Solar Hot Water Subsidies For Victorians

Solar hot water subsidies in Victoria

Power Your Hot Shower With Solar – Image:  Nicole-Koehler, CC BY-SA 3.0

Households and businesses in Victoria can still take advantage of added incentives for upgrading their gas and electric hot water systems to solar units.

Heating water is the second largest energy guzzler in a typical Australian home, so it makes good financial sense to take steps to minimize the cost of this activity.

In Australia, the installation of solar hot water systems and heat pumps are accompanied by “Small Scale Technology Certificates” (STCs) that form the basis of subsidies; usually provided as a point-of-sale discount .

In Victoria, there’s an added incentive under the Victorian Energy Efficiency Target (VEET) scheme, Victorian energy efficiency certificates (VEECs). 

VEECs are electronic certificates created by specified energy saving activities known as Prescribed Activities. Each certificate represents one tonne of carbon dioxide equivalent (CO2-e) avoided and has a financial value.

Among the prescribed activities are upgrading:

  • Electric to gas or boosted solar hot water
  • Solar retrofit on electric hot water
  • Gas to gas boosted solar hot water
  • Adding a solar pre-heater on a gas water heater

VEECs apply to all of the above for both business and residential applications. We’ve also seen an installer recently indicate VEECs are available on air-source heat pumps, but that’s something we need to confirm.

UPDATE, MAY 1 : “Decommissioning an electric resistance water heater and installing an electric boosted solar or heat pump water heater is an eligible activity under Activity 1E,” states the VEET office.

The number of VEECs you’ll receive varies on the size of the system and where you live. As with STCs, the value of a certificate also fluctuates according to supply and demand; but the general range of the full subsidy is generally between $300 and $1,500 – a significant chunk of change.

Like STCs, the VEEC system is rather complex, so thankfully most installers offer the financial benefit as a point of sale discount if you sign the certificates over to the installation company.

Given the total value of the VEECs in addition to the substantial subsidy associated with the STCs, now is a really good time for Victorians to consider making the switch to solar hot water.

Whether you’re in Victoria or elsewhere in Australia, you can get three quotes from reputable installers and learn more about saving a bundle on water heating (and what to avoid) at SQ’s sister site, Solar Hot Water Quotes.

By the way, if you haven’t yet installed solar panels, a good quality electric boost solar hot water system combined with solar PV can slash your water heating bills by up to 90%. However, as Finn points out, if you already have an instant gas hot water heater, then it makes sense to reuse it as your booster if possible.

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.


  1. Michael, your final sentence “…electric boosted solar hot water system combined with solar PV…” sparked my interest. By this, do you mean a solar thermal hot water system combined with a PV diverter type device to power the electric elements?
    I am interested because I have been contemplating a similar setup for my own hot water system. I currently have a solar thermal hot water system & have recently increased the size of my PV system so often have surplus electricity.
    My only concern is how much benefit there would be. The solar thermal panels already supply most of the hot water during summer so there could only be a gain in winter. But a run of poor days for solar thermal gain are also likely to be poor days for PV gain, so how often would a boost from grid electricity be avoided?
    What are your thoughts?

    • Ronald Brakels says

      Hello Peter, Ronald here.

      For a standard electric hot water system there are two main ways to increase the amount of solar electricity it uses. The first is to put the hot water system on a timer so it switches on during the day when solar PV output is likely to be high and the other is to install a diverter so excess solar electricity is used to heat water instead of sending it into the grid. This article covers both approaches:

      The same applies for electric boost solar hot water systems, but the benefits will be much less. As you have pointed out, there is going to be a lot of overlap between needed to electrically boost the hot water system and low PV output. Most people don’t consider the cost of getting a diverter for a standard electric hot water system to be worthwhile and I don’t see paying to have one installed to an existing electric boost solar hot water system being worthwhile. A timer is less expensive, but again may not be very cost effective.

      Hope this helps.

      • Hi Ronald, thanks for your comments.
        I am sure you are correct that paying for a PV diverter is unlikely to be cost effective. I though, have a Fronius inverter which has a built-in relay that can be made to switch when the PV output to the grid exceeds a programmable wattage. Not as sophisticated as a PV diverter but better than nothing. It’s not free though, as there is a cost in connecting the Fronius relay to a power relay to switch the hot water boost elements.
        I guess I was hoping someone had done the sums to work out if it was worth it but it’s probably not.
        My other plan which is likely to be more viable is to connect the surplus PV output to a small heater under my desk. My study is on the south side of the house & is freezing all winter, even when I can see the sun blazing away outside!

        • Keith Pad says

          According to Chromagen Veecs and STC’s are applicable to heat pumps
          http://www DOT chromagen (dot)

          My electric hot water costs me (ausnet/momentum) .0755 cents (seven censts) per kwh. I realise that these kind of prices will not always be available so have run sums based on 11 cents and 15 cents.
          We have an average usage of 6 kwh this varies of course up to 10 or 12 kw if we have visitors staying over. This average is not likely to increase as we are empty nesters.
          Therefore my hot water cost is $165 per year, ($240 @ .11, or $328 @ .15).

          To maximize the benefit of a heat pump it would need to be located on the north side of my home which is where bedrooms are located so overnight noise is an issue. It could be located on the south but would (i suspect) be less effective. Temperatures here naturally vary but over winter drop as low as minus 6 and many winter days max at about 10 degrees C. Running a heat pump during the day is an option but draws from the grid at peak prices.

          We have solar but only a small 1 kw system and do not see the value (yet) in increasing the size. Quotes vary but about $5600 for a 3 kw system. Numbers suggest that even if solar powers the majority of our daylight usage and hot water it would still be 15 + years payback

          LPG gas is available but (seems) expensive @ $1.25 per litre (88 litres per 45 kg bottle @ about $120.00 per bottle) compared to electricity supply.

          With all that in mind would anyone care to suggest what sort of hot water system might be the most cost efficient?

      • Scott Greentree says

        Hi Ronald, Scott here,
        I have been working on such an animal, You can buy a production diverter for about $1000 + install, probly never pay for itself. The 1 I am about to implement is home built for under $200 installed (with my sparky mates license, wink, wink).
        Go To:
        Must admit some geek knowledge required.


  2. Tyson Harold says

    very nice

  3. Switching to the solar water heater is a good option but I resisted to do so, as it involves a huge investment. But now after reading your blog, I have come to know that it requires some affordable price. Can you suggest the estimated price for the whole water heater setup?

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