The Energy Security Safeguard
What is the Energy Security Safeguard?

The Energy Security Safeguard (Safeguard) is part of the NSW Electricity Strategy, which is the NSW Government's plan for a reliable, affordable and sustainable electricity system.  It is made up of 3 certificate schemes that aim to:

  1. reduce energy consumption (Energy Savings Scheme)
  2. reduce peak demand for electricity consumption (Peak Demand Reduction Scheme)
  3. incentivise the production of green hydrogen (Renewable Fuel Scheme).
What is the legislative framework that underpins the Safeguard?

The Electricity Supply Act 1995 sets out the legal framework of the Safeguard. It also sets out the functions and responsibilities of IPART as Scheme Administrator and Scheme Regulator of the ESS and PDRS. The Electricity Supply (General) Regulation 2014 sets out requirements for accrediting and auditing ACPs, and rules around creation and transfer of certificates. It also provides compliance principles for entities that are required to participate in the scheme. 

Both the Act and Regulation support the ESS Rule and PDRS rule, which provide details of the methods to create Energy Savings Certificates (ESCs) and Peak Reduction Certificates (PRC's). 

What is the Peak Demand Reduction Scheme?

The Peak Demand Reduction Scheme (PDRS) is designed to support activities that reduce the demand for electricity during the summer peak in NSW. It works by creating financial incentives for activities that provide the capacity to reduce electricity use during times of peak demand - between 2:30 and 8:30 pm (AEST) from 1 November to 31 March.

How does the PDRS work?

Financial incentives are in the form of tradeable certificates, called peak reduction certificates (PRCs). Generally, householders and businesses who fund activities that help reduce peak demand transfer the right to create PRCs to Accredited Certificate Providers (ACPs) in return for a discount on the cost of the activity.

ACPs create and register PRCs for these peak demand reduction activities. The PRCs are then purchased each year by Scheme Participants (mainly electricity retailers) operating in NSW to meet their share of a legislated annual target.

Our How the PDRS works page provides more details.

What activities are included in the PDRS?

The PDRS includes 3 calculation methods:

  • Peak Demand Saving – installing more efficient equipment that uses less energy during peak times, for example installing a more efficient air conditioner to reduce electricity use on hot days.
  • Peak Demand Shifting – installing new systems, or changing the way existing systems are used, so that electricity consumption is shifted to an off-peak period, for example installing a household battery.
  • Peak Demand Response – controlling certain technologies to temporarily reduce consumption during peak times, for example signing a battery up to a demand response contract.

See our Calculation methods pages for more information on sub-methods and eligible activities. The PDRS Rule provides more detail on these activities.

When do battery activities start?

New battery activities start on 1 November 2024. See our battery webpage for more information.

How will peak scheme targets be set?

The peak demand reduction targets are set in the Electricity Supply (General) Regulation 2014. The target starts at 0.5% in 2022-23 and will increase to 10% by 2029-30. The target will then remain at 10% until the end of the scheme in 2049-50. Exemptions will be considered when calculating individual targets for scheme participants.

How is peak demand reduction calculated?

The Peak Demand Reduction Scheme (PDRS) Rule sets out calculation methods for determining the number of peak reduction certificates that can be created from eligible activities. 

How is responsibility for PDRS split between IPART and the Department of Climate Change, Energy, the Environment and Water?

The split of PDRS responsibilities between IPART and the Department of Climate Change, Energy, the Environment and Water is the same as for the ESS.  Refer to the IPART’s role and DCCEEW’s role pages to find out more.

What is DCCEEW doing to progress the PDRS?

The Department of Climate Change, Energy, the Environment and Water is responsible for developing PDRS policy and updating and consulting on the legislation to support the policy - see DCCEEW’s role for details. You can find more information about the PDRS on the Energy website, including links to consultation and position papers, information about exemptions and details of how to get involved.

How can I be involved in the PDRS?
I am a Scheme Participant – how will I be affected?

Scheme Participants – entities that are legally required to participate in the PDRS, such as electricity retailers - will be required to calculate their individual liable demand. This will be based on the four summer days with the highest maximum demand within the compliance period. The Scheme Regulator will nominate these days based on AEMO information. Scheme Participants will be required to submit information to the Scheme Regulator in two stages.

Stage 1 requires Scheme Participants to calculate their Individual Liable Demand during the hours of 2:30 and 8:30pm (AEST) on the four nominated days. The Scheme Regulator will calculate and publish the Scheme Liable Demand based on the Individual Liable Demand of all Scheme Participants.

In stage 2, the Scheme Participant will calculate their individual certificate target based on the Scheme Liable Demand and provide an annual statement to the Scheme Regulator. The statement will set out how they will meet their obligations, e.g. by surrendering certificates, carrying forward a shortfall or paying a shortfall penalty.

The Scheme Participant section of our website provides more information.

I am interested in applying for PDRS accreditation - what is the process?

To become accredited under the PDRS you need to be approved by IPART, as the Scheme Administrator. You must submit an application that will be assessed by the Scheme Administrator against certain eligibility criteria. Only accredited certificate providers are able to create Peak Reduction Certificates. Our Becoming an ACP in the PDRS page has more information about how to become accredited.

What are the requirements for certificate creation?

Certificate creation requirements are set out in the PDRS Rule. See our PDRS Method Guide for more information about certificate creation requirements.

I am an auditor – how will I be affected?

Audits will continue to be a compliance tool used within the schemes. Auditors that are currently members of the Audit Services Panel for the ESS will be able to complete audits under the PDRS. See the PDRS Auditors page for more information on how to join the Audit Services Panel.

Stakeholder engagement
How will IPART keep stakeholders informed about the PDRS?

We are committed to keeping you informed about what we are doing to administer the PDRS. We will do this by providing regular updates through our website and publishing useful information as it becomes available. More information is available on our News and events and How we engage pages, which are updated regularly.

We want to make sure that you have the information you need so that you can participate in the PDRS. We will seek your feedback on what we are doing so that we can continue to tailor our approach when engaging with you.