Solar hot water was the first product to earn STCs, long before rooftop PV took over the headlines, and it still does. A registered solar water heater installed by a qualified installer creates certificates, and those certificates become a discount on your price. What has changed is the competition. Heat pump hot water systems now take the bulk of new quotes, and the incentives have followed them.
This guide is for homeowners comparing options. It explains what rebate you can still claim on a solar water heater, how the amount is worked out, how it compares with a heat pump and what to check on the quote. For the state-based side in Victoria, see our guide on the heat pump rebate stack.
What is on offer
There are up to three layers of incentive, depending on where you live and what you install:
- Federal STCs. Eligible solar water heaters and air-sourced heat pumps are in the same hot water category of the Small-scale Renewable Energy Scheme.
- State certificate schemes. Victoria has Victorian Energy Upgrades and NSW has the Energy Savings Scheme. Whether a solar thermal system qualifies depends on the activity rules, which are generally written around heat pumps for replacements. Check the product and the activity.
- State rebates. Programs such as Solar Victoria’s have their own product lists and household income tests. The Victorian cap fell to $150,000 on 1 July 2026. See the Victorian solar hot water answer.
The federal layer is the one that is nearly always available, so it is the one to understand first.
How the STC count is worked out
Unlike rooftop PV, there is no kW times zone times years formula. Each registered model has an entitlement based on its tested annual energy contribution, adjusted for the climate zone where it is installed. Sunnier zones give larger entitlements. The result is a whole number, usually in the tens, and it is on the registered product data. You cannot work it out from the tank size alone.
At the time of writing STCs have been roughly $38 to $40 each. A solar water heater with an entitlement of 20 STCs would be worth about $760 to $800, and one with 30 would be about $1,140 to $1,200. Those counts are illustrations. Your installer should show the registered figure for your model, postcode and installation type. The solar hot water STCs answer explains the detail, and the hot water STCs page covers the claim side.
Installation type changes the answer
A new installation, a replacement of an electric or gas unit and an additional system are treated differently, and getting the type wrong can invalidate a claim. For a typical home replacing a failing electric storage tank, the type is a replacement. The installation type guide explains how to choose. Photograph the old system before it comes out.
Solar thermal versus a heat pump
| Factor | Solar thermal | Heat pump |
|---|---|---|
| Needs good roof exposure | Yes, collectors on the roof | No, works from ambient air |
| Hot water use pattern | Best when much hot water is used in the day | Flexible, can run off solar PV or off-peak tariffs |
| Backup | Needs a booster, electric or gas | Self-contained |
| Upfront price | Often higher | Often lower than solar thermal |
| STCs | Yes, if registered | Yes, if registered |
| State incentive eligibility | Varies, check the activity | Commonly written around heat pumps |
| Common today | Less so | The leading quote |
For a house with a large north-facing roof, a household using hot water through the day and a high gas or electricity price, solar thermal can still pay. For a typical suburban home with a shaded roof or a household that uses most hot water in the morning and evening, a heat pump tends to win on price and flexibility. Ask for both quotes.
From the desk: do not compare quotes on the final price alone. Ask each installer for the STC count, the price per STC and any state certificate or rebate lines. A solar thermal quote with fewer incentives and a heat pump quote with more can look similar on the bottom line while the products are very different. Put the incentive lines side by side first.
What the paperwork needs
For the claim to be valid, the installer should:
- Use a model registered for STC creation.
- Complete the installation to plumbing, electrical and safety standards by a suitably licensed person.
- Record the correct installation type.
- Take photos of the collectors, tank, data plates, connections and the old unit.
- Get you to sign an assignment form naming the agent.
The hot water and heat pump checklist lists the photo and data requirements. As an owner you can ask to see the finished photo set.
A worked example
A household replaces an old electric storage heater in zone 3 with a registered solar water heater.
| Line | Amount |
|---|---|
| Installed price before incentives | $5,800 |
| Less STC discount (assume 22 STCs at $39) | -$858 |
| Less any state incentive (check eligibility) | not assumed |
| Price you pay | $4,942 |
The 22 is illustrative. Replace it with the registered figure for your model. Any state line is on top, if eligible.
State schemes to check
- Victoria: Victorian Energy Upgrades is run by the Essential Services Commission and Solar Victoria has its own rebate. VEEC spot has been roughly $85 to $95 in 2026. See heat pump VEECs in Victoria.
- NSW: the Energy Savings Scheme creates ESCs for some hot water activities. See NSW heat pump hot water rebate and ESCs.
- Other states: some have rebates or none at all. Ask your installer what applies at your address.
State rules change, so use the scheme’s own page for the current position.
Is it worth waiting?
The STC scheme ends on 31 December 2030 and hot water entitlements follow the scheme’s method, so do not assume today’s number holds. There is no single January cliff as with rooftop solar’s deeming period, but state rules do change on set dates, including the Victorian income cap from 1 July 2026. If you are replacing a failed system, you will not want to wait without hot water. If it is a planned upgrade, get quotes now and check each date.
For installers
Hot water claims depend on correct model data, installation type and evidence. Certificates from these jobs settle on the same basis as other STCs. See /stc-trading/ and today’s rate.
What to do next
- Ask each installer for the registered STC count, price per STC and any state lines.
- Get one solar thermal and one heat pump quote if your roof suits both.
- Check the state schemes in your area on their official pages.
- Photograph the old system before removal.
- For a deeper dive on heat pumps, read heat pump hot water STCs explained.