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Heat Pump Rebate Victoria Eligibility: Check If You Qualify for Huge Government Rebates

VIC Government heat pump hot water system rebates
Sustainability Victoria published its State of Sustainability Report 2024 in November 2024. In this survey, 95% of Victorian households said they are considering switching from gas to electric and 48% were aware of high greenhouse gases (GHG) emission intensity of natural gas appliances. Cost of living ranked #1 on the top three priority issues for Victorians. Switching from gas and energy-inefficient resistive electric water heating appliances to heat pump powered water is one of the definitive solutions to tackle all three issues:
  • Cost of living
  • High GHG emission intensity
  • And transitioning away from fossil fuels.
Almost every second Victorian homeowner or business owner that calls us up to get a hot water upgrade asks the first question: “Am I eligible to get rebates for getting my old water heater replaced with an energy-efficient water heating unit?” On most web portals, you’d find just two conditions to get the hot water rebates:
  1. You must be a household/business located in Victoria state.
  2. You should not have applied for the rebates before.
While these two conditions are essential for the rebates under the state government-run Victorian Energy Upgrades Program (VEU), there are other criterias that Victorians must meet to receive the VEU program rebates for replacement of old water unit with a new heat pump water heater or installation of a new heat pump based water heater (without any decommissioning of an old water heater and replacement). Rebate eligibility conditions for residential heat pump installations and commercial heat pump installations are different.  We’ll first cover the residential eligibility conditions for hot water rebates under the VEU program.

Which households are eligible for rebates under the VEU program?

Hot water rebates eligibility for Victoria households Before discussing the eligibility conditions for households in Victoria state, it is important to know how the upgrades are carried out, and who is licensed to install the air-source heat pumps under the VEU scheme? The VEU program was formulated under the VEET Act, 2007 and its regulations, specifications, and guidelines are listed in Victorian Energy Efficiency Target (VEET) regulations 2018, Victorian Energy Upgrades Specifications 2018, and Victorian Energy Efficiency Target Guidelines (VEET Guidelines). The VEET regulations, VEU Specifications and VEET Guidelines have detailed guidelines, regulations, and specifications for the hot water upgrades, which includes:
  1. Code of Conduct for installers and accredited businesses (businesses that are authorised to carry out the hot water upgrades under the VEU program). Code of Conduct is listed under Schedule 6 of the VEET regulations.
  2. Heat pump water heater performance, energy efficiency requirements.
  3. Eligibility conditions for households and maximum heat pump units that can be installed in residential premises.
  4. Licensing of installers.
  5. Pre-installation requirements
  6. Guidelines for decommissioning of existing water heating units.
  7. Installation guidelines and requirements for installing a new heat pump unit.
  8. Record-keeping requirement for accredited businesses.
Before the upgrade/replacement, a Victorian homeowner has to sign a VEEC assignment form. This assignment of energy certificate rights enables the VEU accredited businesses to offer discounts/rebates on heat pump hot water units to Victorian residents. The assignment of Victorian Energy Efficiency Certificates rights is done through VEEC assignment forms. One energy certificate represents abatement/avoidance of 1 ton of carbon dioxide (a GHG) equivalent. After assignment of VEEC rights and creation of VEECs, an accredited business can sell them to an energy utility company and offer rebates/discounts on installation and product in return for the assignment of the VEEC rights. Accredited businesses must ensure that all personal information collected on the VEEC assignment form is held in accordance with the Information Privacy Principles under the Privacy and Data Protection Act 2014 (Vic) (PDP Act). An accredited business (such as iPromise Australia) gets entitled to receive carbon credits — in the form of Victorian Energy Efficiency Certificates or VEECs —  for every time it upgrades/replaces an old water heating appliance with an energy-saving heat pump water heater. The accredited business gets entitled to VEECs only if the business has met the VEET regulations, VEU Specifications and VEET Guidelines. Residential hot water upgrades are done under the following activity codes of the Victorian Energy Upgrades Program.
  • Activity 1C: Get a resistive electric heater replaced with a grid electricity-boosted solar water heater. The new solar water heater should be certified by an accredited body as complying with AS/NZS 2712 Standard, and it should not have a water storage tank of volume bigger than 700 liters. The new water heater should achieve greater than or equal to 60 percent annual energy savings, as determined in AS/NZS 4234:2021 standard. The new solar water heater must be listed in the VEU Register of Products at the time of VEEC creation.  The existing resistive water heater must be connected to an electricity supply before it is decommissioned.
  • Activity 1D: Get a resistive electric heater replaced with an energy-efficient electric air source heat pump powered water heater. The new air source heat pump water heater should be certified by an accredited body as complying with AS/NZS 2712 Standard. It should have a water storage tank that is insulated and not bigger than 700 liters and a refrigerant that is less than 700 global warming potential (GWP).  The existing resistive water heater must be connected to an electricity supply before it is decommissioned. The new water heater should achieve greater than or equal to 60 percent annual energy savings as determined in AS/NZS 4234:2021 Standard. The air source heat pump should be covered by a warranty against defects for a period of at least 5 years from the day of installation.
  • Activity 3C: Get an LPG/natural gas-fired water heater replaced with an energy-efficient electric air source heat pump powered water heater. The rest conditions under Activity 3C are the same as Activity 1D.
  • Activity 3D: Get an LPG/natural gas-fired water heater replaced with a grid electricity boosted solar water heater. The rest conditions under Activity 3D are the same as Activity 1C.
In addition to meeting the VEET regulations, VEU Specifications and VEET Guidelines, the accredited businesses will only be eligible for energy certificates if they carry out the upgrades in accordance with the relevant provisions of the Australian Consumer Law (ACL), Electricity Safety Act 1998, Gas Safety Act 1997 and the Occupational Health and Safety Act, 2004.

