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NSW ESS and PDRS (ESCs and PRCs)

How does the ESS HVAC upgrade activity create ESCs in NSW?

Short answer

In NSW, the Energy Savings Scheme creates Energy Savings Certificates (ESCs) for replacing or upgrading commercial heating and cooling with high-efficiency equipment. An Accredited Certificate Provider creates the certificates, and the value depends on the activity, the equipment and the energy saved.

Written and checked by the Energy Merchants desk · Reviewed 3 October 2026 · For installers and homeowners

Two NSW schemes reward efficient air conditioning, and they get confused. The Energy Savings Scheme (ESS) creates Energy Savings Certificates (ESCs) for energy saved over the life of the equipment. The Peak Demand Reduction Scheme (PDRS) creates Peak Reduction Certificates (PRCs) for electricity demand cut at peak times. This page is about the ESS side: commercial HVAC upgrades and ESCs. The residential and light-commercial PDRS side is in PDRS air conditioner activity.

What the ESS HVAC activity covers

The ESS has an activity for installing or replacing air conditioning and heating and cooling plant in commercial premises with higher-efficiency equipment. Reported sources describe the commercial air conditioner activity as F4 under the ESS, and the equivalent under the PDRS as HVAC2. The ESCs are calculated from the electricity the new equipment is expected to save compared with a baseline, over the activity’s lifetime. Bigger, more efficient units in hot-running buildings save more, so they create more certificates. Specific formulas, eligible equipment, minimum efficiency and the baselines are in the ESS Rule and Method Guide, which the NSW scheme administrator updates. Confirm the current version before quoting.

Who creates the certificates

Certificates are created by an Accredited Certificate Provider (ACP), accredited by the scheme regulator. The business or its installer works with the ACP, which holds the evidence, registers the activity and creates the ESCs. See what is an ACP and becoming an ACP.

How the money flows

  1. The ACP creates ESCs after the upgrade is complete and evidenced.
  2. The ESCs are sold to buyers with obligations, usually energy retailers, or through traders.
  3. The value is passed to the customer as a discount or payment, with the ACP or installer taking a fee.

ESC prices move with the market and are published by brokers and the regulator. Never quote one number as current. See ESC price.

What this means for installers

If you install commercial HVAC in NSW, ask whether the job is eligible before you quote, because the incentive can decide whether a customer upgrades. Agree who is the ACP and who owns the certificates before you start. Evidence rules are strict: product models, installation photos, customer consent and commissioning records matter, and the scheme is audited. See NSW ESS audit requirements.

What to check before you rely on it

  • The activity definition and its current version.
  • That the equipment appears on any required product register.
  • The baseline and whether this is a replacement, a new install or an addition.
  • Who signs the customer consent and the ACP agreement.
  • Timing: ESC payment can take longer than STC payment. See NSW ESC payment time.
From the desk: Do not mix up the activity codes. The same plant can be eligible under both schemes with different certificates and different paperwork, and you cannot assume one satisfies the other.

Energy Merchants works in STCs, battery STCs and VEECs, so ask the desk first about your federal and Victorian certificates. For ESCs, see how to sell ESCs.

For how the NSW certificates compare with STCs and VEECs, see STC vs VEEC vs ESC. The wider list of certificate topics is on topics.

Follow-up questions

People also ask

Is the ESS HVAC activity the same as the PDRS air conditioner activity?
No. The ESS creates ESCs for energy saved. The PDRS creates PRCs for peak demand reduced. They are separate certificates and rules.
Who creates the ESCs?
An Accredited Certificate Provider, working with the business or its installer.
Where are the current rules?
On the NSW Energy Sustainability Schemes site and in the ESS Rule. The activity definitions change, so check before quoting.

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