Published by AC Hot Water Rebate | Reading time: ~6 minutes | Victoria only | General information only
That number stopped you, didn’t it.
$15,000. Just for hot water. Over 10 years. For a family running 8 showers a day on a standard gas hot water system in Melbourne.
No emergency repairs. No replacement costs. Just the everyday running cost of doing something every single member of your family does every single day without thinking about it.
The good news is there’s a better way, and right now the Victorian Government is helping Melbourne homeowners pay for it.
Meet the Nguyens
Sarah and David Nguyen have two kids, a dog, a busy household in Melbourne’s south east, and until recently, a gas hot water system they hadn’t thought about in years.
Eight showers a day. Dishes. Laundry. The usual.
Their gas bill was creeping up every quarter and they couldn’t quite work out why. When they finally looked into it, the answer was sitting on the side of their house rusting quietly away. Their gas hot water system was costing them over $1,300 a year just to heat water.
They switched to a heat pump hot water system through the VEU program. Their annual hot water running cost dropped to under $400. Then they paired it with their existing solar system and set it on a timer to run during the day.
Last year their hot water cost them less than $80 for the entire year.
That’s the difference we’re talking about.
The Real Numbers: Gas vs Heat Pump for a Melbourne Family of 4
A family of 4 running 8 showers a day uses roughly 150 to 200 litres of hot water daily. Here’s what that actually costs depending on your system:
Gas hot water Annual running cost: $900 to $1,500 Over 10 years: $9,000 to $15,000
Heat pump hot water Annual running cost: $300 to $500 Over 10 years: $3,000 to $5,000
Heat pump paired with solar Annual running cost: under $100 Over 10 years: under $1,000
10 year saving switching from gas to heat pump with solar: up to $14,000
And those are just the hot water numbers. They don’t include what you save on heating and cooling when you ditch gas entirely.
Why Is a Heat Pump So Much Cheaper to Run?
Most people assume a heat pump is just another electric appliance. It’s not.
A heat pump doesn’t generate heat. It moves it. It pulls warmth from the air around it and transfers that into your water tank, using the same technology as a reverse cycle air conditioner but working for your hot water.
The result is remarkable efficiency. For every single unit of electricity a heat pump uses, it produces three to five units of heat. A gas system produces less than one unit of heat for every unit of energy it burns.
That efficiency gap is where the savings come from. And it’s why gas simply cannot compete on running costs with a modern heat pump system.
The Solar Combination That Changes Everything
Here’s where it gets seriously compelling for Melbourne homeowners.
A heat pump hot water system can be set on a timer to run between 10am and 4pm, right when your solar panels are producing the most power. Instead of drawing from the grid, your hot water is being heated almost entirely by free solar energy sitting on your roof.
Melbourne families with a 6.6kW solar system paired with a heat pump are regularly getting their annual hot water bill down to under $100. Some households effectively heat their water for free.
Add a home battery and you take it even further.
Any excess solar generated during the day gets stored in the battery and used overnight. So even on overcast Melbourne winter days, your hot water system is running on stored solar rather than expensive grid electricity.
Melbourne households that have made the full switch, reverse cycle heating and cooling, heat pump hot water, solar panels and a home battery, are reporting total annual energy bills of under $500. Compare that to the $3,500 to $5,500 a year that a typical Melbourne home still running gas across heating and hot water is spending.
Over 10 years the difference is staggering. We are talking about more than $30,000 in total energy savings for a family of 4.
What About the Upfront Cost?
This is always the first question. And the Victorian Government rebates are what make this conversation so different in 2026.
Through the Victorian Energy Upgrades (VEU) Program and the Solar Victoria hot water rebate, eligible Melbourne homeowners can stack multiple rebates when switching from gas to a heat pump hot water system. These two programs can be combined, bringing the effective upfront cost down to a fraction of the sticker price.
After rebates, many Melbourne families are getting a fully installed heat pump hot water system for significantly less than they expected. With annual running cost savings kicking in immediately, most systems pay for themselves within 3 to 5 years. Everything after that is pure savings.
The 2027 Deadline That Changes Your Options
This part matters and not enough Melbourne homeowners know about it yet.
From March 2027, if your gas hot water system fails in Victoria, it cannot be repaired. It must be replaced with an electric alternative. That is Victorian Government legislation, not a maybe.
What that means in practice is this. If your gas system breaks down in the middle of winter after that date, you will be replacing it under pressure, with no time to compare options, no time to claim the best rebate combination and no opportunity to plan the upgrade that makes the most financial sense for your home.
The families who switch now do it on their own terms. They choose the system. They access the maximum rebates. And they start saving immediately rather than waiting for a breakdown to force their hand.
How the Nguyens Did It
Back to Sarah and David. The process took less than a week from start to finish.
They checked their eligibility online in about 60 seconds. A certified VEU installer called them within 24 hours, came out for a free in home assessment and walked them through exactly what system suited their household, what rebates they qualified for and what the all up cost would be after discounts.
The installer handled every bit of paperwork. The government discount came straight off the price on installation day. No forms to submit. No waiting for a cheque.
Three months later with their solar timer set and their new heat pump running quietly on the side of the house, their quarterly energy bill dropped by more than they expected.
“We genuinely couldn’t believe we waited this long,” Sarah said. “It was so simple.”
Ready to Find Out What You Could Save?
Every household is different. Your savings will depend on your current system, your usage, whether you have solar and how many people are in your home.
The best way to get a real number for your specific situation is to speak to a specialist who can look at your home and tell you exactly what you stand to save.
Checking your eligibility takes 60 seconds. A certified installer will be in touch within 24 hours with a free in home quote tailored to your household. No obligation. No pressure. No paperwork on your end.
Find out what the switch could mean for your family.
👉 Check your eligibility now at achotwaterrebate.com.au
Disclaimer: Running cost figures are estimates based on average Melbourne household usage, current Victorian energy tariffs and Sustainability Victoria data. Individual results will vary depending on usage, system size, tariffs and solar availability. Pricing shown is after eligible VEU government discounts. Eligibility depends on property type and existing system. This article is general information only and does not constitute financial advice.