Free Hot Water Upgrade NSW | Who is Eligible?

Many households in NSW have heard about the "free hot water upgrade," but in reality, there is no such scheme that offers a completely free upgrade. However, there are significant financial incentives available from the NSW Government to help reduce the costs of upgrading to energy-efficient hot water systems. These incentives, such as Small-scale Technology Certificates (STCs) and Energy Savings Certificates (ESCs), can substantially lower the overall expense of switching to more sustainable systems. This article explains these NSW Government incentives and how they make your hot water system upgrade more affordable.

If you would like to get in touch with us to find out if you are eligible and how much you can claim, fill out the form below. We will contact you about your query and help you with your new hot water system.

What Are the NSW Hot Water Upgrade Incentives?

While there isn't a completely free upgrade on offer, government-supported schemes in NSW can help homeowners access discounted energy-efficient hot water systems. The two main incentives available are:

Energy Savings Certificates (ESC):

• NSW's Energy Savings Scheme (ESS) offers Energy Savings Certificates (ESCs) to reward households for installing energy-efficient appliances, including hot water systems. These certificates are generated when an accredited provider installs eligible systems, and the financial savings from ESCs are typically applied directly as a discount on the purchase and installation costs.
• ESCs aim to reduce energy consumption across the state and lower household energy bills.

Small-scale Technology Certificates (STCs):

• STCs are part of the federal government's Renewable Energy Target, designed to encourage the installation of energy-efficient systems like solar hot water and heat pumps. Homeowners can earn STCs based on the type of system they install and their location, which can then be traded to reduce the system’s upfront cost.
• The number of STCs available depends on the energy efficiency and type of system, as well as the installation location.

While the total savings will depend on the system you choose and your personal circumstances, these schemes can help reduce the upfront cost significantly.

How Much Money Can I Save?

The amount of money you can save with hot water system incentives in NSW is not a fixed figure, as it depends on several factors. There are two key rebates in NSW that you can take advantage of: Energy Saving Certificates (ESCs) and Small-scale Technology Certificates (STCs), which can be combined to maximise your savings.

The exact savings you’ll receive from these NSW Government rebates depend on three main factors:

1. Your Location: The effectiveness of energy-saving systems, such as heat pumps, varies by climate zone. If you live in an area where a heat pump hot water system can generate significant energy savings, your rebate will be higher. Warmer climates tend to benefit more from heat pump systems, while colder regions may see lower rebates due to reduced efficiency.
2. The Efficiency of the System You’re Installing: Rebates are designed to reward households for installing highly energy-efficient systems. If you're upgrading to a highly efficient heat pump or solar hot water system, you can expect a larger rebate. Less efficient systems receive smaller rebates, as the energy savings are not as substantial.
3. The System You're Replacing: If you’re replacing an outdated, inefficient system like an electric or gas water heater, you are more likely to qualify for higher rebates. However, if the system you’re upgrading is already efficient, your rebate may be smaller, as the potential for energy savings is lower.

Keep reading to find out how to calculate your ESCs and STCs, and therefore estimate how much money you will save.

How Do I Calculate How Many ESCs I Will Earn?

You can use the calculators from the NSW Government to estimate the number of ESCs you will earn for upgrading your system. You can choose whether you are upgrading from an electric water heater or a gas water heater, and if you are replacing it with a heat pump or solar water heater.

Enter your postcode, and the brand and model of heat pump or solar water heater you plan to upgrade to, and then it will calculate your ESCs.

As an example, we have calculated the ESCs using one of the most popular heat pump models, Ecogenica EG-260FR (read review here), upgrading from an electric hot water heater, and the results are below:

You will receive 28 ESCs from upgrading from an electric hot water heater to the Ecogenica 260FR. At the time of writing, the market price of one ESC is $14.50, which means the savings you receive are $406. To see the current market price of an ESC, visit this website.

If we use another calculator to estimate the ESCs to upgrade from a gas water heater to the Ecogenica 260FR, you can see that the benefit is much lower, at only 13 ESCs, which equates to $188.50.

I also used the calculator to estimate the ESCs to upgrade from an electric hot water system to a solar water heater (Rinnai Close Coupled CCSE2002B) and the result is 37 ESCs, or $536.50.

If you upgrade from a gas hot water system to a solar water heater (Rinnai Close Coupled CCSE2002B) the benefit is much lower, at only 19 ESCs, or $275.50.

How Do I Calculate How Many STCs I Will Earn?

