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If your gas hot water system is on its last legs, you’re probably weighing up whether to replace it with another gas unit or switch to an electric heat pump. The switch costs more upfront than a like-for-like gas replacement, but government rebates close most of that gap, and the running costs afterwards are hard to ignore. Here’s what the cost to replace gas hot water with an electric heat pump in Victoria actually looks like, once you strip out the marketing.

What You’ll Pay Upfront

A heat pump hot water system typically starts around $3,500 up to $6,000+ installed before rebates, depending on system size, brand, and site complexity.

Unit cost depends on tank size, efficiency rating, and brand. Quality units from recognised suppliers start around $2,500 to $3,500 for standard family sizes, while premium CO2-refrigerant systems from brands like Reclaim Energy run higher, coming with longer warranties and superior cold-weather performance.

Installation costs depend on your setup, but keeping existing circuits makes it simple. For straightforward installations, wiring a standard electrical circuit typically runs around $400 to $800 depending on your property’s switchboard setup and access. Converting from gas requires both a licensed plumber to safely decommission the gas line and a licensed electrician to run a dedicated circuit, keeping total installation affordable while ensuring full regulatory compliance.

Rebates That Cut the Cost, And Why Gas Conversions Get Less

Two rebate layers apply in Victoria, and they stack.

Federal STCs (Small-scale Technology Certificates) apply to every eligible heat pump installed in Australia. The installer deducts this straight off your quote, you don’t claim it separately. In Victoria, this is typically worth $490 to $680, depending on your postcode and the unit’s rated efficiency.

Solar Victoria’s Hot Water Rebate contributes $1,000 towards an eligible system, rising to $1,400 if you choose an Australian-made unit (brands like Rheem, Dux and Rinnai qualify). To be eligible, your household income needs to be under $150,000 combined, your property under $3 million, the existing system needs to be at least three years old, and the property can’t have received a hot water or solar battery rebate previously.

There’s also a third layer worth knowing about if you’re switching from gas specifically: Victorian Energy Efficiency Certificates (VEECs). These are worth less for a gas-to-heat-pump switch than an electric-to-heat-pump switch, roughly $447 versus $790, because the emissions saving from replacing gas is calculated differently. It’s a smaller rebate, but it still stacks on top of the STC and Solar Victoria contributions.

What You’ll Actually Pay, After Rebates

Once you combine the STC rebate, Solar Victoria’s contribution, and VEECs, a typical quality gas-to-heat-pump conversion in Victoria lands around $2,800 to $3,200 out of pocket, depending on your chosen unit and site access. That’s for a solid mid-range system installed properly by trade professionals.

If a quote comes in well under that after rebates, ask what’s being cut. Underpriced “free” or near-free heat pump offers are common in this space, and they usually mean a lower-spec unit, a corner cut on insulation or electrical compliance, or an installer who isn’t actually licensed for the gas disconnection and electrical work involved. A properly licensed installer will also arrange safe disconnection of your old gas line, not just leave it capped and forgotten.

Running Costs and Payback

This is where the switch pays for itself. A gas storage system typically costs more to run each year than a heat pump, and that gap is only growing as gas prices rise. Depending on household hot water usage, switching from gas to a heat pump in Victoria can save somewhere between $800 and $1,600 a year, with payback on the extra upfront cost landing in the 1.5 to 3 year range for an average household. Heat pumps also last 10 to 15 years with minimal maintenance, so those savings keep compounding well after the system’s paid for itself.

Local Considerations for the Surf Coast and Bellarine Peninsula

If you’re in Torquay, Anglesea, Portarlington, or anywhere else along the coast, ask your installer about corrosion protection. Salt-laden air accelerates wear on outdoor units, and a system sited without this in mind will need earlier maintenance or replacement. Siting also matters for noise, the compressor runs at roughly the volume of a window air conditioner, so it’s worth thinking about before it goes in under a bedroom window.

Getting a Straight Answer on Cost

The only way to get an exact figure for your home is a proper site assessment, your existing system, switchboard distance, and site access all affect the final price. Newflo Plumbing is a registered installer under the Solar Victoria Hot Water Rebate scheme and handles both the plumbing and gas disconnection side of a conversion, so you’re not coordinating multiple trades yourself.

If you’re weighing up the switch, we offer free onsite quotes and consultations for hot water upgrades across Geelong, the Bellarine Peninsula and the Surf Coast, get in touch and we’ll give you a straight answer on what it’ll cost for your place.