Save up to $400 on your energy bills every year and $630 on upfront costs when you upgrade to a heat pump hot water system.
On this page:
Why upgrade?
Upgrading to an efficient electric hot water system can help you save now and over time.
Lower energy bills
Many households save around $400 a year on energy bills, depending on usage and the system being replaced. Electric heat pump water systems use heat from the air to warm water, using up to 75% less electricity than a standard electric storage system.
Get discounts
Households can save:
up to $560 off upfront costs when replacing a gas hot water system with a heat pump
up to $1,560 off upfront costs when combining a Solar Homes hot water rebate with a Victorian Energy Upgrades discount. A further $400 rebate is available by choosing an eligible locally made hot water product. This allows for a total saving of up to $1,960.
Save more if you have solar
If your home has solar panels, you can lower energy bills even further. An efficient electric hot water system can use excess solar during the day to heat water.
Efficient appliances use less energy and produce fewer emissions, making them better for the environment. Efficient electric hot water systems, especially heat pumps, produce significantly less emissions than conventional gas systems.
Eligibility
Victorian households are eligible for a hot water system discount through the Victorian Energy Upgrades program.
Private rental properties are also eligible. We recommend that landlords and tenants work together when planning an upgrade. For more information, visit Renters, landlords and body corporate.
To be eligible, you must:
have an existing hot water system (to be replaced) in a house or building that’s at least 2 years old
install an approved product through the program that has a minimum 5-year warranty.
Households can upgrade up to 2 hot water systems. Businesses can upgrade up to 5 systems.
Commercial or industrial upgrades
If your industrial premises needs a hot water system larger than a standard household unit, you can get discounts through the program. This is for both replacing an existing system and installing a new one. There is no limit on the number of upgrades.
How to get a discount
Choose a hot water system upgrade available through the program and an accredited provider from the list at the bottom of this page.
The accredited provider may complete the installation themselves or work with a partner installer.
The accredited provider (or their installer) will:
confirm eligible models
include the discount in your quote
install the system and handle the paperwork.
If you have your own installer, they can work with an accredited provider to apply the discount before any work starts. Tip: Getting more than one quote can help you compare options and find the right system for your home.
How much discount to expect
Discounts for hot water upgrades for households and businesses.
Remove this system
Replace with this upgrade
Indicative discount*
Inefficient electric hot water system*
Heat pump hot water heater
$630
Inefficient electric hot water system*
Solar-boosted hot water system
$910
Inefficient gas hot water heater*
Heat pump hot water heater
$560
Inefficient gas hot water heater*
Solar-boosted hot water system
$700
You can get up to $1,560 off when you combine a Solar Homes hot water rebate with a Victorian Energy Upgrades discount. A further $400 rebate is available by choosing an eligible locally made hot water product, with a total saving of up to $1,960.
* This can include some eligible gas-boosted and electric-boosted solar water heaters.
Customers must make a minimum contribution of $200 for upgrades and $10,000 for larger commercial and industrial upgrades.
Find out more about different types of hot water systems and find an efficient upgrade.
To replace
Why replace it?
An electric storage hot water system - uses an element to heat water and keep it in an insulated tank
Electric hot water systems have the cheapest up-front costs, but are the most expensive to run.
Choosing a heat pump hot water system instead can significantly reduce energy bills.
A gas hot water system - uses gas to store hot water in a tank or heat water on demand.
Gas systems are inefficient, particularly in colder climates. They lose a lot of heat because the tank can’t be fully insulated where it’s heated.
Choose a heat pump hot water system that’s efficient and designed to work in cooler climates.
You could save up to $400 a year on energy bills while enjoying reliable hot water year-round.
Non-functionalsolar water systems (electric or gas-boosted) - no longer uses solar because the system is broken and out of warranty.
A broken solar hot water system uses gas or electricity instead of the sun, making it much more expensive to run.
Upgrade to a heat pump hot water system, or an efficient solar-boosted hot water system to enjoy lower energy bills and reliable hot water.
Maximise savings by using both a Solar Homes rebate and a Victorian Energy Upgrades discount.
Energy-efficient upgrade
Why choose it?
Heat pump hot water systems - uses heat from the air to warm water stored in a tank. The heat pump can sit on top of the tank or be installed separately.
Heat pump hot water systems use up to 75% less electricity than a conventional electric hot water system, making them much cheaper to run.
They’re also designed to operate efficiently in cooler temperatures, making them well suited to places like Victoria.
Solar-boosted hot water systems - generate heat directly from the sun. Hot water is stored in a tank that is connected to solar collector panels.
Solar-boosted hot water systems are the most energy-efficient and the cheapest hot water systems to run.
The booster (electric or gas) ensures you still have hot water when there’s not enough sunlight, such as at night or during cloudy weather.
If you already have solar panels, a solar‑boosted system can further reduce grid energy use and power bills.
Choosing the right system for your home
Modern electric systems are designed to meet household hot water needs, even in very cold weather. Choosing a system that’s sized correctly for your home helps ensure consistent hot water without wasting energy.
As every household is different, it’s important to choose the right size system. If your system is too small, you can run out of hot water.
Important: Heat pump hot water systems must have at least a 5‑year warranty to be eligible for a discount. We recommend checking the warranty conditions carefully and choosing a provider experienced with hot water systems.
Choosing the right system for your business
To keep costs down, choose a system size that suits your business needs.
We’ve worked with the Australian Alliance for Energy Productivity to create guides on best practice design, installation and optimisation. These resources include technical advice and real examples.
Accredited providers are the only organisations that can apply the discount. They manage the installation and oversee the process.
Some accredited providers complete the installation themselves while others work with partner installers to deliver the upgrade. You can also choose your own installer if they are partnered with an accredited provider.
