Heat Pump Hot Water Rebate Victoria 2026: VEU + STC Explained

Heat Pump Hot Water Rebate Victoria 2026: VEU + STC Explained — a Prime Plumbing & Gasfitting plain-English guide to heat pump hot water rebate victoria for Melbourne homeowners. Below we cover what works, what doesn't, and when to call a licensed plumber.

Quick answer: Two rebates apply to heat pump hot water installations in Victoria in 2026: the Victorian Energy Upgrades (VEU) scheme administered by the Essential Services Commission, typically worth $1,000-$2,800 depending on the unit and location, and federal Small-scale Technology Certificates (STCs) administered by the Clean Energy Regulator, typically worth $300-$1,200 depending on zone and unit. Both are claimed by your installer, not by you — they're applied as a discount to the install quote. Combined, the rebates typically reduce a $5,500-$8,500 supply-and-fit heat pump install to a net cost of $2,800-$5,500. The VEU rebate amount is reviewed periodically and can shift; we always quote with the current rebate so you see the actual price you'll pay. Both rebates require the installation be done by an accredited installer (we are) and the unit be on the approved list.

Victorian Energy Upgrades (VEU)

The VEU scheme (formerly known as the Victorian Energy Efficiency Target / VEET) is run by the Essential Services Commission of Victoria and is the larger of the two rebates for most heat pump hot water installs.

It works on a certificate market: each eligible install creates Victorian Energy Efficiency Certificates (VEECs) based on the energy savings the install delivers compared to a baseline. Energy retailers (the gas and electricity companies) are required to surrender a quota of VEECs each year — they buy them from the market, which is what gives them dollar value.

The accredited installer creates the certificates as part of the install paperwork, sells them into the certificate market, and passes the value back to you as a discount on the install cost. You don't see the certificates or the market — you just see a lower number on the quote.

VEEC values fluctuate — the spot market price can move week-to-week. Your quote is based on the prevailing rate at quote time, not at install time, so we lock the discount when you accept the quote.

Federal Small-scale Technology Certificates (STCs)

The STC scheme is run by the Clean Energy Regulator at the federal level. It applies to heat pumps anywhere in Australia, not just Victoria. STCs are calculated based on the energy displacement vs an electric resistance baseline, with a deeming period (the years of expected operation) and a zonal factor (climate zone affects deemed savings).

Each STC is worth a market-traded amount — like VEECs, the price moves but is currently around $35-$40 per certificate.

A typical Melbourne residential heat pump install generates 8-25 STCs depending on the unit's energy performance and the climate zone. At current prices, that's typically $300-$1,200 of rebate value.

Like VEU, STCs are claimed and assigned by the installer and applied as a discount on your quote.

Both schemes are reviewed and adjusted periodically. In recent years:

VEU changes

• The VEU deeming methodology (how energy savings are calculated for each unit) is reviewed by the ESC. Updates can shift the per-install certificate count up or down.
• The list of approved models is updated as manufacturers submit new units for assessment.
• The certificate market price moves daily based on supply and demand from energy retailers.
• Eligibility scope has been periodically reviewed — for example, restrictions on new-build vs replacement scenarios.

The net effect for you: rebate values shift over time. Quotes are valid for a defined period (usually 30 days for us) at the rebate value calculated at quote time. If you wait six months between quote and install, expect a requote.

STC changes

• The deeming period (years of operation factored into the calculation) is on a phaseout schedule that gradually reduces the calculated certificate count over time. As the scheme winds down toward its planned 2030 close, certificate counts per install decrease.
• Zone factors are stable (Melbourne is in Zone 4 — moderate climate).
• Market price moves with overall STC market activity.

The trend over the next few years: STC value per install slowly decreases. VEU value depends on policy direction and certificate market dynamics.

The practical takeaway: rebate-driven installs are typically more attractive sooner rather than later under current settings, because both schemes' unit values have downward trends in their methodologies. That said, the net install cost difference between gas and heat pump is also driven by the gas/electricity price ratio, which tends to favour heat pump over time on running cost — so even at lower rebate levels, the case for heat pump usually still works for end-of-life gas replacements.

Solar Victoria heat pump rebate

The Solar Victoria heat pump rebate (separate from VEU) has run intermittently in recent years, offering an additional $1,000+ rebate for heat pump installs that meet specific criteria. Eligibility, rebate amount, and availability change — Solar Victoria publishes current details on its website. When the program is open and your install qualifies, the Solar Victoria rebate can be stacked with VEU and STCs (generally), creating a much larger total discount. Your installer will check current Solar Victoria status when quoting.

Electricity retailer offers

Some electricity retailers offer additional bonuses for switching from gas hot water to heat pump (often as a way for the retailer to acquire your electricity business and earn VEU certificates of their own). These are not technically "rebates" but they reduce your effective install cost. Worth checking your retailer's current offers.

Solar PV bundling

If you're installing solar PV at the same time, the heat pump install integrates well — schedule the heat pump to run during solar production hours and your hot water becomes effectively free. There's no separate "heat pump + solar" rebate, but the running-cost case improves substantially.

Federal home electrification programs

Federal programs targeting home electrification are evolving and may add additional incentives over time. These tend to be slower-moving than state-level VEU changes, but worth asking about at quote time if relevant.

Book a heat pump quote with rebates calculated

Call 0475 407 670 or send through the contact form. Tell us your existing hot water type, household size, and whether you have solar PV — we'll quote the install with VEU + STC + any current Solar Victoria rebate calculated and shown as line items.

• BPC #103414 — Plumbing Industry Commission licensed
• Type A Gasfitter — registered with Energy Safe Victoria
• VEU and STC accredited — rebates applied at quote time, not promised separately
• 4.8 stars on Google

Booking with a non-accredited installer

Without accreditation, the installer can't generate the certificates, and you don't get the rebate. The discount you might think you're getting from a "cheap" non-accredited quote evaporates when the rebate doesn't apply.

Buying the unit yourself and asking the installer to "just install it"

The rebate paperwork is tied to the supply-and-fit transaction by the accredited installer. A unit you bought separately — even an eligible model — generally doesn't generate the same rebate value. The structure is set up to incentivise integrated supply-and-install through accredited channels.

Choosing an unapproved model

Models not on the VEU/STC approved lists generate no rebates regardless of their actual energy performance. Some imported or off-brand units claim "heat pump" status but aren't on the lists. Always check the approved list before committing to a specific model — a $200 cheaper unit that costs you $2,000 in lost rebate is the wrong trade.

Waiting for a "better rebate next year"

VEU values are on a slow downward trend in unit terms. STCs are scheduled to wind down by 2030. Waiting rarely improves the economics.

Not factoring rebate fluctuation into the timeline

If your hot water is on borrowed time (10+ year-old gas unit, signs of leak, intermittent failures), book the replacement quote before you have an emergency. An emergency replacement at after-hours rates in winter, with a unit that happens to be in stock rather than the unit you'd have chosen, is the worst-case scenario for getting maximum rebate value.

Prime Plumbing & Gasfitting installs heat pumps with full rebate paperwork across Melbourne's eastern, south-eastern, inner-east, and bayside suburbs. See all suburbs we service →