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Battery stacking, VPP and state battery schemes

NSW battery incentive PDRS BESS2: what it is

Short answer

BESS2 is the NSW Peak Demand Reduction Scheme activity that rewards connecting a battery to a virtual power plant for demand response. It creates PRCs, applies to batteries within set capacity limits, and sits alongside the federal STC rebate.

Written and checked by the Energy Merchants desk · Reviewed 2 October 2026 · For installers and homeowners

BESS2 is the label used in the Peak Demand Reduction Scheme for a battery demand response activity. In plain terms it pays for the commitment to make a battery available to the grid, not for buying the hardware.

The basics

A battery connected to an eligible VPP, under a contract for a set period, can create Peak Reduction Certificates, known as PRCs. The number depends on the battery’s capacity, up to a cap that has been revised over time, and the contract term. The VPP provider or an approved agent claims the certificates and passes some or all of the value to the customer.

How it differs from the federal program

Federal rebate PDRS BESS2
Certificate STC PRC
Paid for Installing an eligible battery Connecting to an eligible VPP
Regulator Clean Energy Regulator NSW scheme administrators
Needs a VPP contract No Yes
Where Australia-wide NSW only

What changes and what to check

The rules for capacity, solar requirements, warranty remaining on existing batteries and contract term have been changed several times, including updates in 2026. Check the NSW Government PDRS page for the current rules, and confirm that your VPP provider is a registered participant.

For installers, the PRC component often requires separate paperwork from the STC claim. Keep the VPP agreement, the battery serial and the connection evidence together.

Timing the two claims

The STC claim and the PRC claim have separate timelines. The STC claim usually goes in soon after installation. The PRC claim depends on the VPP connection being live and the contract being in place. Do not delay the STC claim waiting for the PRC paperwork, and do not assume one approval means the other is done.

From the desk: The two schemes use different certificates and different registries. Do not assume a document that satisfies one will satisfy the other.

What this means for installers and homeowners

Ask whether a quote includes PRC value and who is responsible for the paperwork. See the NSW VPP incentive overview, the battery STC pillar, and how it works. The VEEC and STC page explains how stacking different certificate schemes works in principle.

Follow-up questions

People also ask

What is a PRC?
A Peak Reduction Certificate, created under the NSW Peak Demand Reduction Scheme for qualifying activities.
Is BESS2 the same as the federal rebate?
No. The federal rebate creates STCs for installing the battery. BESS2 creates PRCs for connecting it to a VPP.

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