STC Rebate for Heat Pump Hot Water: The Federal Discount Explained

Small-scale Technology Certificates (STCs) are the federal government's incentive for installing eligible renewable and efficient systems, including heat pump hot water. They sit under the national Renewable Energy Target and are available everywhere in Australia, on top of any state scheme.

Heat pump hot water systems qualify because they harvest ambient heat from the air, so under the scheme they are treated alongside solar water heaters. When you install an eligible system, it is deemed to create a set number of certificates, each of which has a dollar value on the open market.

You almost never handle certificates yourself. In practice the STCs become an upfront discount on your installation, which is why people usually just call it "the STC rebate".

The STC discount is not a fixed number. For a heat pump hot water system it typically lands between $400 and $1,200. Three things drive where you sit in that range:

• System capacity. Larger systems are deemed to displace more electricity, so they earn more certificates.
• Your postcode zone. Australia is divided into zones, and warmer or higher-yield zones generate more certificates than others.
• The STC market price. Certificates trade on a market, so the dollar value per certificate moves over time.

Because of these variables, two households installing the same brand in different states can see different STC discounts. Your installer's quote should state the exact STC value applied so you can see it as a line item rather than a vague "rebate included".

The number of certificates a heat pump earns is based on a deeming period, which is essentially the number of remaining years the scheme credits the system for. That deeming period reduces by one year every 1 January (the 2026 deeming period is 5 years), and the small-scale scheme is legislated to wind down and end in 2030.

The practical effect is that the same system installed a year later generally earns fewer certificates, and therefore a smaller discount. This is a genuine reason not to delay: waiting does not get you a better STC deal, it gets you a smaller one.

Note this January step-down is a federal mechanism. It is separate from the state scheme changes that took effect on 1 July 2026 (such as the Victorian income threshold change), which people sometimes confuse with the STC timing.

To qualify for STCs on a heat pump hot water system:

• The system must be on the Clean Energy Regulator's register of approved products (generally air source heat pumps of around 425L or less). Sticking to major brands such as Rheem, Sanden, Reclaim Energy, iStore, Daikin, Rinnai, or Stiebel Eltron keeps you safe here.
• It must be installed by an accredited installer, as a new installation rather than second-hand equipment.
• Only one claim applies per premises for hot water.

Claiming is almost always handled for you. The standard approach is that you assign the right to create the certificates to your installer, and in exchange they deduct the estimated STC value from your invoice. You pay the discounted price and never touch the certificate market. Make sure your written quote explicitly states the STC assignment and the discount amount, so nothing is quietly absorbed into the installer's margin.

The STC discount stacks with state incentives. To see how it combines with your state's scheme, use our complete rebates guide, or the Victorian rebate guide if you are in Victoria.