Why is a heat pump an important step in the shift to more efficient heating in Victoria? The answer is simple: it uses less electricity to efficiently heat water. When powered by renewable energy, a heat pump becomes an environmentally friendly choice. This is why Victoria has introduced hot water rebate to encourage the installation of heat pumps. The state government is also focusing on the development of this technology and encouraging switch to ensure widespread adoption. Efforts are underway to make heat pump hot water system installation more accessible by providing solutions for retrofitting existing homes across Victoria.
There has been so much hype and action going on about the hot water rebates in Victoria – we understand this could be overwhelming and you could get swept up in the wave. But before you jump the gun, you need to educate yourself about the rebate program and what you are about to get.
So without further ado, let’s dive into it.
To clear your concept, there are 4 types of heat pumps:
- Air Source Heat Pumps (ASHP) Hot Water Systems
- Ground-Source (Geothermal) Heat Pump Hot Water Systems
- Water-Source Heat Pump Hot Water Systems
- Hybrid Heat Pump Hot Water Systems
Comparing all six types of heat pumps side by side
1. Air-Source Heat Pump (ASHP) Hot Water Systems
How it works: These systems extract heat from the air outside your home and use it to heat water. They work efficiently even at low outdoor temperatures, making them a popular choice in most climates.
Pros:
- High efficiency, especially in mild climates
- Perfect for residential settings
- Lower running costs compared to traditional electric or gas water heaters
Cons:
- Reduced efficiency in extremely cold conditions
- Can be noisy, depending on the model
Best for: Moderate climates, where outdoor temperatures don’t often drop below freezing
2. Ground-Source (Geothermal) Heat Pump Hot Water Systems
How it works: These systems extract heat from the ground using a series of underground pipes. The ground maintains a relatively stable temperature throughout the year, making this type of heat pump highly efficient.
Pros:
- Energy efficient, regardless of outdoor weather conditions
- Long lifespan due to stable ground temperatures
- Can also be used for heating and cooling your home
Cons:
- High installation costs due to the need for extensive ground loops
- Requires significant space for installation
Best for: Larger properties with ample land
3. Water-Source Heat Pump Hot Water Systems
How it works: Similar to ground-source systems, but these extract heat from a body of water, such as a lake, river, or well.
Pros:
- Highly efficient in the right conditions
- Consistent temperature source, stable performance
Cons:
- Requires proximity to a suitable water source
- installation can be complex and costly
Best for: Properties near a reliable water source
4. Hybrid Heat Pump Hot Water Systems
How it works: Combines a heat pump with an auxiliary heating method, such as an electric or gas booster, which kicks in during periods of high demand or low temperatures.
Pros:
- Versatile and reliable in a wide range of conditions
- Ensures hot water supply even in very cold weather
Cons:
- Slightly more complex and potentially higher running costs than a air source heat pump
Best for: Areas with extreme weather conditions or households with high hot water demands
Each type of heat pump hot water system has its strengths and is best suited to specific climates, property types, and household needs.
If your water heating cost is high and/or you are planning to upgrade your existing hot water system to a new one, upgrading it to a heat pump hot water system is the best bet.
You not only save money on your energy bills but also on new product and installation costs, since the upgrade is done under the government rebate program.
| Know More: Heat Pump Rebate VIC
How does heat pump work?
The technology powering heat pumps is based on the same principle as a refrigerator – but in reverse. While a refrigerator removes warm air from its interior to lower the temperature, a heat pump channels external energy into its interior. The source of this energy is outside air. The process it uses is based on the principles of thermodynamics.
Heat pump operates using the four-stage process, which sees a liquid refrigerant evaporated, compressed, condensed, and expanded in a continuous cycle. This cycle makes it possible to raise the temperature of low-temperature heat to a level where it is usable. The heat pump only needs electricity to do this — and it is highly efficient.
Key components:
- Evaporator: Absorbs heat from the air
- Compressor: Compresses the refrigerant, raising its temperature
- Condenser: Releases the absorbed heat into water tank
- Expansion Valve: Reduces the pressure of the refrigerant, cooling it down so the cycle can repeat.
What all rebates are available for swapping gas/electric water heater with a brand new heat pump hot water system?
Victorian homeowners can access several rebates (totalling up to $3,000) for replacing old water heaters with energy-efficient heat pump hot water systems. Here are the key rebates available:
- Victorian Energy Upgrades (VEU) Program: Under the VEU rebate program, households can receive rebates for upgrading to more energy-efficient hot water systems. The rebate amount varies depending on the product’s energy efficiency rating and your location. Installing a high-efficiency heat pump water heater could make you eligible for up to $1,000
- Solar Homes Program: While this program primarily focuses on solar panels and solar hot water systems, homeowners can receive rebates for replacing old water heaters with solar hot water systems. A solar hot water system that includes a heat pump component might qualify under this rebate program, which offers up to $1,000 for eligible homeowners.
