Three ways to heat water with the sun
"Solar hot water" gets used for two completely different machines, and a third option beats both of them for some households. Here is what each one costs installed, before any rebate, and what it does to the bill afterwards.
| System | Installed | After federal STCs | Tank size (4 people) |
|---|---|---|---|
| Solar thermal (solar hot water) | $4,000–$8,000 | $3,000–$7,400 | 300–360 L, plus about 4 m² of collector area on the roof |
| Heat pump | $3,000–$7,000 | $2,000–$6,400 | 270–315 L |
| Rooftop PV + electric storage tank | $2,000–$3,000 | No hot water STCs | 160–250 L, or 250–315 L if you are keeping an off-peak tariff |
Installed bands from CHOICE, solar hot water buying guide, read 21 September 2026. "After federal STCs" nets $600–$1,000 off the band; a plain electric tank earns no hot water certificates, whatever it is charged from.
Solar thermal, the one people mean by "solar hot water"
Roof-mounted collectors heat the water itself, with an electric or gas booster for cloudy runs.
Installed: $4,000–$8,000, or $3,000–$7,400 after the federal certificates. Running cost: Sunlight does most of the heating, so the bill is whatever the booster uses. CHOICE puts the reduction at 70–80% against conventional water heating, and payback against an electric system at about five years. Who it suits: Households with unshaded north-facing roof space that are replacing an electric storage tank and want the lowest running cost without adding load to the grid.
Heat pump, the one most households are actually quoted
An electric unit that moves heat out of the surrounding air into the tank instead of making heat with an element.
Installed: $3,000–$7,000, or $2,000–$6,400 after the federal certificates. Running cost: At least three times more efficient than a resistive element for the same hot water, and the unit can be timed to run in the middle of the day on your own solar. SolarQuotes puts the saving at about $500 a year for a household using 170 litres a day on a 20c/kWh off-peak rate, and payback at 6 to 15 years. Who it suits: Homes with no spare or suitable roof, units and townhouses, and anyone coming off gas. It is the cheapest of the three to buy and the easiest to retrofit.
Rooftop PV plus a plain electric tank
A plain electric storage tank run in the middle of the day on your own solar, usually with a timer or a diverter.
Installed: $2,000–$3,000 for the tank, plus $1,000–$2,000 if you add a diverter so it heats automatically whenever the panels are exporting. Running cost: The tank itself is inefficient, but the energy is free once it is your own daytime solar. CHOICE prices a diverter to automate that at $1,000–$2,000 on top of the tank. Who it suits: Households already installing or expanding rooftop solar, where the tank is the cheap part and the panels do the work. It earns no hot water STCs.
STCs for hot water: how they are calculated
Hot water certificates are not calculated the way rooftop solar certificates are. There is no system size multiplied by a zone rating here. The Clean Energy Regulator's register of solar water heaters states a certificate number for each individual model, set on a 10 years system life, and that number is then multiplied by the factor for your install year and rounded down.
STCs = floor(register figure for your model × 0.5)
That is the rule; the dollars come from what the certificates are trading for. CHOICE's $600–$1,000 is the market figure once that 0.5 factor has been applied and the certificates are sold at $35–$40 each, which is why it is the band you should expect to see on a 2026 quote rather than the larger numbers still quoted on pages written for earlier install years.
The factor falls every 1 January as the deeming period shortens, which is the step-down worth knowing about before you sit on a quote over Christmas:
| Install year | Deeming period | Multiplication factor |
|---|---|---|
| 2026Now | 5 years | 0.5 |
| 2027 | 4 years | 0.4 |
| 2028 | 3 years | 0.3 |
| 2029 | 2 years | 0.2 |
| 2030 | 1 years | 0.1 |
Schedule from Clean Energy Regulator, calculate STC entitlements , read 21 September 2026. Waiting from 2026 to 2027 cuts the certificate count on the same system by 20%.
The eligibility rules that actually knock systems out
- The model has to be listed on the register. only models on the register of solar water heaters are eligible, and the install must meet the licensing requirements of your state or territory.
- Solar water heaters: less than 700 L. capacity limit for a solar water heater to be eligible without supplying extra documentation.
- Air source heat pumps: 425 L or less. storage capacity limit for an air source heat pump to be eligible under the scheme.
