The Energy Savings Scheme (ESS) may help you replace an older, less efficient electric or gas water heater with a more efficient heat pump water heater. The ESS provides financial incentives that may allow you to get a discount on the cost of your installation.

Installing a heat pump as your water heating system may help reduce energy consumption and lead to lower electricity bills.

Is a heat pump right for you?

In deciding whether a heat pump water heater is right for you, you should consider:

  • whether the capacity of the system will meet your water use and hot water requirements
  • any bill impacts – while heat pump water heaters use less energy their operation might be shifted away from off peak tariff periods, which could increase your electricity bill. Ask your installer and energy retailer about your options
  • the noise the system produces
  • the appropriateness of the space where the system will be installed
  • the length and coverage of warranties.

See our fact sheets below for more information.

Only one-for-one replacements of water heaters in residential and small business settings are allowed in the ESS. This means that one water heater cannot be replaced by 2 or more heat pump water heaters.

However, multiple heat pumps connected by manifold may replace a single existing water heater in commercial settings.

How much will a heat pump water heater cost?

The cost will vary, as it depends on the model you choose, the type of system you currently have, and the services provided.

You need to pay a minimum payment per heat pump towards the costs of the upgrade. The minimum payment depends on the type of premises and date of installation:

Type of premises

Installation date

Minimum payment (excluding GST)

Residential and small business

Before 19 June 2024

$30 per heat pump water heater

 

From 19 June 2024

$200 per heat pump water heater

Commercial and industrial

Before 19 June 2024

$0

 

From 19 June 2024

$200 per heat pump water heater system*

* multiple heat pumps connected by manifold in commercial or industrial premises are considered one system

Your installer or accredited business can confirm the cost of your upgrade.

Where can I find more information?

Please refer to our Things to consider and our heat pump water heater fact sheets for households and businesses for more information.

Further information on upgrading to a more efficient water heater can also be found at the NSW Government's Energy website, including a list of businesses accredited to install water heaters by region.

You can also refer to our FAQs for households and small businesses.

Who to contact

If you have questions about the supply and installation of heat pump water systems, you can contact suppliers, installers or Accredited Certificate Providers directly.

Like any decision to engage a contractor, you should consider your options and what is right for you. You should never feel rushed towards a decision.

If you have questions about the rules of the scheme or concerns about suppliers, installers or Accredited Certificate Providers, you can contact the IPART ESS Team.

Fact sheets

Heat pump water heater fact sheet - for households and small businesses

Heat pump water heater fact sheet - for businesses