The era of the $33 heat pump
Between 2022 and 2023, generous rebate maths made it possible for aggressive operators to offer heat pump "upgrades" for $33, or nothing at all. It went about as well as you would guess:
- Cheap unrated units with outdated refrigerants, with compressors that often failed within 12-24 months, and nobody left to service them.
- Rushed installs by unlicensed subcontractors: missing pressure valves, reused corroded pipes, skipped switchboard checks.
- Rebate paperwork games, including claims that broke the scheme rules outright.
Thousands of households got a "free" unit that became an expensive problem within two years.
What NSW did about it
- May 2024: a mandatory minimum co-payment of $220. By law, you must pay at least $220 out of pocket on a rebated hot water upgrade. Providers cannot absorb it with giveaways or cash-backs. "Free" is now illegal by design.
- Door-to-door sales of these upgrades were banned across NSW.
- Since late 2025: mandatory 5-year warranties. Any heat pump on the approved product list must carry a minimum 5-year warranty covering both the tank and the compressor.
The result: the ultra-cheap end of the market collapsed (low-tier installation volume fell by roughly 84% in early 2025), the opportunists left, and what remains is a market of real brands and real installers. The rebates are still generous, roughly $900-1,800 combined on a typical system. They just can no longer be used to sell junk.
What a fair deal looks like in 2026
- Budget tier (Emerald, iStore, Aquatech, PowerBay): $2,800-3,800 installed before rebates, typically $1,000-2,500 out of pocket after them.
- Mid tier (Rheem, Chromagen, Apricus, Dux): $3,500-5,500 before, $2,500-4,000 after.
- Premium tier (Reclaim, Sanden, Stiebel Eltron): $5,000-8,500 before, $4,000-6,500 after.
A quote far below these ranges deserves suspicion, not celebration. And a quote should always show the federal STC rebate and the NSW ESS rebate as separate line items, so you can see exactly what you are getting.
Red flags, 2026 edition
- Any offer of "free" or under $220 out of pocket. That is not a bargain, it is a rule breach.
- Someone knocking on your door about hot water rebates. Banned.
- A unit that is not on the approved list, or carries less than a 5-year warranty on tank and compressor.
- Old refrigerants (R134a). Modern units use R290 or CO2.
- A quote that will not itemise the rebates.