A Guide To The NSW Battery Rebate Scheme
Installing a solar battery? Learn how you can save up to $3,528 on new installations in this article.
The Peak Demand Reduction Scheme (PDRS), commonly known as the NSW battery scheme, is a New South Wales Government initiative designed to address energy demand issues during peak times. Operating as part of the larger Energy Security Safeguard, this program makes NSW’s energy system more reliable, affordable, and sustainable while supporting the state’s climate goals.
In this article, we’ll explore how the scheme works, its benefits for households and businesses, and the recent updates introduced in 2024.
What is the Peak Demand Reduction Scheme?
The PDRS incentivises both households and businesses to reduce energy usage during times of high demand—typically from 2:30 PM to 8:30 PM AEDT, between 1 November and 31 March. During these peak periods, there’s often high demand on the electricity grid, mainly driven by air conditioners, refrigeration, and other high-energy appliances. By spreading energy usage more evenly throughout the day, PDRS reduces the risk of power outages, stabilises prices, and supports NSW’s emissions reduction targets.
This scheme also aligns with the NSW Government’s net-zero emissions target by 2050. Initially, the state aimed for a 35% reduction by 2030 but revised it to 50% in 2021, reflecting a commitment to sustainable energy practices and grid resilience.
How Does the PDRS Work?
The Peak Demand Reduction Scheme operates through a market for Peak Demand Reduction Certificates (PRCs), which act as tradable assets in the energy market.
Here’s a breakdown of how PRCs function and who is involved:
- Creating PRCs: Every 0.1 kWh saved during a designated peak period equates to one PRC. Households and businesses can generate PRCs by reducing their energy consumption through energy-efficient appliances like residential batteries, air conditioners, pool pumps, large heat pump water heaters, and commercial refrigerated cabinets.
- Accredited Certificate Providers (ACPs): ACPs are authorised organisations that distribute energy-efficient appliances. These providers help households and businesses reduce energy demand, in turn earning PRCs, which can then be sold to Scheme Participants.
- Scheme Participants (Energy Retailers): Retailers are legally obligated to purchase and “surrender” a set amount of PRCs each year, effectively funding the scheme and incentivising reduced energy use.
Households and businesses participating in the scheme benefit from cost savings on their electricity bills, as they receive incentives for energy-efficient practices. However, energy retailers may pass some of the costs associated with purchasing PRCs onto customers in the form of a line item on their energy bills.
Updates to the PDRS in 2024
The NSW Government recently introduced a few changes to the PDRS in September 2024 to increase its effectiveness and align with updated energy goals.
Here’s an overview of what’s new:
1. Changes in Eligible Activities
- The commercial water heater incentive has been restricted to larger units that aren’t eligible for the Small Scale Renewable Energy Scheme.
- The removal of old fridges, freezers, and high-efficiency motors from the list of activities eligible for PRCs.
- Revised baseline calculations for high-efficiency pool pumps, ensuring PRCs reflect the most effective energy savings.
2. New Incentives for Battery Storage
Households and small businesses are now eligible for incentives to install behind-the-meter battery energy storage systems (BESS). These incentives support the installation of new battery systems (adding up to a potential $3,528 off!), and encourage participation in Virtual Power Plants (VPPs). A VPP allows battery storage systems to partially discharge energy back to the grid during peak demand, helping further stabilise the grid.
Note: These changes commenced on 1 August 2024, with battery-related incentives set to begin on 1 November 2024.
Benefits of the PDRS for NSW Residents and Businesses
The Peak Demand Reduction Scheme offers multiple benefits, specifically for households and businesses looking to reduce their energy consumption and costs:
- Cost Savings: The scheme allows households and businesses to save on energy bills through incentives. From 2022 to 2040, PDRS is expected to generate $1.2 billion in savings for NSW residents and businesses.
- Reduced Risk of Outages: The scheme reduces the risk of power outages by spreading out energy consumption, especially during the summer months when demand is high. This is especially beneficial for small businesses relying on consistent power supplies.
- Environmental Impact: The PDRS aligns with NSW’s climate targets, aiming for a 70% reduction in emissions by 2035. Reducing peak demand helps lower emissions and allows for greater integration of renewable energy sources into the grid, driving progress towards net zero by 2050.
How Will the PDRS Evolve?
While the PDRS is currently focused on reducing demand during peak hours, future developments may allow for demand shifting and demand response activities. For example, households might be able to program appliances to operate outside peak periods or, in some cases, enable “smart” appliances that automatically adjust to avoid peak times.
As technology advances and more smart appliances enter the market, the PDRS may also introduce further incentives for appliances that help with demand management. These could include devices that actively monitor and adjust energy usage or connect to VPPs, making homes and businesses more energy-independent and less reliant on the grid during peak times.
Getting Started with the PDRS
Those interested in taking advantage of the PDRS should consider consulting with an accredited certificate provider to identify eligible appliances and upgrades. This can be a good first step for households and businesses aiming to improve energy efficiency while supporting the grid.
