Costs, Price Factors and 2026 Rebates
STCs for heat pump hot water in 2026: how the Small-scale Renewable Energy Scheme discount works
How small-scale technology certificates reduce the price of heat pump and solar water heaters, the shrinking deeming period to 2030, eligibility and how to check a quote.
Small-scale technology certificates (STCs) are the national incentive behind most heat pump hot water discounts in Australia. Under the Small-scale Renewable Energy Scheme (SRES), an eligible heat pump or solar water heater creates STCs based on the electricity it is expected to displace. Most households assign those STCs to an agent, usually the retailer or installer, in exchange for a lower price on the quote. For installations in 2026 the deeming period is five years, and it falls by one year each year until the scheme ends in 2030, so the number of STCs, and therefore the discount, is shrinking. This guide is part of the installation cost overview.
What an STC is
The Clean Energy Regulator (CER) describes one STC as equal to one megawatt hour of renewable electricity generated, stored or displaced. Electricity retailers and other liable entities under the Renewable Energy Target must buy and surrender STCs, which creates a market for them. That market is what turns certificates into dollars for households.
For water heaters, STCs are not paid for electricity generated. They reflect the electricity a solar or heat pump water heater is expected to displace compared with a conventional electric water heater over the deeming period.
Which water heaters are eligible
According to the CER, two kinds of water heater can create STCs:
| Type | Capacity limit for SRES | Key requirement |
|---|---|---|
| Solar water heater | Under 700 litres (larger systems need additional documentation) | Model on the CER register |
| Air source heat pump water heater | Under 425 litres | Model on the CER register |
The installation must also meet the installer licensing requirements of your state or territory. In practice that means a licensed plumber for the water work and a licensed electrician for the electrical connection.
How the number of STCs is worked out
The number of STCs depends on:
- The model. Each registered model has a modelled performance.
- Your postcode zone. The CER publishes postcode zones for solar water heaters and heat pumps, based on climate and system performance.
- The installation year, which sets the deeming period.
| Installation year | Deeming period (years) |
|---|---|
| 2025 | 6 |
| 2026 | 5 |
| 2027 | 4 |
| 2028 | 3 |
| 2029 | 2 |
| 2030 | 1 |
All six years are as published in the CER's deeming period table, which falls by one year each year until the scheme ends in 2030. For water heaters and air source heat pumps, the CER applies a matching multiplication factor (0.5 for a five-year deeming period in 2026, 0.4 in 2027, down to 0.1 in 2030), rounded down to a whole number of STCs. The CER requires solar water heater STCs to be calculated under the Renewable Energy (Method for Solar Water Heaters) Determination 2016 and provides an online STC calculator. Your installer or agent will normally run the calculation for the exact model and postcode.
From STCs to dollars on the quote
The dollar value equals the number of STCs × the price the agent pays per STC. The CER does not set the price agents pay. There is an STC Clearing House where certificates can be sold at a fixed price, but selling through it can involve waiting, so agents usually price the discount using the open market and their own costs.
Illustrative example. Suppose a heat pump installed in 2026 in your postcode is calculated at 20 STCs, and the agent values them at $36 each after its costs.
- Discount = 20 × $36 = $720.
- If the same model were installed in 2027, with one fewer deeming year, the STC count would be lower, so the discount would shrink even if the STC price stayed the same.
These numbers are illustrative only; the actual STC count comes from the CER calculation, and the price per STC varies.
Assigning STCs or creating them yourself
| Option | How it works | Pros | Cons |
|---|---|---|---|
| Assign to an agent (most common) | You sign an assignment form; the agent creates the STCs and gives you a discount or payment | Simple; discount upfront | You must trust the agent's price; read the form |
| Create your own | You register in the CER system, create the STCs and sell them | You control the sale | Paperwork, compliance checks, waiting for payment; must be done within 12 months of installation |
The CER notes that if you create your own STCs you must do it within 12 months of installation, and that you cannot create STCs if you have already assigned the right to an agent. Disputes about the price an agent pays are contractual matters between you and the agent.
Checking an STC discount on a quote
- The quote should show the price before the STC discount, the number of STCs and the discount amount.
- Confirm the model number is on the CER register.
- Read the STC assignment form before signing; it is a legal document.
- Check whether a state discount or rebate is applied as well and in what order (for example, Solar Victoria calculates its rebate on the price after other discounts).
- Keep a copy of the form, the invoice and compliance certificates.
How STCs interact with state schemes
STCs are national and can usually be combined with state programs, but each state program has its own rules about whether its certificate or rebate can be claimed for the same installation. Examples:
- Victoria: households may combine STCs with a Victorian Energy Upgrades discount and the Solar Victoria hot water rebate, if eligible. See the Victorian rebates guide.
- NSW: the Energy Savings Scheme offers a separate discount through Accredited Certificate Providers. See the NSW guide.
Use the payback calculator with the total of all incentives shown on your quote, and the worked example to see a full stack.
Frequently asked questions
Do split system air conditioners get STCs?
No. STCs under the SRES apply to eligible small-scale solar panels, wind and hydro systems, batteries, solar water heaters and air source heat pump water heaters. Reverse cycle air conditioners are covered by some state schemes instead.
Will the STC discount disappear after 2030?
The CER states the scheme ends in 2030, and the deeming period falls each year until then. Expect the STC component of a heat pump discount to keep shrinking.
Can I get STCs for a second-hand heat pump?
Eligibility rules require registered models and compliant installation. Second-hand or previously installed systems are generally not eligible; check with the CER before relying on it.
What if the installer never creates the STCs?
If you assigned STCs and received the discount, that is the agent's responsibility. If you were promised a discount that did not appear, raise it with the seller first, then your state fair trading agency.
Official sources
- Clean Energy Regulator — SRES, STC calculator, heat pump register and postcode zones
- energy.gov.au — household rebates overview
- ACCC — consumer rights and misleading claims
