How Victorian Energy Upgrades discounts work, in plain words

People often ask us about "the government rebate" on a heat pump or a reverse cycle system as if it were a cheque from Spring Street. The Victorian Energy Upgrades program does not quite work that way. The money comes from energy retailers, it moves through a certificate market, and it lands on your invoice as a discount. Follow one certificate through and it makes sense.

Step 1: an old appliance comes out

The program rewards cutting greenhouse gas. So most activities start with something inefficient being removed. For heating that might be a ducted gas heater, a gas wall heater or a hard wired electric panel heater. For hot water it is an electric or gas tank.

The old unit has to be properly decommissioned so it cannot be used again, and the installer photographs it in place first. That is why timing matters. Once the old heater is gone, there is nothing left to prove what was there.

Step 2: a certificate is created

The work is done under an accredited person, which is a business accredited by the Essential Services Commission. Only accredited persons can create Victorian energy efficiency certificates, known as VEECs.

The commission says each certificate represents one tonne of greenhouse gas reduction. How many certificates a job creates depends on the savings worked out for that activity under the program's specifications. A big ducted gas heater replaced with an efficient reverse cycle system creates more than a small panel heater swap.

Step 3: a retailer buys it

Large energy retailers have to surrender a set number of VEECs each year to meet a target written into Victorian law. They buy certificates from accredited persons, or from traders. The commission does not run a trading floor. It records who owns what.

So the certificate has a market value, and that value is what funds your discount.

Step 4: you get a discount

The accredited provider passes some of the certificate value on to you as a lower price. The commission says plainly that the discount varies with market activity and the certificate price. That is why two providers can offer different amounts for the same job, and why the figure can move from month to month.

The part you pay

Since 1 February 2025 there has been a minimum co-payment you must make yourself, which the provider is not allowed to refund in any form. At the time of writing the Essential Services Commission lists:

• $200 including GST per heat pump or solar water heater
• $200 per single split system under 10 kW
• $1,000 per single split system of 10 kW or more
• $1,000 per ducted system and per multi split, rising to $3,000 from 30 September 2026 for ducted systems and for multi splits of 10 kW or more

The co-payment includes the supply and installation together.

Who runs it

Two bodies. The Department of Energy, Environment and Climate Action writes the act and the regulations. The Essential Services Commission administers the program, accredits the businesses, and enforces the rules. In 2025 the rules were strengthened, including penalties for giving false or misleading information and new powers to stop people doing upgrade work if they cause harm.

What has to happen before you agree

For heating, cooling and hot water jobs at homes, the provider or their installer must give you the current VEU consumer fact sheet, tell you clearly whether the product suits your house, and say whether its size matches the fact sheet's recommendation. They must also give you a copy of the assignment form you sign, which is the paper that hands your right to the certificates over to them.

Read that form. It records the price before the discount and what you actually pay.

Where we fit

VEU discounts are applied by accredited providers. What we can do is look at your existing system, tell you whether the job looks like one of the program's activities, and point out what the provider will need to see before anything is pulled out. The two common ones for our customers are covered in the VEU discount for replacing gas heating and the VEU discount on heat pump hot water.

A few honest cautions

• Get the provider involved before the old system is touched.
• A discount is not a reason to buy the wrong size. A system that is too small for a Hepburn winter is a poor deal whatever it cost.
• Be wary of anyone who knocks on the door or calls offering an upgrade at a price that sounds too good. The commission has taken action against accredited businesses over alleged inaccurate claims and installations that did not meet the rules.

If you want a straight answer on whether your heating or hot water job is likely to qualify, ask us through our contact page or call 0417 734 206 during business hours.