Hot water rebates and running costs in Victoria
The richest stacking in the country, and the dirtiest grid.
What a hot water system costs to run in Victoria, what you can claim towards replacing it, and the local facts that change the answer here — the tariff structure, the climate and the grid.
What you can claim in Victoria
Federal Small-scale Technology Certificates
$800–$1,200 off an eligible heat pump or solar thermal system
Available in every state. The installer claims the certificates and discounts your quote, so there is nothing for you to lodge. Victoria sits in STC Zone 4, the lowest-value zone. Gas and electric resistance systems create no certificates.
Administered by the Clean Energy Regulator. Official scheme page. Last verified 5 September 2026.
Solar Homes hot water rebate
Up to $1,000, or up to $1,400 for an eligible Victorian-made system from 1 July 2026
- Owner-occupiers only — renters are not eligible.
- Combined household income of $150,000 or less from 1 July 2026. Households between $150,000 and $210,000 had to apply before 30 June 2026.
- Gas storage and electric resistance systems do not qualify.
Administered by Solar Victoria. Official scheme page. Last verified 5 September 2026.
Victorian Energy Upgrades (VEU)
A discount applied at the point of sale by an accredited provider
- Delivered as a discount by an accredited VEU provider, not a claim you lodge.
- A minimum customer contribution of $200 applies.
- Stacks with the Solar Homes rebate and with federal STCs.
Administered by Essential Services Commission. Official scheme page. Last verified 5 September 2026.
Why Victoria is different
Victoria is the best place in Australia to replace a hot water system and the worst place to argue that going electric cuts your emissions today. Both facts are worth knowing before you decide.
On money: three separate programs stack here. Solar Homes pays up to $1,000, or up to $1,400 from 1 July 2026 for an eligible Victorian-made system. Victorian Energy Upgrades adds a discount applied by an accredited provider on top. The federal certificates come on top of that again. Together they can reach $2,200 to $3,800 on a single heat pump installation, which is why Victorian households sometimes report paying almost nothing.
The conditions matter. Solar Homes is for owner-occupiers only — renters are not eligible. From 1 July 2026 a combined household income cap of $150,000 applies; households between $150,000 and $210,000 had to apply before 30 June 2026. The Victorian Energy Upgrades discount carries a minimum customer contribution of $200.
On emissions: Victoria's grid emits 0.78 kg of CO₂-equivalent per kilowatt hour, the highest of any state, because of the brown coal still in the mix. Run the numbers on this page and you will see that a gas instantaneous system currently produces fewer emissions per year than a heat pump in Victoria, even though the heat pump uses far less energy. That will reverse as the grid decarbonises, and the heat pump will still be there when it does — but it is not true today, and a site that told you otherwise would be selling you something.
Every system at Victoria prices
A three-person household using 120 litres of hot water a day, at Victoria's reference rates and the Melbourne climate. On these assumptions the cheapest system to run in Victoria is solar thermal with gas boost at about $323 a year.
| System | Cost per year | Rebates | 10-year total | CO₂e a year |
|---|---|---|---|---|
| Solar thermal with gas boost | $323 | −$2,200 | $7,527 | 232 kg |
| Heat pump | $384 | −$2,200 | $6,293 | 948 kg |
| Gas instantaneous | $414 | — | $6,492 | 535 kg |
| Solar thermal with electric boost | $492 | −$2,200 | $9,225 | 1227 kg |
| Gas storage | $512 | — | $7,521 | 717 kg |
| LPG instantaneous | $745 | — | $9,797 | 621 kg |
| Electric storage | $813 | — | $10,031 | 2306 kg |
| LPG storage | $1,069 | — | $13,092 | 843 kg |
A three-person household in Victoria using 120 litres of hot water a day, at 27.5c/kWh and 2.58c/MJ for gas, with the Melbourne climate and the Victoria grid's emissions factor of 0.78 kg CO₂e per kWh. Change any of it in the calculator.
Your own household will differ. Put your bill figures into the calculator and every number above recalculates.
The certificate value is falling every January
The federal scheme is winding down on a fixed schedule. Certificates are deemed over a period that shortens by one year every 1 January, and the scheme ends in 2030 — so the same system installed in Victoria in December earns about a fifth more than it would a few weeks later.
| Install year | Deeming period | Indicative value |
|---|---|---|
| 2025 | 6 years | — |
| 2026 (now) | 5 years | $800–$1,200 |
| 2027 | 4 years | $640–$960 |
| 2028 | 3 years | $480–$720 |
| 2029 | 2 years | $320–$480 |
| 2030 | 1 years | $160–$240 |
The certificates a heat pump creates are deemed over a period that shortens by one year every 1 January until the scheme ends in 2030. Waiting from December to January costs about a fifth of the discount, for exactly the same system. It is the one piece of timing advice on this site that is worth acting on.
How Victoria compares
South Australia sits at the opposite extreme on emissions — the cleanest grid on the mainland, against Victoria's dirtiest. Queensland and Tasmania, by contrast, run no state hot water scheme at all, so Victoria's three-program stack has no real competitor anywhere else in the country.
Frequently asked questions
Which system is cheapest to run in Melbourne?
Solar thermal with a gas boost, at about $323 a year for a three-person household on 120 litres a day — cheapest to run, but also the priciest to install, so weigh it against the ten-year figures above.
How much can Victoria's stacked rebates actually add up to?
$2,200 to $3,800, combining the federal certificates with two state programs — Solar Homes and Victorian Energy Upgrades. The precise number turns on system capacity, your STC zone and the certificate price on the day, so an installer's quote is the only way to pin it down.
What does electricity cost for hot water in Victoria?
27.5c per kilowatt hour plus a $1.27 daily supply charge, from the Essential Services Commission's 2026–27 Victorian Default Offer effective 1 July 2026. A controlled-load circuit brings hot water down to 21.4c. Market offers often beat this reference rate, so check your own bill.
Does a heat pump work well in Melbourne's climate?
It is on the lower end nationally — an effective coefficient of performance around 2.22 against a 3.2 nameplate, because there is less warmth in the air to draw on. Even so, it still uses under half the electricity of a resistance element.