The complete 2026 guide to eligibility, discount amounts, and the installation process

If you’re a Victorian homeowner or business considering a new reverse-cycle air conditioner, there’s a very good chance the Victorian Government will cover a meaningful chunk of the cost before you’ve even paid your first invoice. The Victorian Energy Upgrades (VEU) program has funded well over a million home and business upgrades since 2009, and air conditioning remains one of its most popular categories. This guide covers exactly how the VEU air conditioner discount works in 2026, who qualifies, how much you can expect to save, and what the installation process actually looks like from start to finish.

What Is the VEU Program?

The Victorian Energy Upgrades program is a Victorian Government initiative regulated by the Essential Services Commission. It requires energy retailers to purchase Victorian Energy Efficiency Certificates (VEECs), which are created whenever an accredited provider installs an eligible energy-efficient product, such as a high-efficiency reverse-cycle air conditioner.

In practice, this means the provider generates certificates from your upgrade and sells them on the certificate market. The value of those certificates is passed straight back to you as a discount on your installation invoice. You don’t pay the full price and claim money back later, and there’s no separate rebate application to lodge — the saving is built into your quote from the outset.

How Much Can You Save?

According to the Victorian Government’s own Heating and cooling discounts page, households can receive a discount of up to $1,610 and save up to $460 a year on energy bills when replacing a non-ducted gas space heater with an efficient reverse-cycle air conditioner. Larger, whole-of-home upgrades attract significantly higher discounts.

Discount amounts depend on three things: the system you’re replacing, the size and type of the new system, and the current market price of VEECs (which moves with supply and demand). The tables below summarise the Victorian Government’s published indicative discount ranges for households as at mid-2026.

Room / Split System Upgrades (Households)

Current system	New system size	Indicative discount
Hard-wired electric resistance room heater	3kW to 9kW reverse-cycle	Up to $840
Ducted gas heater → 4x split systems (1x8kW + 3x3kW)	Multiple units	Up to $2,520
Ducted gas heater → multi-split (10kW outdoor unit)	Multi-split	Up to $2,940
Non-ducted (room) gas heater	3kW to 9kW reverse-cycle	$630 to $1,610
Non-ducted reverse-cycle (replacing old unit)	3kW to 9kW reverse-cycle	$210
No system to decommission (new install)	3kW to 9kW reverse-cycle	$70 to $140

Ducted Reverse-Cycle Upgrades (Households)

Current system	New system size	Indicative discount
Central electric resistance ducted heater	10kW to 22.4kW	Up to $5,460
Ducted gas heater	10kW / 16kW / 22.4kW	Up to $2,520 / $4,200 / $5,530
Existing ducted reverse-cycle (replacing old unit)	10kW / 16kW / 22.4kW	Up to $490 / $770 / $910
No system to decommission (new install)	10kW to 22.4kW	Up to $410

The single biggest discounts apply when you’re switching off gas entirely, particularly replacing a whole-of-home ducted gas heater with an efficient ducted reverse-cycle system. Business rates differ slightly and generally scale with larger system sizes (up to 56kW for commercial ducted systems), with indicative discounts published separately by the Victorian Government for commercial upgrades.

Indicative discounts are published by the Victorian Government and move with the live VEEC market price. Your exact saving will be confirmed on your personalised quote.

Are You Eligible?

Eligibility is based on your property and the system you’re replacing, not your income. According to the Victorian Government’s published criteria:

Your property must be in Victoria (residential or business).
If you’re replacing an existing system, it generally needs to be more than 2 years old.
There is no income test for the VEU heating and cooling discount.
Private rental properties are eligible, with landlords and tenants encouraged to plan the upgrade together.
New installations (no existing system to remove) are still eligible, though at a lower discount tier.

Minimum Customer Contribution

The VEU program requires a minimum customer co-payment to maintain program integrity and prevent fully subsidised installations. As at mid-2026, this is:

A minimum of $200 for split systems up to 10kW.
A minimum of $1,000 for systems over 10kW or ducted installations.

This means there’s no such thing as a genuinely free air conditioner under the VEU program — be cautious of any advertising that suggests otherwise.

Product Requirements

Only specific products qualify for a VEU discount. To be eligible, the system must:

Be listed as an approved product on the official VEU Product Register.
Be a genuine reverse-cycle system providing both heating and cooling (cooling-only units don’t qualify).
Come with a minimum 5-year manufacturer warranty against defects, a requirement that has applied to all VEU heating, cooling, and hot water installations since 31 March 2025.
Be installed by a VEU-accredited provider — self-installation or unaccredited installers are not eligible under the program.

The Installation Process, Step by Step

Free assessment. Climate Green confirms your property and current system are eligible, and recommends the right size and type of reverse-cycle system for your home or business.
Quote with the discount already applied. You receive a single, transparent quote showing the full system price with your VEU discount deducted — no separate claim or paperwork required from you.
Installation by accredited technicians. Our installers complete the work to VEU program standards, including any required electrical documentation.
Certificate creation and compliance. We handle the VEEC creation and submission process on your behalf, so there’s nothing further for you to do.

Renters and Landlords

Tenants can access the VEU heating and cooling discount, but written landlord consent is required before any installation goes ahead, since it involves a change to the property. The Victorian Government encourages landlords and tenants to discuss upgrades together early, as the long-term benefit (lower running costs, improved comfort, and a more valuable property) is shared by both parties.

Common Questions

Is this really a Government rebate, or a sales gimmick?

It’s a genuine, regulated Victorian Government program overseen by the Essential Services Commission. The discount mechanism (VEECs) is the same regardless of which accredited provider you use — the amount you save depends on your system and eligibility, not on marketing.

Can I install the system myself to save more?

No. The VEU program discount can only be applied when an accredited provider supplies and installs (or oversees the installation of) the approved product. DIY installations are not eligible.

Will the discount amount change after I get my quote?

VEEC market prices move daily, so the exact dollar figure can shift slightly between an initial estimate and your final quote. Your installer will confirm the locked-in discount at the time of quoting.

VEU Air Conditioner Discounts in Victoria