Heat Pump Calculator: STC Rebate, Cost and Savings in Australia 2026
A heat pump hot water system costs $3,000 to $4,000 installed. After the federal STC rebate of around $975 and state incentives, most households pay $1,200 to $2,500 out of pocket. Running costs are $200 to $350 per year on grid electricity, compared to $600 to $900 for gas hot water. That is one of the fastest payback periods of any home upgrade.
The less-discussed benefit is what heat pump hot water does to your gas bill. If hot water is your only gas appliance, replacing it means you can disconnect the gas supply entirely and stop paying the $350 to $400 per year supply charge. That pushes total annual savings to $700 to $1,200 before accounting for any solar benefit.
Enter your postcode and home details below. The calculator models heat pump hot water alongside 14 other upgrades and tells you whether it belongs at the top of your upgrade sequence.
How the Heat Pump Calculator Works
How Heat Pumps Work
A heat pump extracts heat from the outside air rather than generating it from a burning fuel or a resistive element. This makes them 3 to 5 times more efficient than a standard electric element. A COP (coefficient of performance) of 3.5 means you get 3.5 kWh of hot water heat for every 1 kWh of electricity consumed.
Gas Disconnection Savings
The calculator tracks each gas appliance separately. Once all gas appliances are replaced with electric alternatives, it adds the gas supply charge saving ($350 to $400 per year) to the total benefit. This makes the sequencing of gas appliance replacements an important part of the overall analysis.
Solar Interaction
Heat pumps can be timer-controlled to run during solar generation hours, further reducing running costs. If you have solar or plan to add it, the calculator models the interaction and shows the combined benefit of heat pump plus solar versus each upgrade in isolation.
Heat Pump FAQ
How much does a heat pump hot water system cost?
A heat pump hot water system costs $3,000 to $4,000 installed in Australia. The federal Small-scale Technology Certificate (STC) rebate covers around 25 STCs, worth approximately $975 at current STC prices, applied as a point-of-sale discount. Some states add further rebates: VIC offers around $560 under the VEU program at the standard indicative discount rate, NSW has the Energy Savings Scheme, and QLD has the Queensland Climate Ready Homes rebate. After rebates, out-of-pocket costs for most households sit at $1,200 to $2,500.
How much will I save switching from gas to heat pump?
A gas hot water system typically costs $600 to $900 per year to run. A heat pump running on grid electricity costs $200 to $350 per year, and as little as $50 to $100 if you have solar and can shift heating to daytime. That is a saving of $400 to $800 per year just on the hot water bill. If replacing gas hot water means you can disconnect your gas supply entirely, you also save the gas supply charge of $350 to $400 per year, pushing total annual savings above $700 to $1,200.
Do heat pumps work in cold climates?
Yes, with caveats. Heat pumps extract heat from ambient air and work down to around -5 to -10 degrees Celsius depending on the model. In cold climates like Hobart or alpine VIC, performance drops in winter and a backup element activates more often. However, even in cold climates, heat pumps are typically 2 to 3 times more efficient than a direct electric element and considerably cheaper than gas. Look for a model with a cold-climate COP rating above 2.5 if you are in a consistently cold location.
What rebates are available for heat pumps?
STCs apply nationally and reduce upfront cost by roughly $975 for a standard system. VIC offers around $560 through the Victorian Energy Upgrades program at the standard indicative discount rate. NSW has the Energy Savings Scheme for heat pump hot water. QLD has the Climate Ready Homes rebate. SA has rebates for vulnerable households. The ACT offers interest-free loans for heat pumps under the Sustainable Household Scheme. Our calculator applies the rebates for your specific postcode automatically when modelling the return on investment.
Should I replace gas hot water or gas heating first?
It depends on your climate. In gas-heating states like Victoria, Tasmania and the ACT, gas heating is usually the bigger gas load and the better first target, especially if your ducted gas unit is nearing end of life: the money you would have spent on a like-for-like gas replacement covers much of the electric upgrade. In warmer states, hot water is typically cheaper to replace and gets you one step closer to disconnecting gas entirely. The calculator models each gas appliance separately and shows which replacements unlock the biggest savings for your home.
How many STCs does a heat pump hot water system earn?
A heat pump hot water system earns federal Small-scale Technology Certificates worth roughly $975 off the install price at current STC prices, applied as a point-of-sale discount. The exact amount depends on your STC zone, the unit capacity, and the STC spot price. That is on top of any state rebate. The calculator factors the STC value into the upfront cost for your location.
Further Reading
A detailed comparison of running costs, upfront costs, and rebates for gas vs heat pump hot water.
How replacing each gas appliance gets you closer to eliminating the gas supply charge.
VIC has the strongest heat pump rebates in Australia. See the real numbers.
ACT has interest-free loans for heat pumps and pays up to $5,000 for full gas disconnection.
Under the Hood
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Assumptions like electricity rates, sun hours, and gas prices are tailored to your location.