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:
- reduce energy consumption (Energy Savings Scheme)
- reduce peak demand for electricity consumption (Peak Demand Reduction Scheme)
- incentivise the production of green hydrogen (Renewable Fuel Scheme).
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).
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.
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.
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.
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.
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.
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.
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.
PRCs can be sold by ACPs once they are registered. You must make your own arrangements for the buying and selling of PRCs. IPART does not play any role in the certificate market or negotiations for the trading of certificates.
IPART operates the register of certificates that records the ownership of all certificates. You must use TESSA when trading certificates.
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.
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.
Certificate creation requirements are set out in the PDRS Rule. See our PDRS Method Guide for more information about certificate creation requirements.
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.
The application fee is $2,500 and is non-refundable for unsuccessful applications.
There are two ways you can get involved:
Work with an existing ACP: You do not need to become an ACP to benefit from the scheme – you can work with an existing ACP to install batteries and benefit from the scheme. Your ACP will tell you what you need to do to comply. For your battery installations to be eligible under the PDRS, you must hold a current Grid Connect Battery Storage accreditation for Design and Install or Install only with Solar Accreditation Australia.
Become accredited as an ACP: You can become accredited to create certificates under the scheme. Becoming an ACP takes time and comes with obligations such as audit and record keeping requirements. If you are new to certificate schemes, it may be more appropriate for you to work with an existing ACP. Visit our Becoming an ACP in the PDRS page to see if becoming an ACP is right for you.
Battery installers must hold a current Grid-Connected Battery Storage accreditation for either ‘Design and Install’ or ‘Install only’ with Solar Accreditation Australia to install batteries under the scheme.
As this is an entirely new activity, there is no fast track for existing ACPs. However, existing ACPs will provide less information in their Application Form Part A.
To be eligible under the PDRS, batteries must meet the equipment requirements in the PDRS Rule. This includes being listed on the Clean Energy Council’s list of approved batteries, and meeting the additional capacity, warranty and connection requirements. These requirements are set by Schedules C and D of the PDRS Rule, and are explained on the About PDRS
battery activities webpage.
IPART does not maintain a list of all eligible batteries. You should check that the battery is eligible before carrying out any activities under the PDRS.
The requirements for the scheme are set by the Legislation for the PDRS. Once you are accredited, other requirements are set by your conditions of accreditation.
You can find out more About PDRS battery activities, and we have published our PDRS Method Guide which details your obligations as an ACP.
Both Pre-assembled Battery Systems (DC-coupled batteries) and Pre-assembled Integrated Battery Energy Storage Systems (AC-coupled batteries) may be eligible types of batteries under the scheme. To be eligible they will need to meet the eligibility requirements set under the Rule.
Yes, you can install more than one battery provided the total capacity* being installed is greater than 2 kWh and less than 28 kWh. There must not be an existing battery at the site – you may not add additional capacity to an existing battery as only sites which don’t have an existing battery are eligible.
*You must use the usable battery capacity as it is listed on the Clean Energy Council’s
approved batteries list. Do not rely on a battery’s advertised capacity as it may vary from its usable battery capacity.
No. Battery installations must have a capacity* greater than 2 kWh and less than 28 kWh to be eligible. Battery installations larger than 28 kWh are not eligible - you may not create any certificates for the installation, including for the first 28 kWh of capacity.
*You must use the usable battery capacity as it is listed on the Clean Energy Council’s approved batteries list. Do not rely on a battery’s advertised capacity as it may vary from its usable battery capacity.
No, there must not be any existing battery at the site before the installation.
The PDRS Rule sets out calculation methods for determining the number of certificates that can be created from a battery activity. More information on calculating PRCs can be found in the PDRS Method Guide.
IPART does not set the certificate price, which fluctuates based on supply and demand.
Demand Response Aggregators are not required to be accredited or approved, however they must at a minimum meet the definition of a Demand Response Aggregator in clause 10.1 of the PDRS Rule.
Only Accredited Certificate Providers (ACPs) can create certificates under the scheme. If a DRA wants to create certificates from BESS2 implementations, they must be accredited. Otherwise, they may work with an existing ACP who can create certificates on their behalf.
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.