13 July 2026

Space heating and cooling review survey response published

The Department of Energy, Environment and Climate Action (the department) has released its response to the Space Heating and Cooling Survey.

The department has carefully considered all stakeholder feedback and customer insights. The response to the survey paper, now available on Engage Victoria, details the key decisions proposed in response to stakeholder feedback.

The department would like to sincerely thank everyone who took the time to make a submission or meet with the department. Stakeholders provided valuable feedback to inform the direction of the space heating and cooling review and on proposed changes for multi-split reverse cycle air conditioners (RCACs).

Customers are central to the VEU program. Heating and cooling upgrades must be designed to deliver real benefits to Victorian households and businesses, including lower energy bills, reduced emissions, greater comfort and a positive upgrade experience. The space heating and cooling review and proposed changes aim to ensure incentives support appropriate system design, maintain program integrity and deliver strong customer outcomes.

Important changes to multi-split reverse cycle air conditioners

Stakeholders had mixed views on the proposed cap on incentives, increases to minimum co-payments and transition time required before changes commence. The department acknowledges stakeholder feedback about the impact of the proposed changes on product supply chains, accredited providers, installers and customers. In response both to customer and stakeholder feedback, the department proposes to:

1. Proceed with introducing a cap on incentives for all multi-split RCACs installed in residential premises.

  • The proposed cap is to be implemented by capping the heating and cooling capacity used in the activity greenhouse gas abatement calculations at 20 kilowatts (kW).
  • Multi-split RCACs above 20 kW can be installed but no further incentives will be awarded.
  • The proposed cap will not apply to installations in non-residential premises.

2. Increase the minimum co-payment to $3,000 (including GST) for all ducted RCACs and multi-split RCACs with a cooling capacity of 10 kW or more.

  • The minimum co-payment for multi-split RCACs with a cooling capacity less than 10 kW will remain at $1,000 (including GST).

3. Introduce the cap on incentives and increases to minimum co-payments from 30 September 2026.

Next steps for the space heating and cooling review

The department will update the VEU Specifications for these changes which are proposed to take effect from 30 September 2026.

Stakeholder submissions strongly agreed on the need to improve RCAC system design and sizing. The department will carefully monitor the impact of these changes to the Part 6 activity and is considering further changes to the activity to improve system sizing practices. The department plans to release a consultation paper later in 2026 on further proposed changes to the activity based on customer insights and the stakeholder survey feedback.

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Page last updated: 13/07/26