Heat Pump Rebates in Australia (2026): Hot Water & Hydronic, State by State

As at October 2026, help with the cost of a heat pump comes in three layers. The federal layer is the Small-scale Renewable Energy Scheme, which lets eligible air-source heat pump water heaters create Small-scale Technology Certificates (STCs) anywhere in Australia. The state layer adds discounts or rebates: the NSW Energy Savings Scheme, Victoria's Solar Homes program and Victorian Energy Upgrades (VEU), and ACT Home Energy Support. The finance layer is low- or zero-interest loans in NSW and the ACT.

The catch is that almost all of that money is for heat pump hot water. If you're weighing up an air-to-water heat pump for hydronic radiators or underfloor heating, the picture is very different, and we show exactly where the rules stop. Every figure here is a snapshot from official government pages in October 2026. Schemes change often, so AHHAC re-checks your eligibility at quote time.

Hot water means an air-source heat pump water heater; hydronic means an air-to-water heat pump heating through radiators, underfloor pipework or fan coils.

Figures are the indicative maximums agencies publish; your discount depends on model, postcode, the system replaced and the provider.

STCs are the only heat pump incentive that applies nationally. One STC equals 1 MWh of renewable electricity generated, stored or displaced. The Clean Energy Regulator keeps a register of eligible solar water heater and air-source heat pump models, listing how many certificates each earns over a 10-year life in each postcode zone.

Why the number of STCs falls every year

The deeming period drops by one year each year until 2030, when the scheme ends. For heat pumps, the register figure is multiplied by a matching factor and rounded down:

So a model listed at 30 STCs for your postcode (an illustrative number) creates 15 certificates if installed in 2026 but 12 in 2027: a fifth less for the same unit. If your hot water system is near the end of its life, don't sit on the decision.

What an STC is worth, and who claims it

The CER's STC Clearing House price is capped at $40 (excluding GST); open-market prices vary daily. Most households assign their STCs to a registered agent in exchange for an upfront discount, so the value appears on your quote rather than as money claimed later. If you create them yourself, you must do it within 12 months of installation.

The eligibility basics

• The exact model must be on the CER register and installed exactly as listed; a swapped or missing component makes it ineligible.
• The tank must sit within the 425-litre limit for heat pumps.
• The installer must meet your state's licensing requirements.

Our heat pump hot water installation service includes the listed-model check and rebate paperwork.

The main NSW incentive is the Energy Savings Scheme (ESS) hot water upgrade incentive, available now with no closing date. It's an upfront discount on your quote: indicatively up to $640 when a heat pump replaces an electric water heater and up to $330 when it replaces gas. The actual amount varies with installer, location, model and installation complexity, and you still make a minimum payment. Watch for these:

• The discount is applied through an Accredited Certificate Provider; your own tradesperson must work with one.
• You sign a nomination form before installation.
• If you already have an efficient system you may not qualify, because the incentive is based on energy saved.
• The heat pump needs a minimum 5-year warranty against defects covering the unit, tank and supplied components.

The NSW Peak Demand Reduction Scheme doesn't currently list heat pump water heaters among its funded activities. Separately, Home Energy Saver offers property owners with household income up to $210,000 a zero-interest loan of up to $15,000 over up to 10 years for approved upgrades; its means-tested discount of up to $4,000 was listed as coming soon when we checked. Confirm your system is on the approved list. STCs apply alongside the ESS discount. Planning whole-home heating too? See heat pump hydronic heating in Sydney.

Solar Homes hot water rebate

Solar Victoria pays 50% of the product's purchase price, capped at $1,000, or up to $1,400 for an eligible locally made product, calculated after other discounts including STCs and VEU certificates. You must:

• be the owner-occupier of an existing property;
• have combined owner taxable income under $150,000 a year;
• own a property valued under $3 million;
• be replacing a hot water system at least 3 years old; and
• not have received a Solar Homes hot water or battery rebate at that address.

The product must be on the eligible list and the process runs through an authorised retailer: quote, pre-approval, a QR code, then installation within 120 days. Emergency replacements can go first, with eligibility proven afterwards.

Victorian Energy Upgrades (VEU) discount

VEU is open to all Victorian households, including rentals, and is applied upfront by an accredited provider. Indicative discounts as at October 2026 are $630 when a heat pump replaces an inefficient electric system and $560 when it replaces gas. The old system must be at least 2 years old, the product approved with a minimum 5-year warranty, and you contribute at least $200. The Victorian Government says combining both programs can take up to $1,560 off, or $1,960 with a locally made product. For whole-home systems, see heat pump hydronic heating Melbourne.

The ACT leans on finance. The Sustainable Household Scheme lends homeowners $2,000 to $20,000 at 3% over up to 10 years, with no establishment or account-keeping fees, through Brighte. Households approved before 1 July 2026, or previous participants, stay capped at $15,000. A free one-hour workshop is required.

For a hot water heat pump, the model must be on the VEU register under Water heater – Heat pump, you must be replacing an existing gas or inefficient electric system (new builds aren't eligible), and installation needs an ACT-licensed plumber and electrician. The ACT recommends zone 5-rated models that run on the heat pump alone down to −5 °C, the standard we apply in Canberra. If hot water was your last gas appliance, you can disconnect gas.

Concession card holders who own and live in their home may get Home Energy Support: a 50% rebate, up to $2,500, towards an upgrade such as a hot water heat pump, plus a separate solar rebate (up to $5,000 total), and a zero-interest loan of up to $10,000. Land value caps apply. See heat pump hydronic heating Canberra for whole-home systems.

Queensland: we found no current statewide heat pump hot water rebate on Queensland Government sites as at October 2026. The Climate Smart Energy Savers program, which included heat pump hot water, is closed. STCs are the main incentive on a Brisbane install; check qld.gov.au for anything new.