When calculating STCs, the great news is that you will be able to claim them regardless of which hot water system you currently have. The STCs are dependant on the efficiency of the new system that you will be upgrading to, as well as the location.

You can use this STC calculator to estimate the number of STCs you will earn. Simply enter the model of heat pump or solar water heater that you wish to install, your date of installation and the postcode, then click the 'Calculate' button.

In our example, I calculated the STCs for the Ecogenica EG-260FR, and the result was 22 STCs. At the time of writing, the market rate for 1 STC is $39.90, which means you will receive $877.80 for installing this heat pump. To see the current market price of an STC, visit this website.

I also calculated the STCs for the Rinnai CCSE2002B solar hot water system, and the result was 24 STCs, which equals $957.60.

Remember you can take advantage of both ESCs and STCs, to increase your savings. For example, if you are switching from an electric hot water system to a heat pump system, you can save around $1,300, and if you are upgrading from an electric system to solar water heater, you could save around $1,500. This amount could be higher, depending on your location and which model you choose to upgrade to.

Who is Eligible for Hot Water Upgrade Rebates in NSW?

Households in NSW may be eligible to access the rebates provided through the Small-scale Technology Certificates (STC) and Energy Savings Certificates (ESC) schemes, but eligibility depends on several factors. These factors include your location, the efficiency of the existing appliance you plan to replace, and whether your area is serviced by an approved supplier.

To qualify, your home must be located in NSW, and the system you're replacing should offer significant energy savings. For example, if you are upgrading from an old electric or gas water heater to a more efficient solar or heat pump system, you're likely eligible for the incentives. However, if you're replacing a system that is already highly efficient, you may not qualify for the rebates, as the potential for energy savings would be minimal.

It's also important to note that the installation must be carried out by an accredited provider under the scheme. This means that your location must be serviced by an approved supplier who can apply the available rebates. It’s always a good idea to check with an accredited provider to confirm your eligibility before proceeding with the upgrade.

Types of Hot Water Systems That Qualify for NSW Incentives

To qualify for the available incentives, you will need to choose from one of the following energy-efficient options:

• Solar Hot Water Systems: These systems use solar panels to heat water, making them one of the most environmentally friendly options.
• Heat Pump Hot Water Systems: Heat pumps work by extracting heat from the air, transferring it to the water, and are highly energy-efficient.

Both systems significantly reduce energy consumption compared to conventional electric systems, making them a sound long-term investment despite the upfront costs.

How to Apply for a Discounted Hot Water Upgrade in NSW

If you're considering upgrading your hot water system, the process of applying for these incentives is fairly straightforward:

1. Find an Accredited Provider: Look for an installer accredited under the Energy Savings Scheme, as only these providers can apply ESC discounts to your system. You can contact EE Hot Water directly, as all our contractors are accredited installers in NSW.
2. Choose an Eligible System: Work with your provider to select an energy-efficient hot water system that qualifies for both STCs and ESCs. Your provider will help you calculate the potential savings.
3. Installation Process: Once you've chosen the system, the accredited provider will handle the installation, and the discounts from STCs and ESCs will be applied upfront, lowering your immediate costs.

Benefits of Upgrading to an Energy-Efficient Hot Water System

The financial incentives are just one reason to consider upgrading your hot water system. Other key benefits include:

• Lower Energy Bills: By using renewable energy sources or heat pump technology, these systems drastically reduce your electricity usage, which can lead to significant savings on energy bills over time.
• Environmental Impact: Energy-efficient systems help reduce your carbon footprint by lowering overall household energy consumption.
• Improved System Lifespan: Modern energy-efficient hot water systems often come with longer lifespans and require less maintenance, offering better value in the long run.

Are There Any Hidden Fees?

Even with the available rebates, it’s important to remember that upgrading your hot water system won’t be entirely free. However, the financial assistance provided by the NSW Government through STCs and ESCs can significantly reduce your overall costs.

Your accredited provider will generally apply the STC and ESC incentives upfront, meaning you pay a reduced amount. However, there may still be additional installation fees or costs if your current system requires modifications before the new system can be installed.

Upgrade Your Hot Water and Save Money

While a completely "free" hot water upgrade doesn’t exist, the NSW Government's STC and ESC incentives provide a great opportunity to upgrade your hot water system at a much lower cost. These schemes help make energy-efficient systems more accessible, offering long-term savings on both energy bills and environmental impact. If you're considering an upgrade, explore these incentives and speak to an accredited provider like EE Hot Water to find the best solution for your home.