Heat pump hot water: cost after STCs and state rebates
What a heat pump hot water system costs in Australia after the STC discount, how the discount works, and how state rebates can lower it further.
Replacing an old electric or gas storage water heater with a 270-litre heat pump hot water system typically costs $4,500 installed, after the STC discount and including GST, with most jobs between $3,500 – $5,850. An entry-level all-in-one unit comes in around $3,600, and a split CO2 system about $6,000. Depending on where you live, a state rebate can come off on top.
How the STC discount works
Heat pump hot water systems qualify for STCs (small-scale technology certificates), the same federal scheme that discounts rooftop solar. The certificates are created when an eligible system is installed. In most cases the installer claims them and takes their value off your price, so the discount appears as a lower quote rather than a payment to you later.
Two points to keep in mind:
- Prices are usually quoted after STCs. When you see an advertised price for a heat pump hot water system, it has normally already had the discount taken off. Our figures are after STCs too, so you can compare them directly.
- The discount steps down each year until 2030, when the scheme ends. The same system installed next year attracts a slightly smaller discount than one installed this year.
The value of the STCs depends on the system and where you live. Ask your installer to show the discount as a separate line, so you can see the full price and what the certificates are worth on your job.
What the price includes
| System | Typical price after STCs | Usual range |
|---|---|---|
| Entry-level all-in-one unit | $3,600 | $2,850 – $4,700 |
| Quieter all-in-one, better cold-weather performance | $4,500 | $3,500 – $5,850 |
| Split CO2 system | $6,000 | $4,700 – $7,800 |
Each price covers:
- The heat pump water heater, installed in the same spot as the old system
- Tempering valve, isolation valves and fittings
- Removal and disposal of the old water heater
- Plumbing connection and commissioning by a licensed plumber
- Electrical connection by a licensed electrician
Not included: a switchboard upgrade if yours cannot take the new circuit, or moving the system to a new location. See the full breakdown and change the tank size in our Heat pump hot water.
We build each figure from the unit, the fittings and the hours a plumber and an electrician need, at local labour rates, then check the result against market prices and real quotes. That is why the same system costs more in some states than others.
Which system to choose
- All-in-one units have the compressor on top of the tank. They are the cheapest to buy and install, and fine for most homes in mild and warm climates. Check the noise rating if the unit will sit near a bedroom window.
- Better all-in-one units cost more for quieter operation and better performance on cold mornings, which matters in southern states and at altitude.
- Split CO2 systems put the heat pump outside and the tank separately. They keep working efficiently in cold weather and are usually the quietest, but cost the most.
Size the tank to your household: a system that is too small runs out on busy mornings, while one that is too large heats water you do not use.
State rebates
Several states run their own rebates or discounts on heat pump hot water systems, on top of the federal STC discount. The amounts, eligibility rules and approved product lists vary by state and change from time to time, and some are tied to income or to replacing a particular type of old system.
Before you sign:
- Check your state energy agency's website for current programs.
- Confirm the exact model on your quote is eligible.
- Find out whether the installer applies the rebate at the point of sale or whether you claim it afterwards.
- Check whether the installer needs to be registered with the state program.
Our figures are after STCs but before state rebates, so any state rebate you qualify for comes off the prices above.
Running the numbers
A heat pump uses a fraction of the electricity of an old electric storage heater to heat the same water, because it moves heat from the air rather than generating it. The saving is greatest when replacing an electric storage system. With rooftop solar, setting the heat pump to run in the middle of the day uses your own generation and cuts running costs further.
Licensing, GST and your quote
Electrical and plumbing work must be done by licensed tradespeople under state licensing. Make sure both the plumber and the electrician on the job are licensed, and ask for the compliance certificates when the work is done. Quotes to households include 10% GST, and so do our figures.
Once you have a written quote, compare it with typical prices in your state using our "Is my quote fair?" tool: Is my quote fair?. Enter the price after STCs but before any state rebate, so it matches how our figures are calculated.