A new $400 rebate will soon be available to Victorian households who install an efficient hot water system that's made in Australia. The cost-of-living measure is designed to boost local manufacturing and encourage households to switch to efficient hot water systems.

The initiative will start on July 1 and will be on top of the existing rebate of up to $1,000 available for Aussies who upgrade or replace old water systems with electric or solar systems. That means households can get a higher rebate of up to $1,400.

Installing a heat pump hot water system alone can save a household up to $330 a year on electricity bills, according to the Victorian government. Hot water systems account for up to 30 per cent of total energy use.

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Minister for Energy and Resources Lily D’Ambrosio said the initiative would make it cheaper to install quality local products, while supporting local jobs.

"We're on the side of Victorians — helping families cut energy costs and take back control of their bills,” she said.

"We know there is a strong history of locally manufactured hot water products. We want to make sure local jobs are supported and that money spent in Victoria stays in Victoria."

Manufacturers and unions will be consulted ahead of the July 1 rebate kicking in, including on how to define local content. The cost of buying and installing mid-size units typically ranges between $3,000 and $4,000.

It comes ahead of electricity price rises on July 1, following the release of the final default market prices. Victoria price changes range from a drop of $26 to an increase of $90 across the five electricity zones operating in the state.

The government set aside $30 million in the budget to support an extra 27,000 households installing electric heat pumps and solar hot water systems. The government also announced it would offer a new $100 energy bill rebate to concession cardholders.

Who is eligible for the hot water rebate?

Victoria’s hot water system rebate scheme is run by Solar Victoria.

The rebate is 50 per cent of the purchase price of the system, up to the value of $1,000.

It is available to households with taxable incomes of less than $210,000 per year, for properties valued under $3 million.

The hot water system to be replaced must be at least three years old from the date of purchase. The additional $400 rebate for Australian-made products will be available from July 1.