Frequently asked questions to help assist Accredited Certificate Providers (ACPs), Installers and other participants in understanding their compliance and licensing requirements when undertaking heat pump water heater activities under the Energy Savings Scheme (ESS) and Peak Demand Reduction Scheme (PDRS). 

This section aims to provide clear and directive guidance to ensure that all activities are performed in accordance with the relevant standards and regulations, helping you fulfill your obligations under the schemes effectively.

Key points

  • All installations must be performed or supervised by licensed professionals. Non-compliance may result in penalties and exclusion from the scheme.
  • It is important to follow the specific requirements of each scheme (ESS and PDRS) to ensure eligibility and avoid potential compliance issues.
  • Documentation is crucial for demonstrating compliance, particularly during audits. Ensure all installations and decisions are supported by appropriate records and evidence.
  • When making installation decisions, especially in cases where indoor installation of heat pump water heaters may occur, customer consent and understanding of the impacts are key.

Implementation Requirements

What licenses do I need to install or work on heat pump water heaters?

All activities under the ESS and PDRS, including the removal of any existing End-User Equipment, must be performed or supervised by a suitably qualified licence holder in compliance with the relevant standards and legislation. 

For information about licence requirements refer to Notice 03/2024 - Heat Pump Water Heaters - Scheme and Legislative Licence Requirements.

Do the schemes allow indoor installation of compressor units for heat pump water heaters?

The schemes do not explicitly prohibit ACPs from installing compressor units indoors. However, all implementations must be performed in compliance with the relevant standards and legislation, including AS/NZS 3000:2018 which, at clause 4.1.2 (e), requires an appliance is installed in accordance with the manufacturer's instructions. 

Meeting manufacturer guidelines alone is not sufficient reason for the location of compressor units indoors. For example, the placement of compressors in a building envelope that is heated for part of the year is unlikely to be consistent with the objectives of the Energy Savings Scheme (ESS). Further, compressor units should be located where they can operate efficiently and unimpeded without reliance on customer behaviour. 

Indoor installations should only occur in exceptional circumstances and ACPs should consider the following factors: 

  • Is placement outdoors feasible and preferable?
  • Did the customer consent after having been made aware of all potential impacts of indoor installation (informed consent)?
  • Does the compressor cause cool air, noise, or other disturbance/discomfort to people? 
  • Does the compressor cause circulation of dust or impair the operation of equipment? 
  • Is the installation safe?
  • Does the installation impair safe passage through the building or its exits? 
  • Is the unrestricted airflow and replacement of the cooled air with ambient temperature dependent on human behaviour (e.g., leaving doors or windows open)? 
  • Does the location have air-conditioning?

We recommend prioritising outdoor installation wherever possible. If a compressor unit is installed indoors, we expect ACPs to provide the following information at audit along with their evidence pack:

  • Documented reasons for why the implementation complies with the scheme requirements
  • Documented advice provided to the customer to establish the customer was fully aware of potential impacts of indoor installation and provided informed consent.

Rule Interpretation and Calculation

Can I replace a single water heater with multiple heat pump water heaters?

You can replace one or more water heaters with one or more heat pump water heaters under the following methods (provided the replacement heat pump water heaters meet the Equipment Requirements):

  • Installation of High Efficiency Appliances for Businesses (IHEAB) method - Activity Definition F16 in the ESS
  • Reducing Demand Using Efficiency (RDUE) method - Activity Definition WH1 in the PDRS.

You cannot replace a single water heater with multiple heat pump water heaters under the Home Energy Efficiency Retrofit (HEER) method at a residential or small business site. The HEER method allows for one-for-one water heater replacements only. ACPs must provide clear evidence that the number of water heaters replaced matches the number of water heaters installed.

For more information about multiple heat pump water heater activities refer to Notice 03/2023 – Multiple heat pump water heater activities.

Can I install heat pump water heaters that are joined by a manifold?

You can install heat pump water heaters that are joined by manifold(s) under the IHEAB method - Activity Definition F17. 

You cannot install a heat pump water heater joined by manifold(s) under the HEER method. You can only implement one-for-one water heater replacements under the HEER method. Heat pump water heaters joined by manifold are not considered to be a single heat pump water heater

For more information about multiple heat pump water heater activities refer to Notice 03/2023 – Multiple heat pump water heater activities.

I already have an old heat pump water heater installed. Can I replace this with a new heat pump water heater under the ESS or PDRS?

No, replacement of an old heat pump water heater is not a recognised energy savings activity under any method in the ESS or PDRS.

I have an existing electrical or gas-boosted solar hot water system which is broken and only operating in either electrical resistance or gas boiler mode. Can I replace this system with a heat pump water heater or new solar hot water system under the ESS and PDRS?

No, you cannot replace this system with a new heat pump water heater or solar hot water system under the schemes. Even if the existing system is operating in electrical resistance or gas boiler mode, it is still categorised as an existing solar hot water system (and not an electric or gas water heater). Refer to eligibility requirements under activity definitions D17-D21 (HEER) and F16 (IHEAB).

I have a number of implementations at a site that fall under the ESS Rules' definition of a "Residential Building" - i.e. a building or part of a building classified as a BCA Class 1, 2 or 4 building, and may include any Non-Habitable Building on the same site. 

I am unsure whether each implementation should be classified as residential or commercial as the whole site is a business with a business electricity retail agreement, for example caravan parks, motels, hotels and apartments.

