Victorian Energy Upgrades Air Conditioner Rebate Changes 2026: What Homeowners Need to Know

If you’re planning to install a new reverse cycle air conditioner, there are important proposed changes to the Victorian Energy Upgrades (VEU) program that could affect the incentives available for your installation.

The Department of Energy, Environment and Climate Action (DEECA) has published its response to the Space Heating and Cooling Review, outlining proposed changes that are expected to take effect from 30 September 2026.

Here’s what homeowners need to know.

What is the Victorian Energy Upgrades (VEU) program?

The Victorian Energy Upgrades (VEU) program helps eligible Victorian households and businesses improve their energy efficiency by providing incentives for approved products, including reverse cycle air conditioners.

The program aims to reduce energy use, lower emissions and help households enjoy more efficient, comfortable homes.

Why are the changes being introduced?

Following its Space Heating and Cooling Review, DEECA has proposed changes to help ensure VEU incentives continue to support appropriate system design, maintain the integrity of the program and deliver better outcomes for Victorian households and businesses.

The proposed changes also respond to feedback from installers, accredited providers, manufacturers and customers received during the consultation process.

What is changing from 30 September 2026?

If implemented, there are two key changes homeowners should be aware of.

1. Incentives for residential multi-split systems will be capped

For residential multi-split reverse cycle air conditioners, incentives will only be calculated on the first 20kW of heating and cooling capacity.

Larger systems can still be installed where they’re appropriate for the property, however no additional incentives will apply to capacity above 20kW.

This proposed cap applies to residential installations only and will not affect non-residential properties.

2. Minimum customer contributions are increasing

The proposed changes also include an increase to the minimum customer contribution.

For:

• Ducted reverse cycle air conditioners
• Multi-split reverse cycle air conditioners with a cooling capacity of 10kW or more

the minimum co-payment will increase to $3,000 (including GST).

For multi-split systems with a cooling capacity of less than 10kW, the minimum co-payment will remain at $1,000 (including GST).

What do these changes mean for homeowners?

If you’re considering upgrading your heating and cooling, these proposed changes may affect the incentives available depending on the size and type of system you install.

For some larger residential systems, waiting until after 30 September 2026 could mean lower available incentives and higher minimum customer contributions under the VEU program.

Every home is different, so it’s worth understanding how these proposed changes may apply to your property before making a decision.

Should you install before the changes?

There’s no one-size-fits-all answer.

While rebates can help reduce upfront costs, they shouldn’t be the only factor when choosing a heating and cooling system.

A properly designed system takes into account factors such as:

• The size of your home
• Your floor plan and room layout
• Insulation
• Ceiling height
• Window orientation
• How different areas of the home are used

Choosing the right-sized system can improve comfort, reduce running costs and deliver better energy efficiency for years to come.

The best system isn’t the one with the biggest rebate—it’s the one that’s designed to suit your home.

Why getting the right advice matters

Government incentive programs can change, but good system design doesn’t.

At MD Tradeworks, we believe homeowners should understand their options before making a decision. Our role is to recommend a heating and cooling solution that’s right for your home, explain how current VEU incentives may apply and help you make an informed choice.

Whether you’re replacing an older gas heater, upgrading an existing air conditioner or installing a new multi-split system, we’ll take the time to understand your home and recommend a solution that’s designed for the way you live.

What’s next?

DEECA has advised that it will update the VEU Specifications to reflect these proposed changes and has also indicated it will continue reviewing reverse cycle air conditioner system sizing practices, with further consultation expected later in 2026.

We’ll continue to monitor these updates and share any important changes as they’re announced.

Speak with MD Tradeworks

If you’re considering a new reverse cycle air conditioner and want to understand how these proposed VEU changes may affect your project, we’re here to help.

We’ll explain the current incentives, talk you through the proposed changes and recommend a system that’s properly designed for your home—not simply the one with the biggest rebate.

Because good advice comes first, and the right system should keep your home comfortable long after the rebate has been forgotten.