VEU reviewing space heating and cooling incentives

The Department of Energy, Environment and Climate Action (DEECA) has initiated the review to ensure the activity under the VEU program remains fit-for-purpose, and delivers benefits for homes and businesses. Replacing gas heating with energy-efficient electrical appliances that also provide cooling is a key part of Victoria’s Gas Substitution Roadmap.

To support the review, DEECA has published a space heating and cooling survey seeking stakeholder feedback and direction on how the VEU program can better support the transition to efficient electric heating and cooling, and improvement opportunities for the current activity. The survey and supporting paper can be found on the Engage Victoria page.

DEECA will use feedback from survey responses to inform proposed changes to the activity that will be consulted on later in 2026.

The consultation closes at 11.59pm Wednesday, April 29, 2026.

Putting a stop to super-sizing

DEECA is also proposing changes for multi-split reverse-cycle air conditioners.

Industry and customers have provided feedback that multi-split reverse-cycle air conditioners are being over-sized to maximise VEU incentives – and DEECA has found evidence to support these concerns. This means incentives awarded may not reflect the emissions savings achieved by an upgrade, potentially undermining the objectives of the VEU program.

In response, DEECA is proposing to:

• Cap incentives for multi-split reverse-cycle air conditioners at 17kW heating/cooling capacity (products with a higher capacity can be installed but are not awarded incentives beyond 17kW)
• Increase minimum co-payments for multi-split and ducted reverse-cycle air conditioner installations to $3,000.

DEECA says it will not hesitate to consider further actions to mitigate against poor sizing practices and will continue to closely monitor VEU space heating and cooling installations. More information on department analysis for this issue can be found in the heating and cooling survey paper.

Stakeholders can provide feedback on proposed changes to multi-split reverse-cycle air conditioners and how the VEU program can improve sizing practices by completing the space heating and cooling survey.

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