Published by Opt Energy in October 2026. Rebate and VEU figures were checked against the Solar Victoria and Victorian Energy Upgrades websites in October 2026.
Your gas hot water unit is ten years old. The pilot light keeps dropping out, and the plumber wants an answer by Friday. Do you put in another gas unit, or is this the moment to switch?
Here’s the short answer. An eligible heat pump can qualify for a Victorian Government rebate and a Victorian Energy Upgrades (VEU) discount. VEU is the state program that cuts the upfront cost of energy saving upgrades. A new gas hot water system isn’t listed as an eligible product under either program.
On running costs, VEU says upgrading to a heat pump saves up to $400 a year on energy bills. That was the figure on its website as at October 2026. This guide shows you which incentives apply and how to test the savings against your own bills. It also covers what to check before you sign a quote.
The short answer: heat pump vs gas hot water in Victoria
Rebates and running costs at a glance
Most people weighing up heat pump vs gas hot water want two questions answered. Which option gets you money back, and which one costs less to run?
The first has a clear answer. Victorian programs support eligible heat pump and solar products, and they don’t fund new gas units.
The second depends much more on your household. VEU publishes an upper figure of up to $400 a year in bill savings. Your result could land well below or above what your neighbour sees. That’s why we always suggest you run your own numbers.
Why this decision usually lands at the worst time
We’ve been quoting energy upgrades for Victorian homes since 2014, and one pattern shows up again and again. People face this choice when the old unit is already failing. With cold showers and a deadline, plenty of households go straight back to gas because it feels familiar.
A few minutes checking your options can change that outcome, especially once you see how the incentives add up. If you’d like the wider picture first, read about other energy rebates in Victoria.
Which Victorian rebates apply to a heat pump hot water system
The Solar Victoria hot water rebate
As at October 2026, the Solar Victoria hot water rebate page states rebates of up to $1,000 for eligible heat pump and solar products. The same page also shows a higher figure of up to $1,400. The Australian Government’s energy.gov.au site refers to the same figure of up to $1,400 for the Victorian program.
Check the Solar Victoria page directly to see which product types and conditions sit behind each amount. The rebate is tied to an eligible owner and an eligible product. It won’t apply to every heat pump on the market.
The Victorian Energy Upgrades discount
As at October 2026, Victorian Energy Upgrades says you can save up to $630 on upfront costs when you upgrade to a heat pump. The discount can apply when you replace an inefficient system, whether it runs on gas or electricity today.
Conditions do change, so confirm the exact replacement wording on the VEU page before you rely on it. If both incentives look relevant to you, ask your installer to show each one as a separate line on the quote. For more background, see how the VEU program works.
Why a new gas system misses out
Both programs list heat pump and solar products only. There’s no Victorian Government rebate for installing a new gas unit. If anyone tells you there is, ask them to show you the program and the page where it appears.
A warning about NSW figures you may see online
You might come across discounts of $640 and $330 while searching. Those amounts belong to the NSW Hot Water Upgrade Incentive. They don’t apply in Victoria, so leave them out of your sums.
Which one actually saves you more to run
What the VEU figures say
VEU states you can save up to $400 a year on energy bills after upgrading to a heat pump. Treat it as an upper figure, not a promise. It shows what’s possible, but your own bills will tell the real story.
What changes your savings
A handful of factors move the number, and they rarely move together:
- The number of people living in your home
- How much hot water you use, from long showers to laundry habits
- Your gas and electricity tariffs
- The age and efficiency of your current unit
- Whether you have rooftop solar
A large family with an old, inefficient unit will usually see a much bigger change than a couple with a newer system and short showers. You can also cut how much water you need to heat in the first place. One easy way is to pair the upgrade with efficient shower heads, such as the 7.5 litres per minute models we supply.
How to compare using your own bills
This is the same method we suggest to customers who ask us whether a switch is worth it. It takes about half an hour with your bills in front of you.
- Gather your last four quarterly gas bills so every season is covered.
- Write down the usage charges and the daily supply charge separately.
- Estimate how much of that usage goes to hot water compared with heating and cooking.
- Decide whether you’d still keep a gas connection for cooking or heating.
- Add the rebate and VEU discount shown on a formal written quote.
- Put the net upfront cost and the likely yearly saving side by side.
Step 4 matters more than most people expect. If you keep gas for cooking, you’ll still pay the daily supply charge, so your saving comes only from the usage side of the bill.
If you want clearer data before you decide, track your energy use at home for a few weeks first.
Heat pump vs gas hot water side by side
| Factor | Heat pump hot water | New gas hot water |
|---|---|---|
| Solar Victoria rebate eligibility | Yes, for eligible products and owners | Not listed as eligible |
| VEU discount eligibility | Yes, for eligible upgrades | Not listed as eligible |
| Energy source | Electricity | Gas |
| Pairs with rooftop solar | Can use daytime solar generation | No, runs on gas |
| Ongoing gas supply charge | None for hot water | Yes, while connected |
| Upfront price after incentives | Set by formal quote | Set by formal quote |
Real situations: which choice fits your home
Your gas unit has failed mid winter
Nobody wants cold showers in July, and that alone pushes people to rush. A quick like for like swap gets the hot water flowing again. But it shuts you out of the incentives and ties you to gas supply charges for years.
