Registering Commercial HPWHs for VEU (VEECs) and ESS (ESCs): 2026 Guide

The Victorian Energy Upgrades (VEU) and NSW Energy Savings Scheme (ESS) have evolved significantly since commercial heat pump water heater (HPWH) activities were first introduced.

VEU Activity 44 and ESS IHEAB schemes are now directly focused on incentivising larger-scale commercial HPWH systems, not residential systems installed in light-commercial settings. Scheme registrations are based on unique “system” configurations — not just the heat pump alone — so system design including heat pump, thermal storage, plumbing, auxiliary boosting, and control settings all matter.

The incentives are still strong for eligible systems, with certificate returns covering up to 60% of equipment cost.

This guide provides a 2026 update covering:

• Latest rules for system eligibility
• Steps to apply for the schemes
• EN 14511 testing requirements
• Initial documentation required
• Modelling for R&D and performance optimisation
• Application process

Latest Rules for System Eligibility

Through 2025–26, VEU and ESS regulations have been adjusted to focus the program more squarely on engineered, larger-scale systems. The key changes to certificate calculations include:

• A minimum average storage volume requirement under VEU: 700 L, or 425–700 L where average heat pump capacity exceeds 20 kW
• Introduction of the VEU “LoadFactor”, which substantially reduces VEECs for systems below 10 kW
• Introduction of the ESS “ConfidenceFactor”, which applies a similar reduction for smaller systems

In practice, these changes largely remove any commercial incentive for smaller systems to apply for the commercial activities.

Scheme regulators have also increased requirements on warranties and co-payments to improve the quality of installations delivered under the schemes.

Steps to Apply for the Schemes

A typical workflow for commercial HPWH projects:

1. Determine system range
2. Arrange third-party EN 14511 testing
3. Compile relevant documentation
4. System energy modelling
5. Submit application through VEU and ESS portals

Each step is covered below.

EN 14511 Testing

EN 14511 testing forms the foundation of commercial heat pump performance modelling. Selecting test conditions that reflect expected operating conditions is important, as these directly influence modelled system performance and resulting certificate outcomes.

In-house testing to EN 14511 is useful in the early stages of a product to ensure minimum performance requirements are met — namely minimum 60% energy savings, which translates to an annual system COP of approximately 2.5.

For the final application, third-party NATA-accredited testing is required. This testing is currently available through Intertek China, CVC, and Yukawa Laboratory.

For detailed guidance on selecting air and inlet water temperatures, see our EN 14511 test conditions guide.

Initial Documentation Required

Accurate testing and documentation is extremely important for commercial HPWH projects, as inconsistencies or errors are a common cause of delays. The following documents are required for EnergyAE to start energy modelling:

• EN 14511 heat pump performance test report
• System schematic showing storage tanks, heat pump units, and plumbing configuration
• Tank drawings
• Pipework insulation specifications
• For tanks < 700 L: AS/NZS 2712 certificate and AS/NZS 4692 tank heat loss test report

Modelling for R&D and Performance Optimisation

EnergyAE compiles all the relevant system parameters to produce a TRNSYS model of your system. This model can be used to optimise system design — thorough analysis here can deliver massive improvements on system performance and substantially higher VEEC/ESC certificate returns.

Design decisions that can be analysed include:

• Impact of different control settings (set points, dead-bands, sensor positions)
• Storage/thermal capacity performance trade-offs across different systems
• Auxiliary electric/gas boosting sizing and controls
• Storage tank plumbing configurations — series/parallel
• Impact of different EN 14511 test condition selection
• Tank insulation thickness

Once the design is finalised, compliant AS/NZS 4234 modelling reports are produced for the final application.

Application Process

Final application requirements are defined by each scheme and must align with the latest guidance from the ESC and IPART. Once submitted, applications are reviewed by the scheme administrators, with approval typically achieved within 6–8 weeks where documentation is complete and consistent.

Next Steps

If you are developing a commercial HPWH system and want to understand how it will perform under the VEU or ESS methodology, get in touch with EnergyAE to discuss your project.