You do not claim them yourself
You assign the right to create the certificates to a registered agent in exchange for a discount on the purchase price; if you create them yourself you must do it within 12 months of installation. In practice that means the discount is already inside the quoted price, which is exactly how the federal STC rebate on solar panels works. Ask the installer to show it as a line item; if a quote will not break it out, you cannot tell whether you are getting it.
State hot water rebates in 2026, with status
Federal certificates apply in every postcode. State programs do not, and two states have nothing hot water specific at all. Every row below was read from the source named on 21 September 2026:
| State | Program | Worth | Status | Source |
|---|---|---|---|---|
| VIC rebates | Solar Victoria hot water rebate | Up to $1,000 ($1,400 locally made) | Open | Solar Victoria |
| NSW rebates | Hot water upgrade incentive (Energy Savings Scheme) | Upfront discount in the quote | Open | NSW Climate and Energy Action |
| ACT rebates | Home Energy Support: rebates for homeowners | 50% up to $2,500 per upgrade, $5,000 total | Open | ACT Government, Everyday Climate Choices |
| SA rebates | Retailer Energy Productivity Scheme (REPS) | Roughly $250–$850, indicative | Open | SolarQuotes, hot water heat pump rebates |
| QLD rebates | No state hot water rebate listed | — | None listed | Queensland Government, home energy savings |
| WA rebates | No state hot water rebate listed | — | None listed | Energy Policy WA |
| TAS rebates | Not verified | — | Not verified | Tasmanian Government, ReCFIT |
| NT rebates | Not verified | — | Not verified | Northern Territory Government |
VIC: Solar Victoria hot water rebate
A 50% rebate on the purchase price of an eligible heat pump or solar hot water product, capped at $1,000, or $1,400 for products that qualify under the locally made incentive.
Eligibility: Owner-occupier of an existing property; combined owner taxable income under $150,000 a year; property valued under $3 million; the system being replaced at least 3 years old; no previous hot water or solar battery rebate on the property.
NSW: Hot water upgrade incentive (Energy Savings Scheme)
An Energy Savings Scheme discount on a new energy-efficient heat pump or solar hot water system. It is not paid to you: an accredited installer builds it into the quote. NSW states the upgrade can save up to $800 a year against a gas hot water system.
Eligibility: Homeowners installing or replacing hot water systems in eligible NSW postcodes, through a participating accredited installer.
NSW states the larger offer is “Available now. Ends June 2027, or when funding is exhausted”; standard Energy Savings Scheme discounts continue after that at market value.
ACT: Home Energy Support: rebates for homeowners
Covers half the supply-and-install cost of eligible upgrades, capped at $2,500 each and $5,000 across the program. Hot water heat pumps and evacuated tube solar hot water systems are both on the eligible list, and a zero-interest loan of up to $10,000 can cover the rest.
Eligibility: ACT homeowner holding an Australian Government Pensioner Concession Card, DVA Gold Card or Health Care Card, with the property's unimproved land value (the figure on your rates notice) at or below $750,000 for a freestanding home, or $300,000 for unit-titled apartments.
SA: Retailer Energy Productivity Scheme (REPS)
South Australia runs no fixed cash rebate. Energy retailers meet an obligation by funding discounted upgrades, so the amount is set by the retailer and the activity provider rather than by the state, and priority group households get more.
Eligibility: Delivered through obliged energy retailers and their approved activity providers. Ask your retailer what is on offer before you sign anything.
South Australia deliberately does not publish fixed incentive amounts, and sa.gov.au, escosa.sa.gov.au and energymining.sa.gov.au all refused our request on 21 September 2026, so this band is an independent estimate rather than a government figure.
This figure is an independent estimate, not a published government amount.
"None listed" means we read that state's own household energy page on 21 September 2026 and found no hot water program on it. "Not verified" means the state's site would not serve us the page, so we are not going to tell you either way. Federal certificates apply in all eight regardless.
300 litre solar hot water system price
300 litres is the size most households land on, because it is what CHOICE sizes to a four-person home (300–360 L, plus about 4 m² of collector area on the roof). At that size a solar thermal system runs $4,000–$8,000 fully installed, and $3,000–$7,400 after the federal certificates come off the invoice. In Victoria the state rebate can take up to another $1,000 off that, or $1,400 on a locally made product.
Within that band, the things that move the price are the collector type and where the tank goes. A close-coupled system puts the tank on the roof next to the collectors and needs no pump; a split system leaves the tank at ground level and adds a pump and pipework. Gas boosting costs more than electric boosting and needs a gas connection, which is the wrong direction if you are electrifying.
