The NSW Energy Savings Scheme (ESS) requires electricity retailers and other liable parties to surrender ESCs each year. Those certificates come from energy efficiency projects, so businesses and households that cut energy use can be paid for it through an ACP.
The creation steps
- The activity is implemented. Equipment is installed or improved at a NSW site, such as an efficient heat pump hot water system, refrigeration or industrial equipment.
- An ACP is engaged. Only an Accredited Certificate Provider can create and register ESCs. See what an ACP is and how to become one.
- Savings are calculated under a recognised method.
- ESCs are created and registered in the ESS registry and then sold or transferred.
Calculation methods
| Method | How it works |
|---|---|
| Deemed savings (formula-based methods) | Savings are calculated from a published formula for a defined activity and may be forward-created for up to 10 years |
| PIAM&V | Project Impact Assessment with Measurement and Verification: savings are measured against a baseline for a specific project |
| Metered Baseline Method | Compares metered energy use before and after |
The ESS ties 1 ESC to one tonne of CO2-e, using a conversion factor of 1.06 kg CO2-e per kWh, so one ESC is about 1.06 MWh. See ESCs in NSW and the glossary entry.
What activities can create ESCs
Eligible activities cover commercial, industrial and residential energy savings, including efficient hot water, refrigeration, motors and variable speed drives, building upgrades and process improvements, subject to current method rules. The exact list changes, so check the NSW Energy and Environment pages for current methods. For hot water, see NSW heat pump ESC rebates and heat pump STCs.
Commercial lighting
Commercial lighting was the largest ESC source: about 30% of ESCs created in 2023. The Commercial Lighting Energy Savings Formula was discontinued from 1 April 2026, with all implementations to be completed and ESCs registered by 31 March 2026. A business upgrading to LED in NSW cannot now use that formula, but a lighting project may still be assessed under PIAM&V or the Metered Baseline Method if it meets their requirements. Customers who expected a rebate for LED lighting should be told this at the quote stage.
Choosing the right method
The method determines the paperwork, the timing of certificates and how much risk sits with you. Deemed methods are quick but cover defined activities; PIAM&V can cover bespoke projects but needs measurement and an assessor. Ask your ACP to explain which method applies before you quote and what happens if measured savings differ from forecast.
What this means for you
Use an ACP with current experience of the method you need and check the ESC rate they pay. For the price context see ESC price this month. Energy Merchants works in federal STCs, VEECs and battery STCs; see how it works and pricing, and the NSW ESCs and PDRS hub for more.