Replacing a hot water system in Melbourne is one of the larger plumbing expenses a homeowner faces — but a combination of Victorian government rebates and federal STCs (small-scale technology certificates) can significantly reduce the out-of-pocket cost, particularly for heat pump systems.
The Victorian Energy Upgrades (VEU) Program
The VEU program (formerly the Victorian Energy Efficiency Target) provides point-of-sale discounts on energy-efficient upgrades, including hot water systems. In 2025, heat pump hot water systems are among the highest-value upgrades under VEU.
- Typical VEU discount on heat pump HWS: $500–$1,000 off the installed price
- Who qualifies: Victorian homeowners replacing an existing electric or gas storage system with a heat pump
- How it works: The installer is an accredited VEU provider and applies the discount at the point of sale — no paperwork for you
Federal STCs (Small-Scale Technology Certificates)
Heat pump and solar hot water systems also generate STCs under the federal Small-scale Renewable Energy Scheme. The value of STCs varies with the energy market price:
- Typical STC discount for Melbourne (Zone 3): $400–$900 depending on current STC price and system size
- How it works: The installer assigns the STCs and applies the value as a discount on the invoice
Combined Potential Savings in 2025
For a Melbourne homeowner replacing an old electric storage system with a heat pump:
- VEU discount: $500–$1,000
- STC discount: $400–$900
- Total potential rebate: $900–$1,900
A quality heat pump installed in Melbourne typically costs $3,000–$5,000 before rebates. After rebates, net cost is often $1,500–$3,500 — comparable to a new gas storage system, but with significantly lower running costs.
What About Gas Hot Water Systems?
Gas storage and gas continuous flow systems do not qualify for VEU rebates or STCs. If you’re replacing gas with gas, there are no government rebates available in Victoria in 2025.
Is a Heat Pump Right for My Melbourne Property?
Heat pumps work most efficiently in ambient temperatures above 5°C. Melbourne’s winter minimums can test this, but quality heat pump systems are rated for cold-climate operation and perform well year-round. For properties with gas already connected, the decision between gas and heat pump involves running cost comparison (gas vs. electricity tariff) and personal preference.
A good plumber will give you an honest comparison rather than just recommending what they carry on the van.
Sedcon Plumbing supplies and installs hot water systems across Melbourne and can advise on applicable rebates for your situation. Call 0468 013 012 | VBA Lic. 120392
Learn more about our Hot Water Repairs Melbourne service, or see all suburbs we cover across greater Melbourne.