A Plain-English Guide to the Victorian Energy Upgrades Program for Ducted Heating and Cooling
TL;DR: The Victorian Energy Upgrades (VEU) program offers an upfront discount when you install an approved high-efficiency reverse cycle air conditioner, with the largest discounts for replacing a ducted gas heater. The discount comes off your quote at the point of sale, not as a grant you claim later. It must be arranged before any work starts.
What Is the Victorian Energy Upgrades Program?
The Victorian Energy Upgrades program is a state government initiative that makes energy-efficient upgrades cheaper for Victorian homes and businesses. It replaced the former Victorian Energy Efficiency Target (VEET) scheme and is administered by the Essential Services Commission.
The VEU rebate in Melbourne is not a direct government grant. Instead, the program works through a market-based system:
- An accredited provider completes an eligible upgrade, such as installing an approved reverse cycle ducted system.
- The upgrade generates Victorian energy efficiency certificates (VEECs), based on the energy and emissions it saves.
- The provider sells those certificates to energy retailers, who are required to buy them each year.
- The value of the certificates is passed on to you as a point-of-sale discount on your installation.
Because the discount depends on certificate prices, the amount can change over time. That is why the Victorian Government publishes indicative figures rather than fixed amounts.
What Does the VEU Rebate Cover for Ducted Air Conditioning?
The Victorian Energy Upgrades air conditioning discount covers the installation of an approved high-efficiency reverse cycle air conditioner that provides both heating and cooling. Ducted and non-ducted models are eligible.
The biggest discounts apply when you remove or replace inefficient heating, including:
- ducted gas heaters, such as older Brivis, Bonaire and Braemar units
- central electric resistance ducted heaters
- older ducted reverse cycle air conditioners.
A smaller discount may also apply when no existing heating or cooling equipment is decommissioned.
To qualify, the Victorian Government sets these key eligibility criteria:
- Approved product: The system must be listed as approved under the VEU program.
- High efficiency: It must be a high-efficiency reverse cycle air conditioner that heats and cools.
- Warranty: Home installations need a minimum five-year warranty.
- Equipment replaced: Any system being replaced must be more than two years old and must be decommissioned.
- Accredited provider: The discount can only be applied by an accredited provider, or by an installer working with one.
- Timing: The discount must be arranged before installation. Retrospective discounts are typically not possible.
The star rating, rated heating capacity and system size in kW all affect whether a model qualifies and how large the discount is. Every Victorian household is eligible to participate, including homes across Melbourne’s climate zone 6 and private rental properties.
How Much Can You Claim?
The amount you can claim depends on the equipment you replace, the size of the new system and the current certificate price. The Victorian Government lists the following indicative household discounts for ducted reverse cycle air conditioning.
| Current system | New system size | Indicative discount |
|---|---|---|
| Ducted gas heater | 10 kW / 16 kW / 22.4 kW | Up to $2,520 / $4,200 / $5,530 |
| Central electric resistance ducted heater | 10 kW to 22.4 kW | Up to $5,460 |
| Ducted reverse cycle air conditioner | 10 kW / 16 kW / 22.4 kW | Up to $490 / $770 / $910 |
| No decommissioned product | 10 kW to 22.4 kW | Up to $410 |
Source: Victorian Government, Heating and cooling discounts, indicative figures as at October 2026. Discounts are market-based and may change.
These are maximum indicative figures, not guaranteed amounts. Your actual discount depends on the approved model, its efficiency and the certificate price at the time of installation. King & Sons provides a fixed upfront quote with the applicable VEU discount already applied, so you know exactly what you will pay. To see how the discount fits into the overall investment, read our guide to ducted air conditioning cost in Melbourne.
How Does the Application Process Work Through King & Sons?
You do not lodge a separate application. King & Sons manages the VEU process for you, from confirming eligibility to applying the discount on your quote and completing the paperwork.
- Free site inspection: A licensed technician inspects your home and existing system, and confirms which upgrades are likely to be eligible.
- Fixed upfront quote: We recommend an approved ducted reverse cycle system sized for your home, with the applicable discount already applied.
- Approval: You review and approve the quote. No work starts until you are ready.
- Installation: Our ARCtick-certified technicians install the system, including new insulated ductwork where required.
- Decommissioning: The old system is decommissioned and removed, as the program requires.
- Paperwork: We handle the VEU documentation and provide your electrical certificates and product details.
Your only role is to choose your system and sign off on the quote. Find out more about our ducted air conditioning installations and our heating services.
How Does the VEU Rebate Relate to Gas Heater Replacement?
Replacing a ducted gas heater with reverse cycle ducted air conditioning attracts the largest household discount under the program.
Once you have weighed up gas ducted heating vs reverse cycle, the discount can make a gas heater replacement in Melbourne significantly more affordable. Keep in mind that existing gas ducts are not suited to refrigerated air, so the changeover includes new insulated ductwork. Our step-by-step guide to replacing a gas heater with reverse cycle ducted air conditioning explains the full process.
Can Landlords Use the VEU Rebate for the 2027 Rental Standards?
Yes. Private rental properties are eligible for VEU heating and cooling discounts, and Consumer Affairs Victoria states that every upgrade under the new rental minimum energy efficiency standards is eligible for a VEU discount.
From 1 March 2027, a failed heater in a Victorian rental property must be replaced with energy-efficient electric heating. New rental agreements from that date also trigger a requirement for efficient cooling in the main living area. A reverse cycle ducted system can meet both requirements, and the VEU discount helps offset the cost. Read our guide to Victoria’s 2027 rental heating standards for the details.
Does the VEU Rebate Apply to Evaporative Cooling Replacements?
Partly. An evaporative cooler is not one of the specific systems listed for decommissioning under the program, so replacing evaporative cooling alone falls into the smaller “no decommissioned product” category.
The picture changes if your home has both evaporative cooling and gas ducted heating. Replacing both with a single reverse cycle ducted system means the gas heater is decommissioned, which can attract the larger ducted gas heater discount. Eligibility rules can change, so King & Sons confirms the current position for your home during the site inspection. If you are considering this switch, see our guide to upgrading from evaporative to refrigerated ducted air conditioning.
What Happens to Old Systems Containing R22 Refrigerant?
If you are replacing an older ducted or split refrigerated system, it may contain R22, an ozone-depleting refrigerant. It must be recovered by a licensed technician before the old unit is removed.
Only technicians with an ARCtick refrigerant handling licence can legally recover refrigerant. King & Sons is ARCtick certified and VBA registered, so we recover refrigerant safely and dispose of old equipment responsibly as part of the changeover.
Frequently Asked Questions
Ready to Find Out What You Can Claim?
The fastest way to know your VEU discount is a free site inspection. King & Sons will assess your home, recommend an approved reverse cycle ducted system and provide a fixed upfront quote with the applicable discount already applied. Contact King & Sons to book your inspection today.