Electrical water heating is the biggest source of greenhouse gases for the average Australian household. It produces almost a quarter of household emissions. 

Renewable hot water systems can help save money on electricity bills compared to an electric hot water system.

About solar water heaters

There are 2 types of water heaters eligible for small-scale technology certificates (STC) under the Small-scale Renewable Energy Scheme:

  • solar hot water heater systems
  • air source heat pumps.

A solar hot water heater system uses energy directly from the sun to heat water via collectors. These systems consist of a storage tank, a heat exchanger, a controller system and a backup heater. Collectors are usually placed on the roof but are different from solar panels because they generate heat instead of electricity.

Air source heat pumps extract heat from the air and pump it into the water storage tank. The system includes a heat pump unit, like the outdoor unit for a split-system air conditioner, and a storage tank. The unit is powered by your normal household electricity wiring or your solar panels.

If you have rooftop solar or don’t have a gas connection, an air source heat pump allows you to make use of any excess solar electricity generated throughout the day to run your hot water system.


If you want to install an eligible water heater system at your home or business, you may be eligible to claim STCs. You can claim STCs yourself or assign the right to create to a registered agent.

If you assign the right to create STCs to a registered agent, you can get a discount on the purchase price of your system.

Depending on your location you may also be eligible for rebates. You can find out what rebates are available in each state and territory at Smart Energy Programs.

Find out more about creating STCs.

Eligible water heater systems

Only certain models of solar water heaters and air source heat pumps are eligible for STCs. You need to make sure the model you choose is on the register.

Check the register

Your system must also be under a certain capacity:

  • solar water heaters – less than 700 L (if your model has over 700 L capacity, you will have to supply additional documentation to be eligible for certificates)
  • air source heat pumps – less than 425 L.

Installing a water heater system

Follow our step-by-step guide to find out everything you need to know about installing a renewable energy water heater.

The water heater system you choose will depend on your:

  • past and future usage
  • existing power supply
  • location, including the climate and sun exposure
  • budget.

Make sure you research which system best suits your needs. When choosing a system, you can get help from Your Energy Savings.

Your retailer will work with an installer to get your system installed. To be eligible under the scheme, the system must meet installer licensing requirements by the relevant state or territory government.

Installing a small-scale renewable energy system and creating STCs is complicated. To make things simpler, most people choose to use a registered agent.

Registered agents can help:

  • calculate the financial benefit you're eligible for
  • give you a discount on your system in exchange for the right to claim STCs for your system.

Ask your retailer if they'll include an option for you to assign the right to claim STCs to an agent in return for a discount. This will usually be part of your purchase contract.

Find out more about registered agents.

Important to know

We don’t set the certificate price used by agents. We also don't get involved in disputes between owners and agents. This is a contractual matter between you and your agent.

On the day of installation, confirm your installer is the correct person for your installation and ask to see their licence details.

After the installation is complete, check the system is in good condition and operating. Ask the installer for instructions on how to operate the system. If you're asked to sign paperwork, ensure you review and understand the documents before signing.

If you have rooftop solar and air source heat pump installed, consider installing a timer to switch on the heat pump during the day while your rooftop solar system is generating.

Contact your seller if you have concerns or a complaint about your installation. You can find their contact details on the invoice or contract from your installation.

Find out how to make a complaint.

If you decide to create your own STCs, you must create them within 12 months of the installation.

You can't create STCs if you've already assigned the right to an agent.

If you’ve installed an eligible system in the past 12 months and haven’t assigned your STCs to an agent or claimed the certificates yourself, you should check your installation paperwork. You might still be eligible to claim and trade STCs.

Find out how to create STCs.