South Australia: under the Retailer Energy Productivity Scheme, retailers offer free or discounted activities including efficient water heaters. You needn't be their customer, offers vary, and priority-group households may get more.

Western Australia: no statewide rebate found; STCs apply. Tasmania: the Energy Saver Loan Scheme closed on 1 September 2025; STCs apply. Check the energy.gov.au rebates finder for anything newer.

Generally, no. Every program here funds either a heat pump water heater (STCs, NSW ESS, Solar Homes, VEU hot water, ACT hot water) or an air-to-air reverse-cycle air conditioner (VEU heating, the NSW air-conditioner incentive, ACT heating loans). As at October 2026:

• STCs are created only for registered water heaters, not space heating.
• VEU heating discounts require an approved high-efficiency reverse-cycle air conditioner.
• ACT heating loans are limited to GEMS register categories for ducted and room air-to-air heat pumps. Concession card holders should ask the ACT's Sustainable Home Advice team before assuming a hydronic unit fits Home Energy Support.

So an air-to-water hydronic heat pump isn't covered by any program we checked. If it also heats a hot water cylinder, that side only attracts incentives if the exact system is listed; we check model by model. One alternative is a dedicated, listed hot water heat pump such as the Viessmann Vitocal 161-A beside the hydronic unit, so hot water captures STCs and state discounts, at the cost of a second outdoor unit. Either way, hydronic heat pumps pay back through running cost, not rebates; see our heat pump hydronic heating guide.

Gas hot water to a heat pump

This is Australia's best-funded swap: the NSW ESS discount (indicatively up to $330), VEU (indicatively $560) plus Solar Homes and STCs in Victoria, and the ACT loan. In Victoria it's also becoming the rule. The Victorian Government's building electrification guidance says that from 1 March 2027 gas hot water systems cannot be installed in existing homes, so a gas unit that can't be repaired must be replaced with an electric alternative such as a heat pump. From 1 January 2027, new homes, including knock-down rebuilds, can't connect to gas except in specific circumstances. The government estimates the switch saves around $400 a year. Compare solar hot water and heat pump systems.

Gas hydronic boiler to a heat pump

Here the rules and money thin out. The same guidance says there's no requirement to replace existing gas space heating, and gas appliances can still be used and repaired. Two cautions: if your boiler also makes hot water (a combination boiler), check how the hot water rule applies, as we haven't seen specific guidance on combi units. And in rentals, a space heater that breaks beyond repair after 1 March 2027 must be replaced with an efficient reverse-cycle air conditioner in the main living area, so landlords with gas hydronic systems should check the standards and exemptions first.

No scheme we checked funds the air-to-water heat pump itself, so the case is running cost and future-proofing. It connects to your existing radiators or underfloor pipework, can add cooling where emitters suit, and lets you drop the gas connection and supply charge once hot water and cooking are electric. We put a heat pump swap onto an existing hydronic system at roughly $12,000–$22,000, after a heat-loss check that your emitters suit heat-pump flow temperatures. A sensible sequence: move hot water to a rebated heat pump first, then replace the boiler near the end of its life.

You rarely deal with an agency directly, but the order matters:

1. Check eligibility before installation. Solar Victoria pre-approval, the NSW nomination form and VEU provider engagement all come before work starts. Tell us your postcode, what you're replacing and its age, and whether you own and live in the home.
2. Choose a listed model. We confirm it's on the CER register and, where needed, the state's eligible list, with a warranty that meets the scheme minimum.
3. Get an itemised quote. STC, ESS and VEU discounts appear as upfront reductions; in Victoria the Solar Homes rebate comes off after those.
4. Sign the forms. STC assignment to a registered agent, the ESS nomination form or VEU paperwork. For an ACT loan, your supplier starts the application with Brighte.
5. Install and keep the records. Licensed plumbing and electrical work, compliance certificates and the old unit decommissioned. Keep the invoice, certificates and serial numbers.

Where a scheme requires an accredited provider or authorised retailer, we explain at quote stage how the discount is applied on your job. Contact us and we'll confirm what your install qualifies for.

• Hydronic space heating. Air-to-water heat pumps for radiators and underfloor sit outside every program we checked.
• Unlisted or modified systems. No register listing, or not installed as listed, means no STCs.
• Most new builds, for state incentives. Solar Homes is for existing owner-occupied homes, ACT loans exclude new builds, and NSW and VEU discounts are framed around replacing a system. STC rules centre on model, location and install date, so STCs are usually what's left for a new build.
• Work done before approval. Installing before pre-approval or signed forms can cost you the state incentive.
• The whole bill. Rebates are capped and NSW and VEU expect a contribution (VEU at least $200). Electrical upgrades, relocations and building work add cost, though the ACT loan can include 3-phase.
• Repeat claims. Solar Homes allows one hot water or battery rebate per address; VEU up to two hot water systems per household.

• Clean Energy Regulator pages on STC entitlements, the deeming-period decline, the solar water heater register and STC trading (cer.gov.au), checked October 2026.
• NSW ESS hot water and air-conditioner incentive pages, PDRS updates and Home Energy Saver (energy.nsw.gov.au).
• Solar Victoria hot water rebate pages and the Victorian Government's VEU and building electrification pages.
• ACT Climate Choices pages for the Sustainable Household Scheme and Home Energy Support, plus Queensland, South Australian and Tasmanian government pages.
• AHHAC installation and service experience with heat pump hot water and hydronic heat pumps.

Written and reviewed by the AHHAC Technical Team, licensed plumbers and hydronic engineers (NSW Lic 262528C). We'll next review it in early 2027, when the new STC deeming period and Victoria's March 2027 rules take effect.