The National Construction Code defines the BCA class of buildings and structures by the purpose for which they are designed, constructed or adapted to be used. 

Prior to implementation, an ACP should assess and gather evidence to support the BCA class for the building or structure at the site where the implementation takes place. 

Under both the ESS and PDRS rules “site” means the location of the End-User Equipment included in a Recognised Energy Saving Activity, as defined by: 

  1. an Address; or 
  2. a unique identifier, as specified for the relevant Implementation that identifies the affected End-User Equipment; or 
  3. a method accepted by the Scheme Administrator. 

It may be reasonable to apply a whole of site classification if this approach is consistent with the BCA. However, where there are multiple buildings with different uses, it may be appropriate to separately classify each building. 

ACPs should consider the particular characteristics of a site when selecting classifications and document the reasons for the selected approach ahead of certificate registration and audit.

When determining the Capacity Factor under Activity Definition F16, do I use the 'Total Thermal Capacity' or 'Total Heat Pump Thermal Capacity' for HPCap in the formula?

You should use the 'Total Heat Pump Thermal Capacity' value for the product in the Accepted Products List for HPCap . 

‘Total Thermal Capacity’ should not be used as it represents the capacity of both the heat pump and booster heaters. 

Where multiple heat pumps are installed HPCap is the sum of Total Heat Pump Thermal Capacity for the individual units installed. 

For further explanation of how to determine capacity factor and apply the F16 formula see below FAQ “Should I apply the calculation formula in activity definition F16 (F16 formula) to all implementations at an address or system by system?”

When determining the Capacity Factor under Activity Definition F16, how do I determine the value of 'total rated capacity (kW) of the End-User Equipment (EUE) being replaced’?

The value of 'total rated capacity (kW) of the EUE being replaced’ or ‘WHCap’ is the power that would have been consumed by the replaced EUE during its normal operation. 

Where more than one relevant value is listed on the nameplate, we expect ACPs to exhibit a conservative approach and use the lower value. 

For example, where a water heater nameplate displays 'rated capacity' as well as 'maximum capacity' or 'maximum rated energy' the ACP should use the lower value of ‘rated capacity.’ 

Where the 'maximum rated energy' or 'max loading' value is used, we expect ACPs to provide evidence that demonstrates that the replaced unit was operating at its maximum rated energy.

If more than one unit is replaced, WHCap is the sum of the 'total rated capacity (kW) of the End-User Equipment (EUE) being replaced’. 

For further explanation of how to determine capacity factor and apply the F16 formula see below FAQ “Should I apply the calculation formula in activity definition F16 (F16 formula) to all implementations at an address or system by system?”

Should I apply the calculation formula in activity definition F16 (F16 formula) to all implementations at an address or system by system?

ACPs must apply the F16 formula by system and only for multiple HPWHs that meet the equipment requirements.

The Scheme Administrator has accepted both single and multiple HPWH units as meeting the equipment requirements in activity definition F16. 

These are set out in the Accepted Products List. 

An ACP can install multiples of a single unit on the Accepted Products List provided that: 

  • the single HPWH unit is accepted for use in activity definition F16 
  • the HPWHs:
    • are joined in parallel 
    • are identical models, and 
    • have balanced water flow, and 
    • the other equipment requirements for activity definition F16 are met, including that the HPWHs achieve minimum annual energy savings of 60% when determined as an air sourced heat pump in accordance with the modelling procedures published by the Scheme Administrator.

(see Notice 03/2023 - Multiple heat pump water heater activities)

Energy savings for the installation of 1 or more HPWHs under Activity Definition F16 are calculated using Equation 17 for each implementation. 

Electricity Savings = Σ Deemed Equipment Electricity Savings 

Gas Savings = Σ Deemed Equipment Gas Savings 

The summation is over all items of End-User Equipment that meet the equipment requirements have been installed as part of the implementation. 

‘Deemed equipment electricity/gas savings’ are calculated according to the F16 formula. 

The F16 formula requires an ACP to:

  • first apply the formula to each ‘system’ 
  • second, sum the results for each system to determine the deemed equipment electricity savings/gas savings for the implementation. 

In this context ‘system’ refers to: 

  • where 1 HPWH is installed, that newly installed unit, or
  • where more than 1 HPWH is installed and the units are multiple HPWHs accepted by the Scheme Administrator, each newly installed unit 

Applying the formula to each system requires the ACP to calculate the capacity factor for the newly installed units. Where more than 1 HPWH is installed, to calculate the correct HPCap value, ACPs should use total heat pump thermal capacity value in the Accepted Product List for HPCap and multiply by the number of units installed. 

The ACP should then calculate the deemed activity electricity/gas savings by calculating the energy savings of each newly installed unit using the capacity factor determined above and summing the energy savings of those units.

Examples of different scenarios and how to apply the F16 formula can be found in Notice 03/2023 - Multiple heat pump water heater activities.

Evidence Requirements

What evidence must ACPs provide when disposing of an existing hot water system?

Activity definitions D17-D21 (HEER) and F16 (IHEAB) require that the End-User Equipment (EUE) is removed in compliance with relevant standards and legislation. While the HEER and IHEAB Method Guides do not prescribe the type of disposal evidence for hot water heaters, ACPs are expected to provide evidence of removal and disposal of the old EUE. This could include receipts from recycling or disposal services.

Where a receipt is for multiple water heaters it should be possible for the auditor to reconcile the number of water heaters on the receipt with the number of implementations and the site where the implementations took place.