Heat Pump Water Heater Upgrade in Victoria (via VEU scheme)

Hot Water Upgrade (backed by government rebates) in Victoria

Water heating contributes to 25% of the total energy cost in Australian businesses. This number rises up to 30% if you're living in colder regions of Australia. The energy cost arising from water heating also depends on the type of water heater you've installed.

Here is a comparison of the annual energy cost of 4-people Australian households consuming 150 litres of hot water a day:

From this table, it is evident that heat pumps should be the default choice of homeowners or renters in Australia. But buying a heat pump is a significant upfront cost.

To recompense the high upfront cost, the Victorian government is offering rebates to eligible Victorian businesses who are planning to replace a old water heater with an efficient air-sourced heat pump water heating system,

A hot water heat pump extracts heat from outdoor air and transfers it to the water storage tank. Heat pumps deliver a sizable reduction in energy costs and emissions because it harnesses ambient heat quite efficiently.

An air-sourced heat pump hot water system works on the principle of vapour compression refrigeration cycle. Your home appliances like fridge and aircon also work on the same principle.

A hot water heat pump is more like a fridge working in the opposite. Instead of pumping the heat out—as the fridges and air-conditioners do—it extracts heat from ambient air and transfers it to the water.

Now you might be wondering how a heat pump will work in winter when it is cold outside and air temperature is well below 0 °C?

Even if you're living in an alpine region where ambient temperature drops to minus 40 °C, the air still holds some thermal energy that a heat pump can draw out.

Remember, the absolute zero (when there is no heat left) is 0 degrees kelvin, i.e.-273.15 °C.

Annual energy cost of water heating (heat pump consuming 150 litres of hot water a day) in off-peak tariff is over $145.

If the same business had installed a gas water heater, it would have cost them $505 – which is 348% more.

To know about the 348% rise in the energy cost, let’s see what air source heat pump (ASHP) water heating system is and how it works?

Government rebates for replacing conventional water heaters with ASHP

Under the Victorian Energy Upgrades (VEU) for businesses and households, the government is offering a free upgrade for replacing existing gas/electric resistance hot water systems with a small size heat pump hot water systems in Victoria.

Free hot water upgrade eligibility

Victorian businesses who have electric resistance and natural gas powered water heaters are eligible for government free hot water upgrade in Victoria. To be eligible, the upgrade must be undertaken at:

• A business/non-residential premises
• The common areas of a building that is classified under Part A6 of Volume One of the Building
• Code as a Class 2 building (i.e., common area of a multi-residential building)

Is the replacement completely free?

The hot water heat pump upgrade is free in Victoria. The energy upgrade is done under the VEU scheme – which is a mandatory carbon reduction scheme devised by the Victorian government.

The aim of the VEU rebate program is to reduce the greenhouse emissions of Victoria by replacing old, energy-hungry products with energy-efficient products through accredited providers.

These providers replace inefficient products with highly efficient products by creating and trading energy savings certificates (VEECs).

How does a business claim the rebate?

Here are the steps involved in claiming rebates on water heater replacement with air-source heat pump in Victoria:

1. You share a document verifying the property ownership and the details of your current water heater.
2. Give us a rough estimate of daily hot water consumption.
3. Our plumbers and heat pump installers will assess the site for feasibility and convenience of wiring and piping.
4. Once the installation is complete, we will claim the rebate on your behalf.

What is an air source heat pump hot water heater?

It is a reverse refrigerator. The natural heat flow (from hot to cold body) is reversed in ASHPs. These water heaters absorb heat from ambient air and transmit it to water storage in your home.

It is an electricity powered appliance that amplifies the heat extracted from outdoor air by running the refrigerant in the refrigeration cycle through evaporator coils, compressor, condenser coils (or heat exchanger) and expansion valve.

How does ASHP water heater system work?

In simple terms, an ASHP water heater moves heat from ambient air to water. The electricity is used in moving the heat.

The refrigerant liquid flowing through the evaporator coils absorbs ambient heat. The liquid then flow through compressor

Types of heat pump water heaters

We can classify heat pumps into three major groups:

1. Air source heat pumps (ASHPs)
2. Ground source (or Geothermal) heat pumps (GSHPs)
3. Absorption heat pumps

Air source heat pumps

ASHPs move heat from ambient air to refrigerant liquid to heat the water. The heat pumps are 50% more efficient than conventional electric resistance water heaters. ASHPs can be used both for space and water heating purposes.