Eligible residential premises & max installation limit

Residential property where hot water upgrades are planned under the VEU program should not be constructed within two years from the date of installation. That is, residential property must be at least two years old. Maximum 2 installations per residential property can be carried out.

Pre-installation requirements

After a homeowner agrees to the rebates/discounts offered by the accredited business, the accredited business must:
  • Share a copy of VEU Water Heating Consumer Factsheet with the homeowner.
  • Share clear and accurate information about suitability of new water heater with respect to meeting water needs of the homeowner and location of installation.
  • Advise the homeowner about the size-suitability of the new water heating unit in accordance with the VEU Water Heating Consumer Factsheet.

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Post-installation  

After the installation is complete, the accredited business will have to provide the following documents to the homeowner:
  • Tax invoice/proof of purchase.
  • Energy certificate (VEEC) assignment form.
  • VBA compliance certificate.
  • Electrical Safety compliance certificate.
  • OEM (Original Equipment Manufacturer) manual/instruction and warranty
  • Information listed in VEU Code of Conduct (including dispute resolution contact details, manufacturer’s instructions, contact details of the accredited business and/or installer).
  • A minimum 5-year warranty against defects document.

Water storage tank installation guideline

Under the VEU hot water upgrades, the water storage tank of the new water heating unit can’t be connected to an additional hot water storage tank or a manifold water heater.

Plumbing and electric work requirements

Regulatory requirements for plumbing and electrical work
 
The hot water upgrades under the VEU program must be done by a team of installers, which includes licensed plumbers and electricians. The plumbing work involves decommissioning of the existing water heating unit and installation of a heat pump powered water heating unit or grid electricity boosted solar water heater. This decommissioning and installation work must be carried out by a Victorian Building Authority (VBA) licensed plumber in accordance with Plumbing Regulations 2018. In plumbing work under VEU hot water upgrades, which involves decommissioning of a resistive electric water heater, a plumber licensed in water supply work must undertake the plumbing work. Similarly, for plumbing work which involves decommissioning of a natural gas-fired water heater, the plumber carrying out the decommissioning must be licensed in gas fitting work and water supply work. For installation of grid electricity-boosted solar water heaters under Activity 1C and Activity 3D of VEU program, the plumbers must be licensed in water supply work. For plumbing work involving installation of a heat pump water heating unit under Activity 3C (replacement of type A gas-fueled water heating appliance with air-source heat pump), the plumber must be licensed in water supply work and gas fitting work.

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A plumber licensed in water supply work must undertake the plumbing work under Activity 1D (replacement of resistive electric water heater with air-source heat pump). In plumbing work of split system heat pump water heater (which has an evaporator+compressor outdoor unit connected to indoor water storage tank via refrigerant lines), the plumber must be licensed in water supply work and refrigerated air conditioning work. If the upgrade activity involves decommissioning of type A gas-fueled water heating appliance and installation of the split system heat pump water heater, the plumbing work must be done by a plumber licensed in water supply work, gas-fitting work and refrigerated air-conditioning work. All electric work under Activity 1C, 1D, 3C and 3D of the VEU program must be undertaken by an Energy Safe Victoria licensed electrician in accordance with Electricity Safety (Registration and Licensing) Regulations 2020.

