Free Hot Water Upgrade VIC | Who is Eligible?

If you're in Victoria, you have likely heard of "free hot water upgrades," but in reality, there is no current scheme that provides an entirely free hot water system. However, the VIC government does have some rebates and incentives , which significantly lower the costs of upgrading to energy-efficient hot water systems. These include Small-scale Technology Certificates (STCs), Victorian Energy Efficiency Certificates (VEECs), and the Hot Water Rebate from the Solar Homes Program. You can save thousands of dollars when you switch to more sustainable systems such as heat pumps and solar hot water systems. In this article, we explain how these incentives work and how you can access them to upgrade your hot water at an affordable price. 

If you want to get in touch 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 upgrade.

What Are the Victoria Hot Water Upgrade Incentives?

While there isn’t a completely free upgrade on offer in Victoria, several government-supported schemes can help homeowners access discounted energy-efficient hot water systems. These incentives aim to reduce household energy consumption and make the switch to sustainable systems more affordable. The three main incentives available in Victoria are:

Victorian Energy Efficiency Certificates (VEEC):

The state's Victorian Energy Upgrades (VEU) program offers Victorian Energy Efficiency Certificates (VEECs) to encourage households to install energy-efficient appliances, including hot water systems. These certificates are generated when an accredited provider installs an eligible system, and the financial savings from VEECs are typically applied directly as a discount on the purchase and installation costs of the new system.

VEECs are part of Victoria’s efforts to reduce the state’s energy consumption and help households lower their energy bills. The number of VEECs generated depends on the type of system installed and its energy efficiency rating. Generally, the more energy-efficient the system, the greater the number of certificates generated, and the larger the discount you’ll receive.

Small-scale Technology Certificates (STCs):

In addition to VEECs, Small-scale Technology Certificates (STCs) are available through the federal government’s Renewable Energy Target. STCs are designed to encourage the installation of renewable energy systems, such as solar hot water systems and heat pumps. Homeowners can earn STCs based on the type of system installed and the location of the property. 

STCs can then be traded to reduce the system’s upfront cost. Like VEECs, they provide a significant discount that lowers the financial barrier to upgrading to more energy-efficient systems.

Hot Water Rebate:

Victoria’s Solar Homes Program offers a hot water rebate of up to $1,000 for eligible households installing either a solar hot water system or a heat pump. To qualify, homeowners must meet certain criteria, including having a combined taxable income below $210,000, and the property must not have previously received a similar rebate. The rebate is designed to cover 50% of the purchase price (up to $1,000) after applying other discounts like VEECs and STCs, significantly reducing the overall cost of upgrading to a more energy-efficient system.

While a completely free hot water upgrade isn’t available for Victorians, the combination of VEECs, STCs and Hot Water Rebate can significantly reduce the upfront cost of installing a new, energy-efficient hot water system in VIC. These incentives not only make sustainable upgrades more accessible but also help reduce household energy consumption and lower energy bills over time. By choosing an eligible system and working with an accredited provider, you can make the most of these government-supported schemes.

How Much Money Can I Save?

The amount of money you can save by upgrading your hot water system in Victoria depends on several factors, including your location, the efficiency of the system you’re installing, and the system you're replacing. Homeowners can take advantage of Victorian Energy Efficiency Certificates (VEECs) and Small-scale Technology Certificates (STCs), which can be combined to reduce the upfront costs. Homes in warmer climates tend to benefit more from heat pump systems, while those replacing older, inefficient systems can expect larger rebates and energy savings.

The overall savings can vary widely, but for eligible households, a combination of rebates through the Victorian Energy Upgrades program and the Solar Homes Program can result in substantial reductions. You could save thousands of dollars, depending on the efficiency of the system and the available rebates. Upgrading from an electric or gas water heater to a more efficient solar or heat pump system maximises both your rebate and long-term energy savings.

Keep reading to find out how to calculate your VEECs and STCs, and estimate how much money you will save when upgrading your hot water system.

How Do I Calculate How Many VEECs I Will Earn?

You can use this VEEC calculator from the VIC Government to estimate the number of VEECs you can earn when you upgrade your hot water system. Simply enter the date you plan to upgrade your hot water, select whether it is for a Residential or Business property, and then select the relevant option from the dropdown box. You will be using one of the top four options, upgrading your hot water system to either heat pump or solar, and replacing an electric or gas heater. If you plan to upgrade a system that is already energy-efficient (eg: from a heat pump to a solar pump), you will not receive any VEECs.

In this example, I chose to upgrade to a heat pump from an electric hot water system (option 1D in the dropdown list).

