Victorian solar and plumbing contractors are set to benefit from a significant policy shift, with higher rebates for Australian-made heat pump hot water systems under the state’s Solar Homes program.
From 1 July 2025, households that opt for an eligible locally manufactured system will receive a $1,400 rebate – up $400 from the standard $1,000 available for imported systems.
The boost is part of a $29.7 million allocation in the 2025/26 state budget aimed at accelerating the uptake of energy-efficient electric appliances.
Heat pump hot water systems, which can account for up to 30 per cent of a home’s energy use, have become a key component of Victoria’s energy transition strategy. The technology extracts ambient heat from the air to warm water, using significantly less electricity than traditional electric storage units. A typical installation can save households up to $330 annually on power bills.
The rebate increase is expected to reinforce demand for these systems, which already saw a 151 per cent year-on-year increase in installations under the program.
Industry consultation is underway to define “Australian made” eligibility, including supply chain and local content requirements.
For solar installers and plumbing contractors, the change presents new market opportunities – particularly for businesses aligned with local manufacturers or able to verify domestic sourcing.
With the rebate incentive set to directly influence product selection, suppliers offering compliant systems may see increased demand.
Since 2018, Solar Victoria has issued more than 400,000 rebates and loans, supporting the deployment of over 310,000 rooftop solar systems and 2.3 GW of capacity across the state.
The expanded hot water rebate scheme is seen as a complement to this broader decarbonisation effort, with further potential to displace gas appliances in residential settings.
The policy also aligns with the state’s manufacturing strategy.
Victoria’s $39.2 billion manufacturing sector supports more than 275,000 jobs, and the government’s decision to favour locally made systems aims to capture more of the clean energy supply chain within the state.
Solar Victoria is expected to finalise compliance guidelines ahead of the July rollout.
Applications and program details are available at solar.vic.gov.au/hot-water-rebate