- Federal Government Incentives: The Australian government also provides incentives, such as Small-Scale Technology Certificates (STCs), to homeowners installing eligible renewable energy systems, including heat pumps. The number of STCs created depends on the system’s size and the location of your property. These certificates can be traded for financial benefits, effectively reducing the upfront cost of the heat pump system by up to $1,000.
To apply for these rebates, it’s essential to check eligibility of your existing system under the specific programs so that you can get the maximum rebates/discounts.
Keep in mind that the installation company may combine the rebates to maximize your savings by applying for multiple rebates.
Who is eligible for heat pump hot water rebate in Victoria?
Victorian homeowners, tenants (with the property owner’s consent), and businesses who have traditional electric or gas water heaters are eligible for hot water rebate in Victoria.
Here are edibility criteria for hot water rebate:
- Households with a combined taxable income of less than $180,000 a year
- Homes valued at less than $3 million
- Properties with a gas or electric water system that’s more than 3 years old
- Customers who haven’t already received a hot water rebate or solar battery rebate under the Victorian Energy Upgrades program
- Not-for-profit community housing providers can also apply on behalf of their tenants
Once you’re confident you meet the eligibility criteria, fill out the contact form below.
In order to claim the rebate; you need to share a document verifying the property ownership and the details of your current water heater.
Give us a rough estimate of the daily hot water consumption at your house/business.
We’ll offer you a quote based on the model suggested by our licensed plumbers and heat pump water heater experts.
Our plumber and heat pump installer will inspect the installation site for feasibility and convenience of wiring and piping.
Once the installation is complete, we will decommission old tank and claim the rebate on your behalf.
Reasons for switching to a heat pump hot water system
Heat pump hot water systems are often considered better than traditional gas/electric water heaters for several reasons:
The biggest reason – huge savings: Let’s be honest – money saved is money earned. No matter how good a product or offer sounds, we need to look at the financial aspect of it. Same thing applies in case of heat pump upgrade as well.
is the upgrade actually worth it? The answer is yes! I’ll tell you why:
Be it age of your water heater, leaking water tank, or high electricity bills, eventually you are going to change or upgrade your old system. Assuming you do not want to upgrade it under the hot water rebate, you are going to pay for:
- New product cost: $3,000 – $3,500
- Transportation cost: $100-$300
- Installation cost (plumbing and electrical work): $3,000-$4,000
- Recycling cost: $200-$400
At a rough guess, your total cost is going to be well over $6,000, and these are conservative figures. If you live in or close to the CBD, expect these numbers to be higher than these.
On the contrary, if you plan to upgrade your heat pump under the hot water rebate Victoria, your 75% cost is easily covered under the rebate. All you have to pay is between $1,600-$3,000, which includes product, installation and recycling costs. Not bad, right!
Energy efficiency: Heat pump hot water systems are highly energy-efficient because they do not directly generate heat. Instead, they transfer heat from the surrounding air to heat the water. This makes heat pumps highly energy efficient than traditional water heaters. The result is lower energy bills and reduced greenhouse gas emissions. Yes, we need to protect Victoria’s climate – what legacy we are leaving for our future generations!
Lower operating costs: Due to their higher energy efficiency, heat pump water heaters can save homeowners money on their electricity bills in the short and long term compared to gas water heaters. The savings can be substantial, especially in regions with high electricity costs and renewable energy incentives.
Reduced carbon footprint: Heat pumps have a lower carbon footprint than gas water heaters. They rely on electricity, which can be generated from renewable sources such as wind, solar, or hydro. This can contribute to reducing greenhouse gas emissions and environmental impact.
Safety: Gas water heaters can pose safety risks, such as gas leaks or carbon monoxide emissions if not properly maintained or installed. Heat pump hot water systems do not have these combustion-related safety concerns, making them a safer option for residential settings.
Space-saving: Heat pumps don’t require a lot of space to install since they do not require access to natural gas lines. They can be easily installed in various locations, such as basements, garages, or outdoors. This makes them a great choice for homeowners who don’t have big outdoor space.
Longevity: Heat pumps typically have a longer lifespan than gas water heaters. They can last 15-20 years or more with proper maintenance, while gas water heaters may need replacement sooner.
What is Victorian Energy Upgrades (VEU) program
The Victorian Energy Upgrades (VEU) program is a state government initiative aimed at helping Victorian households and businesses reduce their energy consumption and carbon footprint. It does so by providing financial incentives for upgrading to energy-efficient products and services.