Then you will need to select a product brand, model and system size. In this example, we use Ecogenica 260FR, which is one of the most energy-efficient hot water heat pumps in Australia. Select your postcode, and then click 'Calculate', and it will display the eligible VEECs.

You will receive 13 VEECs when you upgrade from an electric hot water heater to the Ecogenica 260FR. At the time of writing, the market price of one VEEC is $102, which means the savings you receive are $1,326. To see the current market price of a VEEC, visit this website.

If we use another calculator to estimate the VEECs to upgrade from a gas water heater to the Ecogenica 260FR, you can see that the benefit is much lower, at only 8 VEECs, which equates to $816.

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 CCSE3302B) and the result is 16 VEECs, or $1,632.

If you upgrade from a gas hot water system to a solar water heater (Rinnai Close Coupled CCSE3302B) the benefit is much lower, at only 8 VEECs, or $816.

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.

Remember you can take advantage of both VEECs 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 $2,200, and if you are upgrading from an electric system to solar water heater, you could save around $2,500. This amount could be higher, depending on your location and which model you choose to upgrade to.

Remember you can also claim the Hot Water Rebate which will discount the amount you need to pay (after VEEC and STC discounts) by 50%, up to $1,000! This can bring your total savings to around $3,500, which is a substantial amount.

Who is Eligible for Hot Water Upgrade Rebates in VIC?

To be eligible for VEEC and STC incentives, several factors come into play. Firstly, your home must be located in Victoria, and the system you’re replacing should be inefficient, such as an old electric or gas water heater. The rebates are designed to reward households that switch to energy-efficient systems, like solar or heat pump systems, which offer significant energy savings.

Additionally, the installation must be carried out by an accredited provider under the Victorian Energy Upgrades (VEU) program to qualify for the rebates. Before proceeding, it’s important to check if your home and the system you're installing meet the program’s requirements.

To be eligible for Victoria’s Solar Homes Program Hot Water Rebate, homeowners must meet several criteria. The household must have a combined taxable income of less than $210,000 per year, and the property must not have received a previous rebate under the Solar Homes Program. Additionally, the property must be owned by the applicant and be their primary place of residence. The installation must be completed by an accredited installer, and the rebate applies to solar hot water or heat pump systems.

Types of Hot Water Systems That Qualify for Incentives in VIC

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 VIC

If you are looking to upgrade your hot water system, the process of applying for the incentives and rebates is fairly straightforward:

1. Find an Accredited Provider: Look for an installer accredited under the Victorian Energy Upgrades program, as only these providers can apply VEEC discounts to your system. You can contact EE Hot Water directly, as all our contractors are accredited installers in Victoria.
2. Choose an Eligible System: Work with your provider to select an energy-efficient hot water system that qualifies for both STCs and VEECs. Your provider will help you calculate the potential savings. Note: if you also plan to claim the Solar Homes Program Hot Water Rebate, you will need pre-approval first. You can read the specific information on their website.
3. Installation Process: Once you've chosen the system, the accredited provider will handle the installation, and the discounts from STCs, VEECs and Hot Water Rebate will be applied upfront, lowering your immediate costs.

Benefits of Upgrading to an Energy-Efficient Hot Water System

Upgrading to an energy-efficient hot water system offers several benefits to Victorians:

• Lower Energy Bills: By using renewable energy or heat pump technology, these systems consume less electricity, leading to significant long-term savings on energy bills.
• Environmental Impact: Energy-efficient systems reduce your household’s carbon footprint by lowering overall energy consumption, contributing to a greener future.
• Improved System Lifespan: Modern systems often have longer lifespans and require less maintenance, providing better long-term value and reliability compared to older, inefficient systems.

Are There Any Hidden Fees?

Even after applying all the available discounts and rebates, upgrading your hot water system won't be completely free. While incentives like STCs and VEECs are applied upfront to reduce the total cost, you will still have to pay some money out of pocket. The cost will depend on the system you are purchasing, and there may be additional installation fees if your current system requires modifications before the new system can be installed. To find out how much you will need to pay, speak to an expert from Eden Emerald Hot Water who can give you a detailed quote.

Upgrade Your Hot Water and Save Money

While a completely "free" hot water upgrade isn’t available, upgrading your system in Victoria using incentives like VEECs and STCs offers a great opportunity to save money. These schemes help reduce the upfront cost of energy-efficient systems, such as heat pumps and solar hot water units, making them more affordable for homeowners. By taking advantage of these incentives, you can also enjoy long-term savings through lower energy bills and a reduced environmental impact. Consulting an accredited provider like EE Hot Water can help you find the best solution for your home and maximise your savings.