If you can manage a short wait, an eligible heat pump quote may well be worth it. When you ask for the quote, ask for the likely install date too. That way you can weigh the wait against the savings.
You already have rooftop solar
Solar panels make their power during daylight hours, not overnight. An electric heat pump can run on that daytime power, which a gas unit can’t do. Ask whether the unit you’re quoted has a timer or solar feature, and how it’s set up to heat water while your panels are producing.
Hot water is your last gas appliance
Some Victorian homes have already moved to electric cooking and split system heating. If hot water is the only gas appliance left, switching could let you close the gas account and stop paying the daily supply charge. Before you count that saving, ask your retailer about disconnection and any fees involved.
You rent or plan to sell soon
The rebate is tied to an eligible owner, so renters should talk to their landlord first. Landlords should confirm their own eligibility rather than assume they qualify. If you plan to sell soon, check eligibility and timing carefully before you commit to a quote.
What to check before you accept a quote
Eligibility questions to ask
- Is this exact product listed as eligible?
- Am I, as the owner, eligible for the rebate?
- Does my existing system count as an eligible replacement for the VEU discount?
How the price is set
Any indicative “from” price depends on your VEU eligibility and the VEEC market price at the time. A VEEC is the energy efficiency certificate behind the VEU discount, and its value moves with the market. Your actual price is set by the formal written quote.
If you turn out to be ineligible
Opt Energy does not guarantee the availability or amount of any government incentive or VEU discount. If you’re found ineligible, the indicative price can’t be achieved and the actual price will be higher.
Your protections
Nothing gets installed until you accept a formal written quote, and you’re under no obligation before that point. If an unforeseen cost shows up on the day, we’ll tell you straight away and you’re still free to decline. If the job can’t be finished as quoted, we’ll restore your property to how it was before work began. A $200 cancellation fee applies if you cancel after accepting the formal quote and before installation.
How we approach a heat pump upgrade
The Emerald heat pumps we supply
We install Emerald heat pumps. They use DC technology, offer app based control over your home wifi and include a Solar Soaker feature. If you have solar, ask us how the Solar Soaker works with your setup before you decide. You’ll find the full details in our Emerald heat pump range.
What changes when you move off gas
Swapping gas for a heat pump is a bigger job than a like for like replacement. In our view, most surprises on install day come from questions nobody asked at the quote stage. These are the ones worth raising with any installer early:
- Where will the new unit sit, and is there enough space and airflow around it?
- Is your existing electrical supply suitable, or is extra electrical work needed?
- What happens to the gas connection that fed the old unit?
- Who removes and disposes of the old system?
Clear answers to these questions should appear on your formal written quote. If an answer is missing, ask for it in writing before you accept. That way, nothing about the job comes as a surprise on the day.
What install day looks like
We know install day means having tradespeople in your home. One customer, Aaron, had five split systems fitted in a single day. That was an air conditioning job rather than hot water, but it shows how our crews work. They kept going through the rain and worked around the family so the baby could nap. Then they cleaned up and took every box away. We aim to bring the same care to every heat pump job.
Experience
We’ve been trading since 2014, and we’ve been a VEU accredited provider since 2014. We look after Victorian households and businesses from our office at 16/36 Sabre Drive, Port Melbourne. All our installers are certified and vetted before they work in your home. Our customers have left 304 Google reviews with an average rating of 4.0, and you can read them before you decide.
Frequently asked questions
Can I get a Victorian Government rebate on a new gas hot water system?
No. The Solar Victoria rebate covers eligible heat pump and solar products. The VEU discount applies to upgrades to an eligible heat pump, including when you replace an inefficient gas system. A new gas unit isn’t listed under either program.
How much is the Victorian hot water rebate in 2026?
As at October 2026, the Solar Victoria page states up to $1,000 for eligible heat pump and solar products. A higher figure of up to $1,400 is also published, so check the page to see which products and conditions it covers. Separately, VEU states up to $630 off upfront costs for a heat pump upgrade.
Is a heat pump cheaper to run than gas hot water?
VEU says you can save up to $400 a year on energy bills by upgrading. What you actually save depends on your usage, tariffs, current system and whether you have solar. The most reliable test is to compare your own quarterly bills against a formal quote.
What happens if I am not eligible for the rebate or discount?
Opt Energy does not guarantee the availability or amount of any incentive or VEU discount. If you’re ineligible, the indicative price can’t be achieved and the actual price will be higher. You’re under no obligation until you accept a formal written quote.
Can I cancel after accepting a quote?
Yes, although a $200 cancellation fee applies if you cancel after accepting the formal quote and before installation. Before you accept, there’s no obligation and no fee.
Do the NSW hot water discounts apply in Victoria?
No. The $640 and $330 amounts belong to the NSW Hot Water Upgrade Incentive. Victorian households should look at the Solar Victoria rebate and the VEU program instead.
Ready to compare heat pump and gas for your home
In Victoria, eligible heat pumps qualify for government support and new gas units don’t. How much you save each year comes down to your usage, your tariffs and your current setup. The formal written quote confirms your real price before anything is installed, so you always know where you stand.
If your old unit is on its last legs, request a no obligation formal quote. We’ll check your eligibility and give you a clear price. For the full rebate details, read our guide to the hot water system rebate in Victoria.
