Hot Water System
Planning to get a hot water system replacement this year? You’re in luck. Victoria’s strong commitment to energy savings gives you fantastic grants and rebates to help you level up to a more energy-efficient heat pump system. Here’s everything you need to know to make the most of it in 2025.
Your hot water system is a major factor in keeping your home or business comfortable and energy-efficient. But if you’re dealing with an old, costly, or unreliable unit, it’s high time you consider a hot water system replacement.
In this blog, we’ll walk you through how to tap into programs like the Victorian Energy Upgrades (VEU) and Solar Homes schemes, understand the hot water system replacement cost, and make use of the incentives that make upgrading to modern heat pumps worthwhile.
Major Energy Grants Available in Victoria for Hot Water System Replacement
Victoria offers two main programs in 2025 to make the hot water upgrade more affordable:
- Victorian Energy Upgrades (VEU) Program
- Solar Homes Hot Water Rebate
1. Victorian Energy Upgrades (VEU) Program
Residents of Victoria have this great advantage. Under the VEU Program, Victoria’s residential and commercial properties can receive discounts when replacing inefficient water heaters with an air-source heat pump. You get:
- Discounts off the purchase and installation price, typically around $560–$630 depending on your old system.
- Businesses can install up to five domestic heat pumps or undertake larger commercial projects with no limit.
- Applies to replacing old gas or electric systems.
Amount Saved?
| System Replaced | Approximate Discount (after VEEC rebate) |
| Electric water heater → Heat pump | $630 |
| Gas water heater → Heat pump | $560 |
Note that the values vary with the market price of VEECs (Victorian Energy Efficiency Certificates) and installer fees.
You’ll need to contribute at least $200 yourself, as per program rules.
Tip: Choose ecofoot and make sure your hot water system replacement goes smoothly and you maximise your savings.
Why? Heat Pumps
From the local laundromat to the family-run bakery, commercial heat pump hot water systems are popping up everywhere. Why?
Because business owners are waking up to the fact that energy-efficient products don’t just help the environment, they help them cut costs too.
2. Solar Homes Hot Water Rebate
This is residential only and for homeowners, Victoria’s Solar Homes Program provides even more help to upgrade to a heat pump hot water system.
What’s Available?
50% rebate (up to $1,000) off an eligible heat pump hot water system.
Can be combined with VEU discounts for extra savings (conditions apply).
Eligibility:
- You must be an owner-occupier living in a Victorian home.
- Your combined household income must be below $210,000 per year.
- Property value must be below $3 million.
- The existing hot water system must be at least 3 years old.
- You must buy from Solar Victoria’s approved product list and use an authorised retailer.
Combined Savings Example
A household upgrading a 10-year-old electric storage tank could:
- Save $630 through the VEU scheme.
- Save another $1,000 through the Solar Homes rebate.
That’s $1,630 in total savings off the cost of a heat pump installation and huge ongoing energy savings!
What About Commercial Properties?
Businesses can tap into the VEU scheme but not Solar Homes. However, there are extra financial incentives for businesses too:
Federal Tax Deductions:
- 20% bonus deduction for energy-efficient equipment (up to $20,000) for small businesses (turnover under $50M).
- Instant asset write-off for eligible assets (under $20,000) for micro-businesses (turnover under $10M).
Heat Pumps that Qualify for Rebates
Not every heat pump qualifies for the upgrade. Under both the VEU and Solar Homes programs, your unit must meet strict efficiency, safety, and warranty standards.
Here’s what to check:
| Program | Requirement |
| VEU | Must be listed in the “Water heater Heat pump” or “Commercial heat pump heater” category on the VEU product register |
| Solar Homes | Must be listed on Solar Victoria’s approved hot water products list |
Common brands meeting approval include:
Ecogenica
Reclaim Energy
Stiebel Eltron
iStore
Rheem
Sanden
Ecogenica
Reclaim Energy
Stiebel Eltron
iStore
Rheem
Sanden
Pro tip: Choose a product with a high Coefficient of Performance (COP) rating.
Why Choose a Heat Pump for the Upgrade?
If you’re weighing up your options, here’s why a heat pump is a top pick:
- Massive energy savings: Uses ambient air to heat water, cutting bills by 60–70%.
- All-weather performance: Works efficiently even in Victoria’s cold winters.
- Environmental benefits: Lower greenhouse gas emissions than gas or electric heaters.
- Low maintenance: Modern heat pumps are built for durability and long lifespans.
- Government support: Rebates and grants make them affordable now more than ever.
Things to Watch Out For
- Hidden installation fees: Always check what’s included in your quote (e.g. disposal of old systems, electrical upgrades).
- Product eligibility: If you buy an unapproved unit, you’ll miss out on rebates.
- Installer accreditation: Use licensed tradespeople familiar with government rebate requirements.
- Timing: Some rebate applications need pre-approval; don’t install until your paperwork sorted (unless emergency rules apply).
Step-by-Step Checklist for Victorian Hot Water System Replacement in 2025
- Compare quotes from accredited providers.
- Choose an approved heat pump model.
- Confirm eligibility for VEU discounts and/or Solar Homes rebate.
- Apply (or your installer applies) for pre-approval where needed.
- Install the heat pump using licensed professionals.
- Pay the balance after rebates are applied.
Do this financially rewarding upgrade right now. The Victorian government is actively encouraging homes and businesses to install energy-efficient systems, and rebates will vary depending on VEEC prices and funding levels. That means the best time for your hot water system replacement is now, while incentives are high and installers are available.
Don’t leave money on the table. Talk to us, grab your eligible discounts, and make your next hot water system replacement one that saves you money for years to come.
FAQ's
Is the Vic government providing free hot water upgrades?
Yes, under the VEU program, you can upgrade to an energy-efficient hot water system with just a $200 co-contribution.
How to get cheap hot water?
Upgrade to a heat pump under the Victorian rebate programs and cut your energy bills by up to 70%.
What is the Vic heat pump rebate?
It’s a government incentive covering most of the cost for installing a heat pump hot water system, leaving you with only a small fee.
How much hot water does the average person use in Victoria?
On average, a person in Victoria uses about 50 to 70 litres of hot water per day.
Hot water in the warehouse and farmshed?
Businesses like warehouses and farms can also upgrade to efficient hot water systems under VEU rebates
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