Hot Water Heater Replacement (VEU Program)

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Upgrade of Commercial Hot Water Systems through VEU Rebates To offset the initial high expense, the Victorian government is providing rebates to eligible businesses in Victoria that intend to replace their conventional water heaters with energy-efficient air-sourced heat pump water heating units.

A hot water heat pump captures heat from the outdoor air and transfers it to the water storage tank. This method effectively reduces energy costs and emissions since it efficiently harnesses ambient heat.

A photo of a heat pump water heater. Photo shows water heater system upgrade to heat pump in Victoria

An air-sourced heat pump hot water system operates on the same principle as a vapor compression refrigeration cycle, which is also utilized by household appliances like refrigerators and air conditioners.

A hot water heat pump functions like a reverse refrigerator. Instead of expelling heat (as fridges and air conditioners do), it extracts heat from the surrounding air and transfers it to the water.

You might be wondering how a heat pump can work in winter when the outside temperature is significantly below zero °C. Even in alpine regions where the ambient temperature can drop to minus 40 °C, there is still residual thermal energy in the air that a heat pump can extract.

Remember, absolute zero (when no heat remains) is 0 degrees Kelvin, equivalent to -273.15 °C.

The annual energy cost for water heating in a four-member Australian household, utilizing a heat pump and consuming 150 liters of hot water per day on an off-peak tariff, is approximately $145. If the same household had a gas water heater installed, the cost would be $505, which is 348% higher.

To understand the reason behind the 348% increase in energy cost, let’s explore what an Air Source Heat Pump (ASHP) water heating system is and how it functions.

Rebates provided by the government for replacing conventional water heaters with ASHP systems: Under the Victorian Energy Upgrades (VEU) program for businesses, the government offers rebates for replacing existing small (2-5 kW power) gas/electric resistance hot water systems with small-sized heat pump hot water systems, as well as medium-sized (5-10 kW power) heat pump water heater upgrades. The specific rebate amount varies based on factors such as:

  • Heat pump kW rating
  • Installation and administrative costs
  • Coefficient of Performance (CoP) or efficiency of the installed heat pump unit
  • VEU certificate price
  • Potential reduction in water heating energy usage

Please contact the team at Victorian Water Heater Program to find out all the relevant information for your transition to a cleaner and more sustainable future.

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