Victorian households are set to benefit from significant new energy affordability initiatives announced as part of the state’s 2026/27 Budget on May 2, 2026. The Victorian Government has committed AUD $28 million towards new rebates for energy-efficient hot water systems and unveiled a ‘Midday Power Saver’ scheme designed to deliver daily free power to millions of homes. These measures aim to alleviate cost-of-living pressures and accelerate the state’s transition to a cleaner energy future.
The new funding for hot water system upgrades is projected to assist up to 27,000 eligible households across Victoria. Under the scheme, rebates of up to AUD $1,400 will be available for locally-made products, with other eligible systems attracting rebates of up to AUD $1,000. This initiative falls under the broader Victorian Energy Upgrades (VEU) program, which has been extended through to 2045 and continuously refined to ensure effective delivery of energy-saving incentives.
Midday Power Saver: Three Hours of Free Daily Electricity
Perhaps the most impactful announcement for a broad swathe of Victorians is the introduction of the ‘Midday Power Saver’ program. This innovative scheme will make approximately 2.6 million households eligible for three hours of free electricity every day during the middle of the day.
The government anticipates that eligible families could save up to AUD $300 per year on their energy bills through this program alone. For households that have already invested in solar panels and batteries, the potential annual savings could soar to AUD $1,070. This move capitalises on Victoria’s growing renewable energy generation, particularly solar, which often creates a surplus of electricity during peak daylight hours.
“We’re seeing Victoria’s investment in renewable power pay off. Solar power means our state produces extra electricity during the day, meaning we can deliver the Midday Power Saver. Families could save up to $300 per year off their energy bills, and up to $1,070 if they have solar panels and batteries.”
This strategy aligns with a broader shift towards demand-side management, encouraging consumers to utilise power when it is abundant and cheapest, thereby reducing strain on the grid during evening peaks. Households looking to maximise these benefits might consider reviewing their current electricity plans and understanding how time-of-use tariffs work. For more information on managing your energy usage, read our guide on How to Avoid Peak Demand Charges and Slash Your Time-of-Use Electricity Bills in Australia in 2026.
Expanding Energy Efficiency for Vulnerable Households
Beyond individual rebates, the Victorian Budget also includes a AUD $10 million allocation to support energy efficiency initiatives within the community housing sector. This targeted funding aims to deliver direct energy efficiency upgrades to vulnerable households, building on existing programs designed to assist low-income Victorians with their energy costs. Earlier this year, on April 13, 2026, the government also announced expanded insulation discounts under the VEU program for eligible social housing, with average savings of AUD $418 per year and a planned expansion to all eligible Victorian homes from October 1, 2026.
These measures complement the longstanding Victorian Energy Upgrades program, which offers discounts on a range of energy-efficient products including LED lighting, heating and cooling systems, and insulation. By making these upgrades more accessible, the state aims to reduce overall energy consumption and greenhouse gas emissions.
How to Access the New Programs
Details on the application process for the new hot water system rebates are expected to be released through Solar Victoria and the Victorian Energy Upgrades program channels. Households interested in claiming these rebates should monitor the official Victorian Government energy websites for specific eligibility criteria and accredited providers. The VEU program typically requires upgrades to be completed by an accredited provider to ensure products and installations meet stringent performance standards.
For the Midday Power Saver scheme, the specifics of how the ‘free power’ will be applied will depend on individual energy retailers. It is anticipated that retailers will adjust their plans to incorporate this benefit, and households may need to opt-in or ensure they are on a compatible tariff. Comparing electricity providers regularly remains a critical step for all Victorians seeking to reduce their energy expenditure. For assistance, consult our guide on How to Compare and Switch Electricity Providers in Australia 2026: Your Essential Guide to Beating Rising Bills.
This latest round of investment underscores the Victorian Government’s ongoing commitment to easing energy cost burdens and driving the state’s clean energy transition. By combining direct financial relief with incentives for energy-efficient upgrades, the budget measures aim to deliver tangible savings for hundreds of thousands of Victorian households in 2026 and beyond. For broader context on available support, refer to Energy Bill Relief in Australia 2026: Understanding the End of Universal Federal Payments and State Support.