Depending on your property, existing hot water system and selected heat pump, you could access thousands of dollars in combined incentives.
An eligible Victorian households can potentially access government incentives when replacing an existing eligible hot water system with an approved heat pump hot water system.
The current Solar Homes program provides:
- Up to $1,000 for eligible hot water products
- Up to $1,400 for eligible locally made products
A separate VEU discount may also apply.
Current indicative VEU discounts include:
- Up to $560 when replacing an eligible gas hot water system
- Up to $630 when replacing an eligible inefficient electric hot water system
The actual incentive depends on your property, existing system, selected product and applicable program requirements.
How Much Can Melbourne Homeowners Save?
For eligible locally made products, Solar Victoria states that the combined Solar Homes hot water rebate and VEU discount can reduce upfront costs by up to $2,030. For other eligible systems, combined savings can be up to $1,630.
Before accepting a quote, ask the trusted, experienced and accredited provider to clearly show:
- Full system price including product price and installation cost.
- Application VEU discount
- Eligible Solar Homes rebate
- Applicable STC benefits
Who Is Eligible for the Homes Hot Water Rebate?
The Solar hot water rebate has specific eligibility requirements.
Generally, eligible applicants need to be Victorian owner-occupiers who meet requirements including:
- Combined taxable household income below $150,000 per year
- Property value below $3 million
- Existing hot water system at least 3 years old
- Property has not previously received a relevant Solar Homes hot water or solar battery rebate
- Installation uses an eligible product
- Installation is completed through an authorised retailer
The selected heat pump must also meet Solar Victoria’s product eligibility requirements.
Eligibility should be confirmed before installation, as program rules and eligible products can change.
The Victorian Government states that the existing hot water system must meet specified conditions and the replacement heat pump must be an approved product with a minimum five-year warranty.
Why Are Melbourne Homeowners Choosing Heat Pump Hot Water?
Heat pump hot water systems use heat from the surrounding air to heat water rather than relying solely on conventional electric resistance heating.
According to the Victorian Government, heat pump hot water systems can use up to 75% less electricity than conventional electric storage systems.
Potential benefits include:
- Lower electricity consumption
- Potentially lower running costs
- Reduced reliance on gas
- Ability to use excess solar electricity
- Access to eligible government incentives
- More energy-efficient hot water heating
Actual savings depend on household usage, electricity prices, system efficiency and operating settings.
Choosing the right size is just as important as finding the right rebate.
An installer should consider:
- Number of people in the household
- Daily hot water usage
- Existing tank capacity
- Shower and bath usage
- Available installation space
- Solar PV system, if installed
- Location and noise considerations
- Manufacturer requirements
- Warranty conditions
A professional assessment can help avoid choosing a system that is either too small for your household or unnecessarily large.
The process generally involves several steps when you apply for the rebate
- Check Your Eligibility: Your property, household circumstances and existing hot water system are assessed.
- Select an Eligible Product: The proposed heat pump must meet the relevant program requirements.
- Receive Your Quote: Your quote should clearly identify applicable discounts and your final contribution.
- Complete the Required Application: For the Solar Homes rebate, eligible customers receive a unique QR code after their eligibility is confirmed.
- Installation: The authorised installer completes the installation and follows the required rebate process.
- Rebate Is Applied: For the Solar Homes rebate, the rebate is paid to the retailer and deducted from the customer’s invoice.
What If Your Gas Hot Water System Breaks?
If your existing gas hot water system is ageing, it may be worth planning your replacement before an unexpected breakdown.
From 1 March 2027, when an existing gas hot water appliance in a Victorian home break and cannot be repaired, it will generally need to be replaced with an efficient electric alternative.
That doesn’t mean every Melbourne homeowner needs to replace a working gas system immediately.
However, planning ahead gives you more time to:
- Compare heat pump systems
- Check rebate eligibility
- Compare installation quotes
- Select an appropriately sized system
- Avoid making a rushed decision after a breakdown
Ready to find out what you could save?
Greentastic can help Melbourne homeowners assess their heat pump hot water upgrade options and understand the applicable rebates and discounts.
Check Your Eligibility & Get a Quote
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