ESS Rule and changes
This page has information about the Energy Savings Scheme Rule (ESS Rule). The ESS Rule applies to Accredited Certificate Providers (ACPs) and their energy savings activities. It provides detail about:
- nomination as the energy saver
- recognised energy saving activities
- product acceptance requirements
- eligibility equipment and implementation requirements
- calculation methods to determine how many Energy Savings Certificates (ESCs) can be created.
ACPs must understand and comply with the ESS Rule. See How to comply as an ACP for more information.
The latest ESS Rule commenced on 1 July 2026.
The previous version of the ESS Rule applies to all implementations from 12 September 2025 until 30 June 2026.
See the document hub for the ESS Rule for the ESS Rule for all versions of the Rule.
The NSW Department of Climate Change, Energy, the Environment and Water develop the policy behind the ESS. It also updates the ESS Rule annually or when needed. To find out more about how the ESS Rule is updated and how to get involved, visit the NSW Climate and Energy Action page.
What ACPs need to do
- review the ESS Reference Table with the list of changes
- review the updated Method Guides and other updated documents
- ensure you comply with the new ESS Rule and use updated documents from today
- inform your representatives so they know how to comply.
ESS Rule commenced 1 July 2026
The information below provides more detail on all the changes, grouped by method. Each section explains what changed and what you need to do.
ESS-wide changes
ESS-wide changes apply from 1 July 2026 and include clarifications on disposal of equipment and an updated definition of Exempt Energy Program.
What has changed
From 1 July 2026:
Replaced equipment cannot be refurbished, reused or resold by the ACP or anyone else. This approach is now consistent with the Peak Demand Reduction Scheme Rule 2022.
What you need to do
Update your systems and process to make sure that equipment is disposed of appropriately and maintain the appropriate evidence.
What has changed
From 1 July 2026:
The definition of Exempt Energy Program has been updated to clarify that the programs are exempt from specified clauses in the ESS Rule.
What you need to do
Review the Exempt Energy Program page to understand which programs have been nominated by the Minister as Exempt Energy Programs and specified clauses. Monitor updates about Exempt Energy Programs from IPART and the Department of Climate Change, Energy, the Environment and Water.
Home Energy Efficiency Retrofits (HEER) Method
What has changed
From 1 July 2026:
Air conditioner activities were expanded to include multi-split systems. Minimum payment requirements, certificate caps for multi-split systems, eligible product types and equipment and implementation requirements have been updated.
Minimum payments
Updated minimum payments for all residential and small business air conditioner activities:
- $500 for systems that are not multi-split or ducted units
- for multi-split and ducted units:
- $1,000 up to 15kW cooling capacity
- $2,000 for more than 15kW and less than 20kW cooling capacity
- $3,000 for 20kW cooling capacity and above.
Certificate caps
The number of ESCs that can be created from a multi-split air conditioner implementation for homes and small businesses are capped at:
- 90 ESCs in Cold Climate Zones
- 70 ESCs in Average or Hot Climate Zones.
The system size installed is not restricted but the number of ESCs that can be registered was capped.
Updated Activity Definition requirements for air conditioners
Updated eligibility, equipment and implementation requirements to include multi-split systems.
New Implementation Requirement that equipment must be designed and installed in accordance with AS/NZS 5141: 2018 (as updated from time to time) to help make sure units are appropriately designed, sized and installed in homes and small businesses.
Eligible product types clarified and aligned with GEMS
Eligible product types are clarified to remove inefficient products. Requirements for some existing product classes changed, and the associated definitions and values were updated to align with GEMS.
What you need to do
Review the new requirements and update your internal systems, templates and processes. Make sure you:
- use the updated HEER fact sheet
- collect correct minimum payments
- don’t create certificates for multi-split systems above the cap and
- calculate your certificates in line with the GEMS Determination and new requirements.
Installation of High Efficiency Appliances for Businesses
What has changed
From 1 July 2026:
Multi-split air conditioning systems and large air conditioners above 65kWh are now eligible. A minimum cooling capacity was introduced and minimum payment requirements were updated. Minor administrative changes to update definitions and values to align with GEMS and removal of outdated standards.
Minimum capacity of 30kW for large sites to be eligible
New or replacement air conditioners must have at least 30kW of cooling capacity to be eligible under IHEAB. Smaller systems are not eligible under this method. Only Large Business Sites are eligible, unless the activity is the replacement of an existing air conditioner at a centralised system or in a common area of a BCA Class 2 building.
Minimum payments
Added minimum payments for air conditioners:
- $1,000 (for units that are not multi-split or ducted systems)
- $3,000 (for multi-split or ducted implementations).
Eligible product types clarified and aligned with GEMS
Eligible product types were clarified and inefficient products are no longer eligible. Requirements for some existing product classes changed, and associated definitions updated to align with GEMS values for consistency.
What you need to do
Review the new requirements and update your internal systems, templates and processes. Ensure you collect correct minimum payments and calculate your certificates in line with the GEMS Determination and new requirements.
What has changed
From 1 July 2026:
Lifetimes for chillers have increased from 10 to 12 years.
What you need to do
From 12 September 2025:
Update your calculation processes to account for the increase in lifetime.
What has changed
From 1 January 2027:
The Confidence Factor for activity definitions F16 and F17 is changing for products with an Individual Heat Pump Thermal Capacity of 10kW or more, with a transition period in place until 31 December 2026.
What you need to do
Review the equipment energy savings equations and equation definitions and update your internal systems and processes to make sure you calculate equipment savings correctly from 1 January 2027.
Project Impact Assessment with Measurement and Verification (PIAM&V) and Metered Baseline Method (MBM)
What has changed
From 1 July 2026:
Emissions factors were removed and replaced with a requirement to use National Greenhouse Accounts (NGA) Factors. Other emissions factors may be used subject to Scheme Administrator approval.
What you need to do
Update your processes to use NGA factors in your calculations. Or you can apply to the Scheme Administrator for other factors you wish to use by logging a TESSA query. You will need to provide evidence and justify why your selected factors are appropriate to use.
What has changed
From 1 July 2026:
New or replacement equipment involving gas will be discontinued for use in the PIAM&V method. Activities to be discontinued include:
- gas fired steam boiler
- gas fired water heater
- gas fired hot water boiler
- gas space heater.
Where the implementation date is on or after 1 July 2026, these activities cannot be used to create ESCs.
What you need to do
Ensure projects with these activities have an implementation date before 1 July 2026. Projects with implementation dates before that date can continue to create certificates and top-up certificate creation.
Discontinued method - Sale of New Appliances (SONA)
What has changed
From 1 July 2026:
- References to the discontinued SONA method were removed from the ESS Rule.
- SONA ended on 30 November 2025.
What you need to do
Nothing.
Transitional arrangements
What has changed
From 1 July 2026:
Energy savings calculated before the ESS Rule change are subject to the previous version of the ESS Rule and general transitional arrangements.
What you need to do
Use the previous version of the ESS Rule to calculate ESCs for implementations before 1 July 2026.
Use the latest ESS Rule to calculate ESCs for implementations on or after 1 July 2026.
ESS Rule change that commenced 12 September 2025
The previous ESS Rule was published on 29 August 2025.
To see a list of specific changes to clauses in the Rule, download our ESS Reference Table.
You can also download the ESS and PDRS Rule changes: Information session – What it means for you.
