How to Claim Government Rebates When Installing a Commercial Hot Water System

If you are a commercial property owner, facility manager or business operator in Australia, installing an energy-efficient commercial heat pump hot water system could qualify you for government incentives that reduce your upfront costs.

Several government schemes support eligible commercial hot water upgrades, including the federal Small-scale Renewable Energy Scheme (SRES), NSW Energy Savings Scheme (ESS), Victorian Energy Upgrades (VEU) and South Australia’s Retailer Energy Productivity Scheme (REPS).

However, not every commercial heat pump qualifies. Eligibility depends on your location, existing hot water system, proposed heat pump and the requirements of the relevant government scheme.

This guide explains the available commercial heat pump rebates, eligibility requirements and how businesses can claim them.

Commercial Hot Water Rebates in Australia at a Glance

Scheme	Available Incentive
Federal – SRES	STCs for eligible air-source heat pumps under 425 litres
NSW – ESS	Energy Savings Certificates (ESCs) under F16 and F17
Victoria – VEU	Victorian Energy Efficiency Certificates (VEECs)
South Australia – REPS	Incentives for eligible commercial water heater upgrades under WH1

Each scheme has different eligibility and documentation requirements. Some incentives may be combined where the relevant program rules permit.

What Commercial Heat Pumps Qualify for Government Rebates?

Commercial heat pump water heaters must meet the product, capacity and installation requirements of the relevant government scheme.

Here are the main eligibility requirements.

Federal Requirements – SRES

Under the federal Small-scale Renewable Energy Scheme, eligible air-source heat pump water heaters can generate Small-scale Technology Certificates (STCs).

To qualify:

• The heat pump model must appear on the Clean Energy Regulator’s eligible product register.
• Air-source heat pumps must have a storage capacity of less than 425 litres.
• The installation must comply with applicable product and licensing requirements.

Many large commercial and industrial heat pumps exceed the federal capacity limit and therefore cannot access this particular incentive.

Official reference: Clean Energy Regulator – Solar Water Heaters and Air Source Heat Pumps.

NSW Requirements – Energy Savings Scheme

NSW businesses can access commercial heat pump incentives through the Energy Savings Scheme (ESS).

Two activities are particularly relevant:

• F16: Replacing existing hot water boilers or heaters with eligible air-source heat pump water heaters.
• F17: Installing eligible air-source heat pump water heaters.

The proposed equipment must appear on the NSW ESS Accepted Products List and satisfy the applicable activity requirements.

Other important conditions include:

• A minimum customer payment of $1,000 excluding GST for eligible commercial heat pump installations.
• A minimum five-year warranty against defects for eligible systems with an average insulated storage volume of 700 litres or less.
• Providing the required customer fact sheet before the customer agrees to the upgrade.
• Completing the required nomination and installation documentation.

Important 2027 update: From 1 January 2027, the confidence factor used in F16 and F17 energy savings calculations will decrease from 1.0 to 0.7 for products with an individual heat pump thermal capacity of 10 kW or more.

This affects the calculation of Energy Savings Certificates and may influence the incentive available for larger commercial installations. It does not mean every customer’s rebate automatically decreases by 30%.

NSW also limits certificates to 5,000 ESCs per F16/F17 system installation.

Official references: NSW IPART – Appliances for Businesses | ESS Rule and Changes.

Victoria Requirements – Victorian Energy Upgrades

Victoria’s VEU program supports eligible commercial and industrial heat pump water heater installations.

Under the specifications effective from 31 March 2026:

• The minimum average insulated storage volume is 425 litres.
• The previous 20 kW average heating capacity threshold has been removed.
• The minimum customer co-payment is $10,000 including GST.

The proposed system must still satisfy the relevant product registration, performance and installation requirements.

Official reference: Victorian Government – Commercial Heat Pump Water Heater Updates.

South Australia Requirements – REPS

South Australian businesses may qualify for commercial hot water incentives through the Retailer Energy Productivity Scheme (REPS).

The WH1 activity supports eligible water heater replacements and upgrades, including qualifying heat pump systems.

For non-residential customers, eligibility generally requires electricity consumption of less than 160 MWh per National Meter Identifier (NMI) during the preceding 12 months.

Other conditions depend on the existing equipment, property, proposed system and applicable activity specifications.

Incentives are delivered through participating energy retailers or activity providers, and availability can vary.

Official reference: ESCOSA – Commercial Water Heating Activities.

Who Can Claim a Commercial Heat Pump Rebate?

Eligible commercial property owners, business operators and other non-residential customers may benefit from government incentives.

Potential applicants include:

• Hotels and accommodation facilities.
• Restaurants and commercial kitchens.
• Hospitals and aged care facilities.
• Schools and educational institutions.
• Gyms and sporting facilities.
• Manufacturing and industrial businesses.
• Other eligible commercial properties.