Decommissioning and disposal regulatory requirements 

  • The old water heater must be decommissioned and disposed of safely.
  • Accredited business/installers must ensure that the old water heater is disabled properly and can’t be used again.
  • Decommissioning and disposal must be done in accordance with applicable waste management requirements under the Environment Protection Act (EPA) 2017 and its regulations.
  • The accredited business, installers, and the homeowners will need to provide a declaration to the Essential Services Commission (ESC) stating that “the decommissioned product was not installed for the purposes of decommissioning it as part of an activity under the program.”

Record keeping requirements for VEU accredited business 

All accredited businesses are required to keep the following documents related to the hot water upgrades for at least 6 years:
  • VEEC assignment form
  • Invoice/proof of purchase
  • Electrical safety certificate
  • VBA compliance certificate
  • Geotagged pictures of the installation, decommissioning, existing water heater before decommissioning, picture of existing water heater showing brand, model number and serial number of the product, picture of new water heater showing date of manufacturing, and pictures of disabled old water heater.

Which Businesses are eligible for rebates under the VEU program?

Hot water rebates eligibility for Victoria businesses
The commercial and industrial heat pump hot water upgrades are done under activity 44A (i), 44A (ii) and 44A (iii) of VEU program.
    • Activity 44A (i):  It involves decommissioning of natural gas based water boilers or gas water heaters and installation of air source heat pump water heaters in place of the decommissioned gas water heaters/boilers.
    • Activity 44A (ii) : It involves decommissioning of resistive electric hot water boilers or resistive electric water heaters and installation of air source heat pump water heaters in place of the decommissioned electric resistance water heaters/boilers.
  • Activity 44A (ii) : Installation of a new heat pump powered water heater (no decommissioning involved).
To be eligible for the rebates/discounts and free upgrades under commercial and industrial heat pump water heater activities (i.e., 44A (i), 44A (ii) and 44A (iii)) the following conditions and terms met be met:
  • The upgrades must take place in premises of commercial establishments. The common areas of VBA Class 2 buildings (i.e., domestic apartment buildings) are also eligible.
  • The heat pump unit must be listed in the VEU Register of Products. 
  • The upgrade must be carried out by a VEU accredited business.
  • The new heat pump hot water system must have an insulated water storage tank of 700 litres or less.  The tank should be certified by an accredited body as complying with AS/NZS 2712 standard.
  • The new heat pump unit should be able to deliver water of a minimum delivery temperature of 45 °C.
  • The unit must be installed by a VBA licensed or registered plumber.
  • The heat pump hot water unit must achieve the specified minimum annual energy savings.
  • The unit must be modelled against the specified heat pump modelling requirements.
  • Under Activity 44A (i) and (ii), if the existing water storage tank is to be used with the new heat pump unit, the water storage tank must have been manufactured less than 10 years at the day of installation.  The existing water storage tank should have a volume that is greater than or equal to the volume of the water storage tank of the new heat pump.  Also, the existing water storage tank must be insulated.
  • The heat pump hot water system must be covered by a warranty against defects for a period of at least 5 years from the day of installation.
In addition to the above conditions/terms the regulatory requirements and relevant guidelines listed in Victorian Energy Efficiency Target (VEET) regulations 2018, Victorian Energy Upgrades Specifications 2018, and Victorian Energy Efficiency Target Guidelines (VEET Guidelines) are also applicable to commercial and industrial hot water upgrades under VEU program. It includes:
  • Plumbing and electric work requirements
  • Record keeping requirements
  • Decommissioning and disposal requirements
  • Plumbing and electric work requirements
  • Post-installation requirements
  • Code of Conduct guidelines

Marketing and lead generation guidelines for accredited businesses

Marketing and lead generation campaigns of the accredited business must adhere to relevant laws which includes:
  • Schedule 6 of VEET regulations (provisions of code of conduct)
  • Australian Consumer Laws 
  • Telecommunications (Telemarketing and Research Calls) Industry Standard 2017
  • Spam Act 2003 and Spam regulations 2021 (for email and SMS text campaigns)

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