The rebate scheme is designed to make energy efficiency improvements more affordable, contribute to the reduction of greenhouse gases, and encourage investment, employment and innovation in industries that supply energy efficiency goods and services.
Key features of the VEU rebate program
Incentives and discounts: The program offers rebates, discounts, and other financial incentives for a wide range of energy-efficient upgrades, such as replacing old appliances with more efficient ones (e.g., heating, cooling, lighting, hot water systems, and more).
Energy Efficiency Certificates (VEECs): When eligible energy-saving activities are performed, Victorian Energy Efficiency Certificates (VEECs) are created. These certificates can be traded, and their value is passed on to consumers as a rebate or discount when they make energy-efficient upgrades.
Accredited Providers: Only Accredited Providers (APs) are authorized to provide eligible discounts and rebates on products and services approved under the VEU program. These providers handle the creation of VEECs and the application of rebates, making the process easier for consumers.
How it works?
- The program works by setting a state-wide target for energy savings that results in a range of energy-efficient products and services being made available to homeowners and businesses at a discount.
- Accredited providers generate Victorian Energy Efficiency Certificates, which are sold to energy retailers.
- The program operates by placing a liability on large energy retailers in Victoria to surrender a specified number of VEECs every year. Each certificate represents a tonne of greenhouse gas abated.
- Energy retailers and other large carbon emitters in Victoria are required by the government to purchase or create VEECs to offset their carbon emissions.
Benefits of the VEU program
Cost savings: By upgrading to energy-efficient products and services, participants can save on product, installation and energy costs.
Reduced carbon footprint: The rebate program encourages the use of environmentally friendly technologies, helping Victoria reduce its greenhouse gas emissions.
Government backed: The program is part of the Victorian government’s broader energy policy, supporting sustainability goals.
| Also Read: 17 FAQs About Heat Pump Hot Water Rebate VIC
VEU program in context of heat pump hot water rebate
As already mentioned above, accredited providers create Energy Efficiency Certificates (VEECs) for each heat pump hot water upgrade on your behalf. One VEEC created is equivalent to 1 tonne of CO2 abated.
To get the upgrade done, the installer needs to get evidence of your existing hot water system that they need to decommission as part of the upgrade process to determine the VEECs value that can be applied.
The VEECs are available for upgrades from electric storage or gas hot water systems.
As per the new update from ESC, you are eligible for the rebate if you are upgrading from solar hot water, gas boosted solar, heat pump or electric boosted solar as well.
What size hot water heat pump do I need?
Installing a suitable size heat pump hot water system is a crucial part of the heat pump hot water upgrade process.
If you install a bigger heat pump, there will be standing/operational losses, and you won’t see any saving in your electricity bills.
In the case of a smaller size heat pump, you’ll often run out of hot water, at the worst possible time and place: in the middle of a shower 😊).
Basic rule for choosing the right tank size
To find the perfect balance between lower electricity bills and your family’s need for hot water, follow these steps:
Step 1: Count the number of people in your household, and consider the people who might join or leave your household soon.
Step 2: Assume that each person will use around 50 litres of hot water per day.
Step 3: Require that your hot water tank keeps 1.5 days’ capacity at all times.
Step 4: Thus, multiply the number of people by 75. This will give you an estimate of how large your water tank should be.
For example, if you have a 3-bedroom house which can comfortably accommodate 4 people, it should have a 300-litre tank.
Heat pump size guide:
- Small (Tank size of 170-200 litres)
- Medium (Tank size of 215-250 litres)
- Large (Tank size of >300 litres)
How much can I save on my electricity bills after switching to heat pump?
On average, a family of four can save over $625 per year on electricity bills after switching to a heat pump hot water system. Past data for an electric hot water system shows around $820 per annum running cost for a family of four, which is just $185 for a heat pump, meaning you’ll save around $625 a year.
So heat pump owners see their system pay for itself within 5-10 years, and
save an average of $6,300 over 15 years.
The amount you can save on your electricity bills after installing a heat pump hot water system may vary a bit since it depends on factors such as your current hot water system, household size, water usage, and the efficiency of the heat pump. However, in general, heat pump hot water systems are much more energy-efficient than traditional electric water heaters, potentially leading to significant savings.
Heat pump hot water systems use up to 75% less electricity compared to traditional electric storage water heaters. This can result in substantial reductions in your electricity bills, particularly if you previously used an electric system.
Factors influencing savings:
- Energy efficiency of the heat pump installed: Higher-efficiency models tend to save more energy and money.
- Household hot water demand: Larger households with higher hot water consumption will see greater savings.
- Electricity rates: Savings depend on your local electricity rates. Higher rates mean greater potential savings.
