the VEU Program (Melbourne)

Electric bills are rising, gas prices are unpredictable, and many Melbourne homeowners are looking for ways to heat their homes more efficiently, safely, and affordably. One of the best options? Replacing old gas wall heaters with modern reverse-cycle air conditioners or heat pumps — and thanks to the Victorian Energy Upgrades (VEU) program, you may be eligible for generous rebates and support to make the switch.

Here’s everything you need to know.

What is the VEU Program?

The Victorian Energy Upgrades program is a Victorian government initiative designed to help homeowners and businesses reduce energy consumption, reduce greenhouse gas emissions, and make energy‐efficient upgrades more affordable.

It offers discounts or rebates when you replace inefficient appliances with more efficient ones (e.g. replacing gas or electric heaters with reverse cycle AC or heat pumps).

Why Replace a Gas Wall Heater?

Gas wall heaters have been popular, but they come with drawbacks:

• Lower efficiency compared to modern reverse cycle systems. A lot of heat is lost.
• Higher running costs, especially with volatile gas prices.
• Environmental impact — burning gas emits greenhouse gases (CO₂, etc.). Replacing with electric renewable-friendly appliances helps lower emissions.
• Safety & comfort — old models may be harder to maintain, may produce stale air, risk of carbon monoxide issues etc.

Replacing with a reverse cycle air conditioner (capable of both heating and cooling) or a heat pump can provide year-round comfort, much better efficiency, and lower operating costs.

What Does the VEU Say about Replacing Gas Wall Heaters?

Below are the current rules & updates from the government as of mid/late 2025:

1. Eligibility
   • To be eligible, you must use an accredited VEU provider for your upgrade.
   • The property must be in Victoria, and the heating system being replaced must generally be the main form of heating in the house. For example, if the gas wall heater is your primary heater, then it qualifies.
   • The current heating system (gas wall heater) must exist prior to replacement, of course.
2. Product Requirements
   • The replacement unit must be a VEU-approved product.
   • It must meet minimum standards (warranty requirements, energy efficiency etc.). For space heating and cooling, eligible products include high-efficiency reverse cycle air conditioners (split, multi-split, or ducted) that both heat and cool.
   • As of 31 March 2025, new warranty requirements apply to products in space heating and cooling activities (activity 6). Products must meet minimum warranty and product standards.
3. Financial Incentives & Savings
   • Replacing a gas space heater with an efficient reverse cycle air conditioner can save up to $370 per year on operating costs.
   • When replacing a gas ducted heater with a reverse cycle system, savings can be higher depending on energy usage and system size.
   • The exact rebate/dis­count depends on what you’re replacing (gas wall heater vs gas ducted heater), what you’re replacing it with (single split, multi split, ducted), and the size (kW) of the unit.
4. Recent Regulatory & Spec Changes
   • There have been updates to the activity guides clarifying eligibility, especially around what counts as “main form of heating,” how many units can be decommissioned per property, etc.
   • Also important: co-payment rules, proof of purchase/invoice form requirements, and record keeping have been updated.
   • The VEU Registry of Products has been updated to reflect which products meet the new warranty/efficiency criteria, so not every reverse cycle unit will automatically qualify. Always check the current product register.

How Much Can You Save?

Savings will vary depending on:

• What kind of gas heater you have now (power, age, usage)
• What system you replace it with (split, multi-split, ducted reverse cycle, or heat pump)
• Installation costs, running costs, electricity vs gas costs in your area

To put some numbers in:

• A household replacing a gas space heater with an efficient reverse cycle system might save up to $370/year in operating costs.
• If you have a gas ducted heater and replace it with an efficient ducted reverse cycle AC, savings can be greater.

Also, the upfront rebate / discount helps reduce the cost of purchase + installation. The VEU program applies a discount at the time of purchase/installation (through providers). You may need to contribute a co-payment depending on the product size & type.