In NSW the support for a heat pump hot water system arrives through certificates, not grants. A federal STC discount sits on one side and, where the activity qualifies, a state certificate sits on the other. Neither is paid to the homeowner. Both reduce the price on the invoice because someone else, usually an accredited provider, creates and sells the certificates.
This guide explains how that works in 2026, shows a worked quote, and lists what to ask your installer. We describe the mechanism and name the places to check the numbers, rather than quote state dollar figures that depend on the activity and the date. For the shorter version, see the answer on the NSW heat pump rebate and ESCs.
The two NSW schemes
NSW runs two certificate schemes, both overseen by IPART, the Independent Pricing and Regulatory Tribunal:
- Energy Savings Scheme (ESS). Rewards energy-saving activities with Energy Savings Certificates (ESCs). Hot water upgrades have been part of this. See what the ESS is and ESC trading.
- Peak Demand Reduction Scheme (PDRS). Rewards activities that cut demand at peak times with Peak Demand Reduction Certificates (PRCs). PRCs were reported at about $3 in 2026. See the PRC definition.
A heat pump’s value arrives under whichever scheme and activity method applies to the product and the replaced system. That is a detail the accredited provider works out. NSW also changed its battery incentives in 2025, with the battery incentive moving into the federal program and a PDRS incentive for VPP connection, but that is separate from hot water.
Who actually creates the certificates
In NSW, ESCs are created by an Accredited Certificate Provider (ACP), who records the activity, holds the evidence and sells the certificates to liable entities, mostly electricity retailers. The installer may be the ACP or may work with one. If you are an installer who wants to create ESCs directly, see becoming an ACP in NSW.
The STC side is separate. The installer, or an agent, creates STCs from the CER register and the usual evidence, and sells them.
A worked quote
This is an illustration. The installed price of a heat pump is $4,500, and the installer’s assumed STC count for the model, zone and year is 25 at $39. The ESC line is an example only, because its value depends on the activity and the provider.
| Line | Amount |
|---|---|
| Installed price before incentives | $4,500 |
| STC discount (25 x $39) | -$975 |
| ESC discount (example, set by the provider) | -$500 |
| Price you pay | $3,025 |
If the same unit were quoted with no ESC line, the price would be $3,525. The point is to ask why. An installer may not be an ACP, the activity may not apply to your replacement, or the quote may have left the discount out. Each is a different answer, and each is fair to ask about.
What qualifies
Eligibility is a matter of the product and the job:
- The model. For STCs, the model must be on the CER register. For ESCs, the product must meet the activity method.
- The replacement. The old system and the installation type decide the activity. See heat pump rebate eligibility.
- The installer. Plumbing and electrical licences as required, and accredited providers for ESCs.
- The evidence. Photos, serials and an assignment form.
The hot water paperwork is the same in every state. The hot water and heat pump checklist lists it.
Questions to ask each installer
- Which certificates does this quote include: STCs, ESCs, PRCs?
- How many of each, and what dollar value per certificate?
- Who is the Accredited Certificate Provider for the ESCs?
- Is the discount fixed at signing, or can it change before install?
- What happens to my price if a claim is refused?
Compare the quotes on the net price. Two quotes with the same headline price can include different certificates.
From the desk: NSW certificate prices can move between a quote and an invoice. Ask whether the discount is fixed at signing or floats with the market. A fixed discount with a short quote validity is a straightforward way for the installer to share the risk fairly.
Timing and payment
ESC creation and payment follow the provider’s process and IPART’s registry, so settlement time varies by provider. For the installer’s side of ESC payment see NSW ESC payment time. STC settlement is a separate process, which our desk handles in 24 hours for established partners. The deeming count for hot water falls as the scheme runs to 2030, so waiting can reduce the STC line.
Landlords and tenants
The owner decides on a hot water replacement, and the certificates belong to the installation, not the tenant. A landlord can benefit from the discount and a tenant benefits from lower running costs, which is worth raising.
For installers
If you quote NSW heat pump jobs, show each certificate as its own line and keep your ACP arrangements clear. Our hot water STCs page explains the federal certificate, and the pricing page shows today’s published rate. Compare with Victoria in our Victorian guide.
Gas to electric in NSW
Many NSW households replacing a gas system are doing so alongside other electrification, and the activity under the Energy Savings Scheme can differ from a like-for-like electric replacement. The rules for what is treated as a replacement, what evidence is needed for the old system and which activity method applies are set by the scheme, and an accredited provider will know them. Ask the installer to say in writing which activity the job is being claimed under.
Why two quotes can differ by hundreds of dollars
Two installers can quote the same heat pump at different prices for reasons that have nothing to do with equipment. One may be an accredited provider with its own certificate stream and pass the full value on. Another may sell the job to a provider and keep a margin. One may include the ESC line, the other may leave it out because their process does not reach it. Those are all legitimate business models, but they should be visible. The cleanest comparison is the final price after all incentives, with each certificate listed, on the same product, with the same warranty and the same installation scope. Our answer on how much a heat pump costs after rebate explains how to line the numbers up.
What to do next
- Ask your installer to itemise each certificate on the quote.
- Check the product on the CER register for your install date.
- Photograph the old unit before it comes out.
- Read which hot water systems are eligible and the hot water pillar at /hot-water/.
For the wider hot water picture, see the hot water hub.