- Climate: Heat pumps work more efficiently in mild to warm climates. If you live in an area with moderate temperatures, you will see more savings coming your way because heat pump will require less energy to heat water.
How to maintain your hot water heat pump after the upgrade?
Maintaining your hot water heat pump after installation is essential to ensure it operates efficiently and has a long lifespan. Here are some tips on how to maintain your hot water heat pump:
- Regular cleaning: Keep the area around the outdoor unit clear of debris, leaves, and dirt. Regularly clean the fins and coils to ensure proper airflow and efficiency. As for indoor unit, dust and clean any accessible components of the indoor unit, including the water tank.
- Filter cleaning: Most heat pumps have filters that need to be cleaned or replaced regularly to ensure proper airflow. Dirty filters can reduce efficiency and performance.
- Check insulation: Inspect the insulation on pipes and ducts periodically to ensure it’s intact and effective, helping to maintain energy efficiency.
- Monitor pressure and temperature: Test the pressure relief valve (usually located on the water storage tank) every six months to ensure it is functioning correctly. This valve prevents excess pressure from building up in the tank. Ensure the thermostat is set to an appropriate temperature (typically 60°C for hot water). Avoid setting it too high, as this can increase energy consumption and risk of scalding.
- Check for leaks: Regularly inspect the system for any signs of water leaks around the tank, pipes, or connections. Addressing leaks early can prevent damage and reduce water and energy waste.
- Monitor system performance: Keep an eye on your energy bills and monitor any significant changes in consumption. If you notice a sudden increase, it may indicate that the heat pump is not operating efficiently and may require servicing.
- Ensure proper airflow: Make sure there is adequate ventilation around the outdoor unit to maintain efficient heat exchange. Obstructed airflow can reduce efficiency and lead to overheating.
- Flush the tank: Consider flushing the storage tank once a year to remove any sediment that has accumulated at the bottom. This can improve efficiency and prolong the life of the tank.
FAQs about heat pump hot water rebate Victoria
Do you need to pick up my old tank?
Yes, to qualify for the rebate we are legally required to decommission your old tank by drilling a hole through to render it inoperable. We’ll pick it up and recycle for you, free of charge!
How do I find a good installer?
The efficiency and durability of a heat pump hot water depends on the product and quality of installation. We only work with certified installers who follow rebate guidelines while supplying and installing the system. A non-compliant installation is not eligible for the rebate. So, we make sure each heat pump we install is compliant so that we can submit the paperwork to the government to claim the rebates.
Where can heat pump hot water be installed?
Heat pump in installed outside. They are typically installed down the side of houses where there is no restricted access for easy installation.
Which unit should I choose?
Well, that’s a fair question! As with most things, each unit has its strengths and weaknesses. To ensure that the model we install matches your requirements, our expert installers will look at your existing water heater, household energy consumption and your water usage. On basis of that, they will recommend you a suitable brand and model that fulfils all your requirements.
How long will a heat pump hot water system last?
Lifespan of heat pumps we install is around 15-20 years, but with proper care and maintenance, some could last 25 years and even longer.
What rebates are available for hot water upgrades in Victoria?
Since heat pumps are considered a renewable energy technology, upon installation owners are eligible for:
- Small-scale technology certificates (STCs): Up to $1,000
- VEU rebate: Up to $1,000
- Solar Victoria: Up to $1,000
Are heat pump hot water systems energy efficient?
Yes, heat pump hot water systems are extremely energy efficient – in fact, they typically use 70–75% less electricity than traditional hot water systems. With water heating making up approximately a quarter of the energy use in Australian homes, switching to a heat pump system is a significant step towards reducing your electricity bills.
Who is eligible for the heat pump hot water rebate?
The rebate is available to all Victorian homeowners, landlords, and businesses across the state. It’s an inclusive program designed to encourage sustainable water heating solutions for all.
Can I receive the heat pump rebate if I’m a tenant?
Yes and no! In some cases, tenants may be eligible for the heat pump rebate. However, this can depend on the program and whether the installation is undertaken by the landlord or the tenant themselves. It is recommended to contact us to know the tenant specific rebate requirements.
Is there a deadline for applying for the heat pump rebate?
There is not specific deadline for application announced by the ESC. It is advised to get the upgrade done while you can since ESC may announce change in rebate guidelines or a deadline.
How much is the heat pump rebate amount?
The heat pump rebate amount is up to $3,000. However, this depends on multiple factors such as brand, model, your current power usage, and rebates you are eligible for. Please get in touch with one of our heat pump experts to check your eligibility for all three rebates available.
Are heat pumps noisy?
No! The air source heat pumps outdoor unit typically has sound power levels between 55 – 75 dB(A) depending on the manufacture and output.