On 31 May 2023, the Department of Energy, Environment and Climate Action (DEECA) introduced space heating and cooling activity (for reverse cycle air conditioner upgrades) under the Victorian Energy Upgrades (VEU) program.
Since the day activity page went live, estimated rebate amounts have been explicitly listed on it. The VEU discounts apply to the installation of new Reverse Cycle Air Conditioners (RCACs) or the replacement of the following existing units with RCACs:
- Hard-wired electric resistance room heaters.
- Ducted gas heaters.
- Non-ducted gas heaters.
If discount numbers are specified for the replacement of existing space heating/cooling units with RCACs and for the new installation of RCACs, you can be sure that the replacement or new installation of RCACs under the VEU program does not come for free.
However, it is true that for a few months after the launch of space heating and cooling activity, VEU program accredited air conditioner installers were offering heavy discounts – to the extent of 50-70 percent on retail price of a new RCAC unit. Consequently, some installers aggressively advertised these upgrades as “free.”
The rebate number an VEU accredited installer can quote depends on the brand and model of an air conditioner unit and current VEEC (Victorian Energy Efficiency Certificate) energy certificate prices in the energy markets.
The higher the price of VEEC, the greater the discount an installer will offer.
Since the VEEC prices surged in 2024, the VEU accredited installers offered larger discounts on ESC approved RCAC units and pushed their advertising campaigns of “free air conditioner” as much as they could.
Unfortunately, this race to the bottom led to the installation of substandard air conditioning units, with some businesses prioritising number of installations over quality.
Co-payment requirement
In late 2024 (on 25 October 2024), the Essential Services Commission released amendments to VEU program and VEU Registry – online register of VEECs and ESC approved products). It introduced a minimum amount (as “Co-payment”) a consumer must pay (listed as under) for an RCAC unit even after availing VEU scheme discounts:
- $200 for non-ducted RCACs of cooling capacity up to 10kW.
- $1000 for non-ducted RCACs of cooling capacity above 10kW.
- $1000 for all ducted and multi split RCACs.
The amendments were announced on 25 October 2024 but it came into effect on 1 February 2025.
Thereafter the ESC updated the space heating and cooling activity scheme page and it now explicitly states:
“Under the VEU, space heating and cooling systems have a minimum customer contribution that must be met by all households and businesses.”
Despite this explicit co-payment requirement, we continue to receive enquiries regarding “free” air conditioners. It is important for consumers to understand that under the revised regulations, a financial contribution is now mandatory to ensure quality and compliance.
“Free aircon” trap
During the early days of the VEU program, households in Victoria could get halogen/fluorescent lights replaced with LED bulbs for virtually free under the VEU program. The ESC received many complaints and reports regarding accredited businesses claiming VEECs against poor quality lighting products and installation.
A similar trend emerged with the space heating and cooling activity, where some installers supplied substandard RCAC units to maximise margins on VEU subsidised installations. As the VEU rebate can only be claimed once per household/business, we strongly recommend choosing a rightly sized ESC approved RCAC unit from an established brand.