The Victorian Energy Upgrades (VEU) program is one of Australia's longest-running energy efficiency certificate schemes, and it underpins many of the heat pump hot water and air conditioning upgrade offers Victorian households and commercial clients encounter. Like the federal STC scheme, VEU works through certificates rather than direct government payments, and understanding that mechanism helps explain why offers can vary between providers and over time.
The certificate mechanism
Under VEU, accredited providers can create Victorian Energy Efficiency Certificates (VEECs) when they carry out an eligible activity, such as replacing an electric resistance or gas hot water system with a heat pump, or upgrading an inefficient air conditioner to a more efficient reverse-cycle unit. The number of certificates generated is calculated using activity-specific methods set out in the scheme, which estimate the energy savings the upgrade is expected to deliver over its lifetime, relative to a baseline (typically the type of equipment being replaced).
These certificates are sold into a market where liable entities, mainly large energy retailers, who have obligations under the scheme, need to acquire a certain volume of certificates each year. The market price for VEECs fluctuates with supply, demand and scheme settings. Installers or their certificate brokers typically apply the certificate value as an upfront discount on the customer's invoice, similar in structure to how STCs work for solar and batteries.
Why VEU discounts vary between quotes
Because VEEC value depends on the specific activity's calculated savings and the certificate's current market price, two households replacing similar equipment can see different discount amounts depending on their existing system's efficiency rating, the specifications of the new equipment, and market conditions on the day the certificates are created. This is a normal feature of certificate-based schemes and is not evidence that one provider is being more generous than another, it reflects the underlying calculation.
Eligible activities relevant to households
Beyond heat pump hot water and air conditioning, VEU recognises a wide range of eligible activities across lighting, insulation, and other appliance upgrades, though the two most commonly discussed in relation to electrification are hot water and space heating/cooling upgrades, given their significant share of typical household energy use.
Eligibility conditions to be aware of
VEU eligibility generally requires the property to be within Victoria, the work to be carried out by an accredited provider, and the specific equipment installed to meet the scheme's product requirements. There are typically also requirements around the condition or type of the equipment being replaced, for example, some activities require replacing an existing eligible system rather than installing new capacity where none previously existed. It's worth confirming these specifics with your provider rather than assuming a given upgrade automatically qualifies.
Commercial and household pathways
Like PDRS in NSW, VEU includes activities relevant to both residential and small commercial or commercial settings, though calculation methods and eligible equipment can differ by activity and building type. Commercial clients considering VEU-eligible upgrades as part of a broader energy efficiency project should ask specifically which activities under the scheme apply to their premises and equipment.
What to check before agreeing to an upgrade
- Confirm the provider is accredited under VEU for the specific activity being quoted.
- Ask for the VEEC-based discount to be itemised separately from any other discounts or promotions.
- Confirm the new equipment meets the scheme's current product eligibility requirements.
- Check whether your existing equipment needs to meet specific conditions to qualify for the replacement activity.
Run your own numbers
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This article is general information, not financial or electrical advice. Program rules and eligibility change, confirm current settings with the relevant scheme or your Esena engineer before making decisions. Last reviewed: August 2026.