Home Heating and Cooling Upgrades Program

Section 2: What to consider when choosing the right energy-efficient reverse-cycle air conditioner system for your home

Living with efficient and effective heating can bring health, wellbeing and social benefits and help you to feel more comfortable in your home year-round, so it is important to understand how to choose a suitable system for you.

Living with efficient and effective heating can bring health, wellbeing and social benefits and help you to feel more comfortable in your home year-round, so it is important to understand how to choose a suitable system for you.

Average cost of a new system  

Like any product, the cost of reverse-cycle air conditioners can vary widely, but it is important to remember that the highest price doesn’t mean that it will be the best choice for you.  

It is worth shopping around and looking out for seasonal discounts as the weather changes and in between peak seasons.  

Product Affordability 

What is affordable is different for everyone and can also change over time. By researching a purchase, you can feel more confident in deciding what is affordable for you. 

The rebate of $1000 is provided towards the cost of purchasing and installing a high-efficiency heating and cooling system, with a limit of one rebate per property. The unit will generally need to be installed in the main living space of the home, unless there is a good reason for installing it another room, for instance, where there are two living areas or a person with a medical condition spends most of their time in another room, like a bedroom. Some systems will be capable of heating more than one room. 

Households can receive an additional $200 if they need to cap their old gas heater, and $500 for households who need to upgrade their switchboard.  

As a guide only, the average cost of an installed 3.5 kW reverse-cycle air conditioner unit that might be suited for a modest sized living room is around $1,700. This means that if you access the rebate, there will be a portion not covered by the rebate, that you will have to pay for. Of course, this will depend on the type of system – so we encourage you to shop around. It is important to think about this out-of-pocket cost when making your choice.

Factors affecting your reverse-cycle air conditioner running costs  

It is likely that an energy-efficient reverse-cycle air conditioner can provide you with the best efficiency for your energy consumption per dollar – especially those with higher energy efficiency ratings.

However, air conditioner running costs depend partly on how much you use it. Likewise, any savings will depend on what heating and cooling you had previously and how much you used it. 

For example, when you start using air conditioning in a home that hasn’t had installed air conditioning before, that may result in additional costs.  

A home in a warmer climate, like Mildura, will probably have a need for more cooling, and a home in a cooler inland climate like Ballarat will have greater heating needs.  

In addition to selecting a high efficiency rated model, installing the right system size for the space that it will be used in will maximise the efficiency, and minimise the running costs. A model with a higher efficiency rating can have lower running costs then a model with a lower efficiency rating in the same sized room. 

Running costs are also affected by other factors such as the type of building materials, and whether the room is insulated well, or if the room has draughts to let warm air in or out. These factors are explained further in Section 3: Energy efficiency and getting the most out of your system

To help you get an idea of what the running costs might be, Sustainability Victoria has calculated estimated average annual running costs for heating and cooling for different room sizes in Melbourne’s climate.


Calculate heating costs | Sustainability Victoria 

Cooling running costs | Sustainability Victoria  


Ways to reduce running costs 

In Victoria on average, about 50 per cent of home energy costs go to heating, so the way that you use heating and cooling appliances, as well as how much you use them, contribute to the running costs.

There are ways to use appliances more efficiently, so that you are getting the most out of your system whenever you use it. This means that the more energy-efficient way that you use your system, the more savings you will see over the course of the appliances lifetime.

Try this Household energy action guide from Sustainability Victoria, to get an idea of where you can save energy use with heating and cooling, and in other ways in your home. There is more information in this guide in Section 3: Energy efficiency and getting the most out of your system.

To help reduce your running costs, you can always check for new retail energy offers that suits you better than your current deal and will allow you to get better value from your energy.

The Australian Energy Foundation recommends checking your account at least every two years, as new deals come on the market and the deal you signed up to may have changed in that time. Regularly checking means always knowing you are getting the best price. Read the article about how to find a better deal on energy.

The Victorian Energy Compare website can compare energy plans for you. 

Arrange a home assessment by an Approved Supplier 

When you speak to a Supplier, it is important that they arrange a home visit for an assessment to recommend the right size system for your home. In general, reverse-cycle air conditioners installed under the Home Heating and Cooling Upgrades Program will be required to be installed in your main living area. Only systems on our approved product list are eligible for rebates under the program. 

The Installer will come to your home, where they can see the space to be heated and take some measurements of the room size and ceiling height. They could also consider windows, the room’s orientation, any insulation in the room and your local climate, to advise you of the right size, or power capacity, of a unit for your home. 

As a guide, a larger room will need a more powerful system to heat or cool it effectively.

They should also assess the best position to install the wall unit and outside fan.

Once you know the right size for your home, you can start shopping around for a suitable reverse-cycle air conditioner and help you to avoid paying extra for a powerful or underpowered system for your family’s needs.  

Why room size is important 

Room size is one of the most important factors to consider for heating and cooling.  

Installing a system that is too large or small for your space can cause other inefficiencies such as:  

  • Models too powerful for the room size may run frequent short cycles to achieve the target temperature. This can result in the room getting too cold or hot, inadequate dehumidification (i.e. not drying the air enough, making the room feel less comfortable), increased power consumption and running costs, and wear and tear on the system. 
  • Underpowered models may have to run more often at maximum output, which could dry the air too much and create excessive wear. 

This table from CHOICE provides a rough guide for the system size for different rooms sizes, but you should take advice from the approved Supplier when they assess your home.

Room size Capacity
Up to 20 m2  2–2.5kW 
20–40 m2 2.5–5kW 
40–60 m2  4–6kW 
60–80 m2  5–7kW 
80+ m2  6–9kW 

Location and climate 

The amount of energy you need to heat and cool your house depends on the climate at your location. Mildura is significantly warmer in summer so it will need more cooling than other Victorian climates. Ballarat and Alpine areas are much cooler in winter so they will need more heating than other Victorian climates. Inland climates also have a greater daily range of temperatures than coastal climates. For example, coastal Warrnambool and inland Ballarat will have different temperature ranges, because there is less cloud cover in inland climates, and this means that the climate cools down more overnight and heats up more during the day.

Reviewed 30 July 2021