As more Australians make the switch to solar in a bid to reduce their energy bills and embrace renewable energy, so too are they taking advantage of the various government rebates and incentives available. However, what many people don’t realise is that these incentives aren’t just limited to rooftop solar panels. There are also generous rebates for upgrading to a new hot water system.
Specifically, if you’re considering a solar or eligible heat pump hot water system, there are rebates available to help you cut down installation costs and ongoing energy bills. Traditional electric or gas water heating can be among the biggest contributors to household energy use. That’s why many Australians are not only switching to solar power, but also upgrading their hot water systems and seeing a noticeable drop in their energy bills.
In this guide, we’ll break down the major hot water system rebates and incentives available across Australia, including how they work, what systems qualify, and how to claim them. We’ll also explore how these programs vary between states and territories, and what to consider before upgrading your system.
Improving energy efficiency doesn’t just lower household energy bills; it also supports Australia’s broader climate goals and strengthens our national energy security.
This is because by using less energy, we’re reducing pressure on the electricity grid. As a result, this helps to ensure a more stable and reliable power supply for everyone.
However, the most energy-efficient appliances, like heat pump or solar hot water systems, often come with higher upfront costs. The good news is that to help ease the financial burden and encourage more households to make the switch, both state and federal governments offer a range of rebates and incentives.
Let’s start at the federal level, where one of the most impactful initiatives is the Small-Scale Renewable Energy Scheme (overseen by Solar Accreditation Australia (SAA). The program helps you invest in renewable energy technologies, including solar and heat pump hot water systems, by offering Small-scale Technology Certificates (STCs).
In its simplest terms, STCs act like a rebate, significantly reducing the upfront cost of installing an eligible system. The number of certificates you receive depends on factors such as:
For an installer to be eligible to claim STCs on your behalf, they must now be accredited by Solar Accreditation Australia (SAA).
We see customers saving hundreds of dollars off their installation costs. Most accredited installers will apply the value of the STCs as an upfront discount on your bill, so you won’t need to claim them separately. The main thing to know is that both solar and heat pump systems qualify for STCs.
On top of the federal STC program, most states and territories offer additional rebates. So, let’s break it down state by state.
In NSW, residents can access multiple rebates and incentives under the Energy Savings Scheme (ESS). This scheme encourages households and businesses to make the switch to more efficient appliances. If you’re upgrading from an older electric or gas system, you could be eligible for a rebate that significantly lowers the cost of a new heat pump or solar hot water system.
Furthermore, there are approved providers that run appliance replacement offers. They can replace your existing inefficient system with an energy-efficient alternative at a heavily discounted price. You will need to contact an ESS-accredited supplier, such as Same Day Hot Water Service, to confirm your eligibility. Alternatively, you can check your eligibility and learn more about available offers via the NSW Energy Savings Scheme.
Victoria offers some of the most comprehensive hot water upgrade incentives in Australia. Firstly, through the Victorian Energy Upgrades (VEU) program, eligible households can receive discounts for replacing inefficient electric or gas hot water systems with more efficient models (with Victorian Energy Efficiency Certificates), including heat pumps or solar hot water. This can be combined with other discounts, and there’s a higher rebate of up to $1,400 for eligible Australian-made products.
On top of that, there’s the Solar Homes Program, which further supports this transition. If you’re an owner-occupier of a home valued under $3 million, and meet income eligibility criteria, you may qualify for a $1,000 rebate for the installation of heat pump or solar hot water systems.
Besides the national Small-scale Renewable Energy Scheme (SRES), Queensland’s Climate Smart Energy Savers Program currently offers rebates up to $1,000 (or the full amount for low-income households) to replace old hot water systems with 4-star+ efficient models.
Eligible residents must use licensed installers and submit applications before installation. While the program remains active, rebate amounts and eligibility can change, so always verify requirements via the official Energy Saver QLD portal before purchasing.
Other incentives include interest-free loans and grants for solar power systems through the Affordable Energy Plan, which may also apply to approved solar hot water systems. These incentives (subject to income testing) can be stacked with existing rebates, effectively reducing upfront costs to zero.
Western Australia now offers state-funded rebates to encourage energy-efficient upgrades. Eligible households can receive rebates of up to $1,000 for eligible renewable energy systems, including heat pumps and solar.
Here’s a quick breakdown of all other states and territories.
The ACT leads smaller regions with its progressive Sustainable Household Scheme, offering loans for heat pump or solar hot water installations (subject to income thresholds). This stacks with the federal STCs, while energy-efficient homes also enjoy stamp duty exemptions. The territory’s integrated approach makes it a standout for eco-upgrades.
SA’s Retailer Energy Productivity Scheme (REPS) delivers rebates through energy retailers like AGL and Origin for heat pump installations. Additionally, low-income households qualify for an extra $250, with retailers often topping up amounts during promotions (always compare offers between providers). Stack all these with the federal STCs, and South Aussies can benefit greatly.
Tasmania residents can apply for loans from the Energy Saver Loan Scheme for energy-efficient upgrades. Eligible upgrades include solar panel systems, battery storage and home EV chargers.
The NT’s Smart Energy Grants (federally co-funded) now cover solar hot water systems and heat pumps, offering a 50% cost split (up to $5,000) for eligible homeowners. This stacks with federal STCs, effectively slashing upfront costs by 60–75%.
Installers must now hold accreditation from Solar Accreditation Australia (SAA) to be eligible to claim STCs.
Proof of purchase, installer license, and system specifications (star ratings/compliance certificates).
Apply before installation for most programs. Processing takes 2–8 weeks.
Pro Tip: Keep digital copies of everything—rebate portals are prone to crashing near deadlines.
When upgrading, heat pumps and solar systems typically qualify for the highest rebates (typically up to $2,000 via federal STCs), while gas and electric options often miss out. Heat pumps lead in efficiency, using 70% less energy than electric tanks, while solar systems excel in sunny regions. Though pricier upfront, both deliver long-term savings, slashing bills by $300+/year.
Heat pumps are today’s gold standard, combining energy efficiency (3–4x more efficient than gas) with broad rebate eligibility. Unlike solar, they work in all climates and need no roof space.
Yes, many states allow stacking federal STCs with local rebates. It’s recommended to always check program rules.
Heat pumps and solar systems (4-star+ rated) typically qualify; electric/gas rarely do
Landlords usually claim rebates, but tenants can ask for upgrades via state “rental efficiency” programs.
As demonstrated, upgrading to an energy-efficient hot water system can unlock thousands of dollars in rebates while slashing your annual energy costs. Depending on where you’re based, you can qualify for federal STCs, state rebates, or local incentives, but the key is choosing the right system (heat pumps or solar) and using an approved installer to ensure compliance.
For personalised, friendly advice and a seamless installation process, consult the experts at Same Day Hot Water Service. We help you navigate rebates and recommend the most cost-effective solution for your home.