For leased premises, property owner approval may be required before installation.

The person receiving the financial benefit or assigning energy certificates must also meet the relevant scheme requirements.

What Documents Do You Need to Claim a Commercial Heat Pump Rebate?

Although requirements vary between schemes, businesses should generally prepare:

• Business name, ABN and contact details.
• Installation property address.
• Existing hot water system details and photographs.
• Proposed heat pump brand, model and specifications.
• Installation quotation and itemised costs.
• Installer and accredited provider details.
• Required nomination forms and customer declarations.
• Final invoice and proof of payment.
• Installation photographs and commissioning records.
• Relevant plumbing, electrical and warranty documents.

For NSW ESS F16 and F17 installations, the required heat pump fact sheet must be provided before the customer agrees to the upgrade, and the nomination process must be completed before installation.

Keep all required evidence before removing the existing hot water system.

How to Claim a Government Rebate for a Commercial Heat Pump

The process is relatively straightforward when eligibility is checked before installation.

Step 1: Identify the applicable government scheme

Determine whether your business qualifies under the federal SRES or a state-based incentive program such as NSW ESS, Victoria VEU or South Australia REPS.

Step 2: Assess your existing hot water system

Provide details of the existing equipment, including its fuel type, storage capacity, age and installation configuration.

Step 3: Confirm heat pump eligibility

Have the proposed model checked against the relevant government product register and technical requirements.

Step 4: Obtain a quotation and complete paperwork

Request an itemised quotation showing the installation cost, expected incentive and final customer contribution. Complete any required nomination forms and agreements before installation.

Step 5: Install the commercial heat pump

Have the system installed by appropriately licensed tradespeople and ensure all required photographs, commissioning records and compliance documents are collected.

Step 6: Receive the incentive

Depending on the scheme, the certificate value may be applied as an upfront discount through an accredited provider or the financial benefit may be arranged through a participating retailer or activity provider.

How Much Can Your Business Save?

The available commercial heat pump rebate depends on the government scheme, installation location, existing equipment and proposed system.

There is no fixed rebate amount that applies to every commercial installation.

For example, consider a business installing a commercial heat pump system costing $20,000.

Description	Amount
Installation cost	$20,000
Illustrative incentive	-$4,000
Final customer cost	$16,000

In this example, the business saves $4,000 upfront.

The new heat pump may also reduce ongoing electricity costs compared with conventional electric resistance water heating.

Note: This is an illustrative calculation, not a guaranteed government rebate. Actual incentives must be confirmed by the relevant provider.

FAQs About Commercial Heat Pump Government Rebates

Do I Apply for the Rebate Myself or Does the Installer Do It?

In many cases, the installer works with an Accredited Certificate Provider or participating activity provider to manage the incentive process. The customer may still need to supply information and sign the required documents.

How Long Does a Commercial Heat Pump Rebate Take?

There is no single processing timeframe. Some incentives are applied as upfront discounts, while others involve certificate creation or separate verification processes.

Is a Commercial Heat Pump Worth Installing Without a Government Rebate?

Yes. A commercial heat pump can still be a worthwhile investment because it uses less electricity to produce the same amount of hot water. While you may have to bear the full purchase and installation costs, you’ll benefit from lower running costs, reduced energy consumption and potential long-term savings that can help offset the initial investment.

When Does the Commercial Heat Pump Rebate End?

There is no single end date for all Australian incentives. Federal and state programs have separate rules and timelines. Businesses should check current eligibility before installation.

Can a Business Claim Incentives for Multiple Commercial Heat Pumps?

Yes, potentially. Multiple installations may qualify if they meet the applicable scheme requirements. Under NSW ESS, specific rules apply to multiple identical heat pumps connected in parallel.

Can Businesses Combine Federal and State Heat Pump Incentives?

Yes, in some cases, depending on the scheme and installation.

• NSW: SRES + ESS incentives can be combined for eligible heat pump water heaters.
• Victoria: SRES + VEU Part 44 cannot be combined for the same installation.
• South Australia: SRES + REPS may be combined where both schemes permit.

Ask your accredited provider to confirm eligibility before installation.

Upgrade Your Commercial Hot Water System with E-Green Electrical

Looking to replace an inefficient commercial hot water system?

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Whether you operate a hotel, restaurant, healthcare facility, aged care centre, school or industrial property, choosing the right system can help reduce energy consumption and operating costs.

Our team can help assess your commercial hot water requirements, recommend suitable heat pump solutions and explain the government incentives that may be available for your project.

Contact E-Green Electrical to discuss your commercial heat pump upgrade and request a quotation.

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