A heat pump at the equivalent capacity (270–315 L) is the cheaper purchase at $3,000–$7,000 installed, $2,000–$6,400 after certificates. If the quote you are holding is above these bands, the honest question to ask is what is in it that these are not: three-phase work, a tank relocation, a switchboard upgrade, or a premium unit with a longer warranty.
Or run your existing electric tank on rooftop solar
This is the option the hot water industry does not put in front of you, and for a household already looking at panels it is often the cheapest way to get free hot water. An electric storage tank is $2,000–$3,000 installed — less than half a solar thermal system — and a diverter at $1,000–$2,000 makes it heat automatically whenever the array has surplus it would otherwise export for a few cents.
The trade-off is honest enough. The tank is inefficient, so it uses far more kilowatt-hours than a heat pump for the same shower; it just uses yours instead of the grid's. It earns no hot water certificates. And it only works if the array is big enough to cover the house and the tank, which is a system-sizing question, not a plumbing one. If you are pricing panels anyway, the numbers to start from are on the solar panel installation cost page, and the size tables on system sizes show what each array actually generates.
Costs and payback vary a lot by city, because irradiance and feed-in tariffs do:
- Solar panels Sydney (NSW)
- Solar panels Melbourne (VIC)
- Solar panels Brisbane (QLD)
- Solar panels Perth (WA)
- Solar panels Adelaide (SA)
- Solar panels Canberra (ACT)
- Solar panels Hobart (TAS)
- Solar panels Darwin (NT)
Common questions about solar hot water
How much is a solar hot water system?
A solar hot water system costs $4,000–$8,000 fully installed, for the 300–360 L tank CHOICE sizes to a four-person household. Federal small-scale technology certificates take $600–$1,000 off that at point of sale, so the usual out-of-pocket is $3,000–$7,400. A heat pump is cheaper again at $3,000–$7,000 installed, $2,000–$6,400 after the same certificates. In Victoria the state rebate takes up to another $1,000 off, or $1,400 on a locally made product. Prices verified 21 September 2026.
Is a heat pump better than solar hot water?
Neither is better everywhere; they fail in different situations. A heat pump costs less to buy ($3,000–$7,000 against $4,000–$8,000), needs no roof space and fits units and shaded blocks, and runs at least three times more efficiently than a resistive electric element, worth about $500 a year on SolarQuotes' figures. It is a machine with a compressor, so it has moving parts and it makes noise. Solar thermal has almost nothing to break, cuts water heating costs 70–80%, pays back in about five years or less against an electric system and can last decades, if well maintained, but it needs unshaded north-facing roof area and a booster for cloudy weeks. Both attract the same federal certificates and the same state rebates.
Do you get a rebate for solar hot water?
Yes, federally, everywhere. Eligible solar water heaters and air source heat pumps create small-scale technology certificates worth $600–$1,000, and you never claim them yourself: you assign them to a registered agent and the value comes off the purchase price. On top of that, VIC, NSW, ACT and SA run their own programs. Victoria pays 50% of the purchase price up to $1,000, or $1,400 for a locally made product. NSW delivers an Energy Savings Scheme discount inside the installer's quote. The ACT covers 50% of supply and install up to $2,500 per upgrade for concession card holders. South Australia works through retailer-funded discounts rather than a fixed rebate. Queensland and WA list no hot water rebate of their own. All checked 21 September 2026.
How long does a solar hot water system last?
CHOICE's assessment is that a solar thermal system's simple, sturdy design means it can last decades, if well maintained, with an inspection every five years worth doing; the boosting element and the pump on a split system are the parts that get replaced along the way. Heat pumps are shorter-lived machines: warranties across the units SolarQuotes compares run 5 to 15 years on the tank, 1 to 10 years on the compressor. For what it is worth, the Clean Energy Regulator's register of solar water heaters sets certificate entitlements on a 10 years system life, which is the closest thing to an official planning figure for either type.
Getting a price
Tell us the address and your latest bill and we match you with one installer we have checked against the ABN record. One installer, one quote, no call-centre bidding.
One thing to be straight about: we match on solar, not on hot water. Hot water gets priced alongside a solar system when the installer works out your roof and your switchboard — that is the conversation where a heat pump, a diverter or a solar thermal system actually gets compared against your usage. We are not a hot-water-only installer service, and if hot water is the only thing you want, a licensed plumber is the right call, not us.