Based on its design, air-source heat pumps can further be classified into:

1. Integrated heat pumps (Evaporator coils and fan are mounted on water storage tank to form a single unit).
2. Split system heat pumps (Evaporator and fan are separate from water tank and the system will work even if the both units can be placed at different locations).

Ground source heat pumps (GSHPs)

GSHPs exploit heat from below the ground to heat/cool your home or supply hot water during winter. Temperatures remain relatively constant (below 12–40 feet) in the earth’s crust.

Compared to ASHPs, GSHPs have the drawback of higher capital and installation cost. But, lower operating and maintenance costs coupled with more durability, reliability, long lifespan and ability to work in the coldest regions of the earth make them a better alternative.

Absorption heat pumps (AHPs)

Instead of a vapour compression cycle, AHPs employ an ammonia-water absorption cycle. In this cycle, ammonia is used as a refrigerant and water as heat absorbent. AHPs do not use electricity as the water-ammonia mix in AHPs is heated by natural gas, solar or geothermal energy sources.

Advantages of electric ASHP over conventional water heaters

ASHP water heaters outrun conventional water heaters on the following parameters:

1. Free upgrade under VEU program
2. Efficiency: ASHP electric water heaters are 50-60% more efficient than conventional electric resistance and natural gas powered water heaters
3. Carbon emissions: Electric ASHP water heaters are a low (even zero if they are powered by solar panels) carbon-emission and environment-friendly alternative to the conventional water heaters.
4. Coefficient of performance (COP): High COP between 3-5
5. Lower running / operating cost
6. Lesser maintenance cost
7. Long lifespan
8. Safety: ASHP water heaters are safer than natural gas fuelled water heaters, as they are not combustion based and don’t pose a risk of fire.

Things to consider before switching

There are several factors that determine the best suitability of ASHP water heater for a business. Before replacing your water heater with ASHP, you need to consider:

• Size
• Constant temperature function
• Thermal insulation of water tank
• COP
• Heating capacity
• Flow rate in case of tankless ASHP water heater
• First hour rating

Will it work in colder climates?

Even in sub-freezing temperatures, ASHP hot water heaters are the best appliance to decarbonize and reduce your energy use and save money on utility bills. Modern heat pumps (that includes heat pumps we install under the VEU program) have variable speed air compressors driven by a variable frequency drive (a motor controller that supplies varying frequency and voltage to control the speed of the heat pump compressor.

This enables the heat pumps to move heat even in freezing weather conditions when the temperatures are well below -20 °C.

Present-day heat pumps also use lower boiling point refrigerant liquid. Such refrigerants are able to draw heat from sub-zero ambient temperature and continue to flow through the evaporator coils of the heat pump.

Factors affecting the performance of ASHP

A host of factors affects the performance and efficiency of ASHP. The major factors are:

• Frequent changes (increase/decrease) in temperature set point.
• Stained and grubby evaporator coils.
• Not doing regular maintenance tasks.
• Leaks.
• High hot water usage.
• Outdated shower-heads and faucet fixtures.
• Exposed water pipes.
• Uninsulated water tank .

Things to consider before installing ASHP water heaters

Before installing the heat pump, an installer should:

• Check the location and space where the homeowner is planning to install the pump. Ensure that the bearing surface is level and able to bear the weight of the heat pump water heating system.
• Think about the final position of the exhaust fan.
• The circuit breaker and power cable current ratings match with the recommended current ratings.
• Airflow at the planned installation site.
• Ensure that the heat pump system is kept upright all the time (even during the installation).
• Discuss the operational noise level with homeowner
• Read the installation instructions listed in the product manual.

After the installation, ensure that:

• All the components of the heat pump are working fine.
• The pump system and pipe work are earthed to avoid electric shocks.
• The minimum inlet water pressure is maintained at the recommended level.
• All the mandated building and plumbing standards are being met.

How to choose among different sizes of heat pumps?

Picking a suitable size heat pump hot water system is a crucial step in the conventional water heater to heat pump upgrade process.

If you install a larger size heat pump that doesn't match your needs, there will be standing/operational losses, and you won’t find any significant drop in electricity bills.

In the case of a smaller size heat pump, you’d often find running out of the hot water in the depths of freezing winters.

Heat pump size selection:

1. Small (Tank size of 170-200 litres)
2. Medium (Tank size of 215-250 litres)
3. Large (Tank size of >300 litres)

Factors contributing to energy cost of heat pump water heater

1. Head count
2. Electricity tariff
3. Efficiency of water heater
4. Hot water usage
5. Length and insulation of connecting pipes and water storage tank
6. Leakages (if any) in connecting pipes, faucets or water heater system
7. Climate