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NSW ESS and PDRS (ESCs and PRCs)

What are BESS3, BESS4 and BESS5 for commercial batteries in NSW?

Short answer

From 1 September 2026, NSW's Peak Demand Reduction Scheme adds BESS3 for apartment buildings, BESS4 for small and medium businesses (reported at about 20 to 200 kWh) and BESS5 for commercial and industrial sites (200 kWh up to 30,000 kWh, with the incentive on the first 10,000 kWh).

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

Residential batteries have had their incentives. From 1 September 2026, the NSW Government extended the Peak Demand Reduction Scheme (PDRS) to larger batteries in apartments and businesses. Everything here is as reported by industry guides at the time of writing; confirm against the PDRS Rule and the NSW Energy Sustainability Schemes site before quoting.

The three activities

Activity Who Reported scope
BESS3 Apartment buildings Class 2 buildings with at least four dwellings
BESS4 Small and medium businesses Behind-the-meter batteries of about 20 to 200 kWh; residential buildings and data centres excluded
BESS5 Commercial and industrial 200 kWh up to 30,000 kWh combined usable capacity, with the incentive applying to the first 10,000 kWh

All three create Peak Reduction Certificates (PRCs) through an Accredited Certificate Provider, in the same way as BESS2 for the VPP route.

The solar condition

Reported requirements for BESS4 and BESS5 are that new solar installed with the battery must be at least a quarter of the battery’s usable capacity. In other words, a 100 kWh battery needs at least 25 kW of new solar. A battery-only installation is reported not to meet the equipment requirements. This shapes the project: you are selling a solar-plus-battery package, and the solar side may itself create STCs, as covered in the mid-scale expansion.

Interaction with federal STCs

The federal Cheaper Home Batteries Program covers batteries of 5 to 100 kWh usable, with up to 50 kWh eligible, with tiers that cut the value for capacity above 14 kWh. That means a BESS4 battery at the lower end can fall in the federal program as well as the NSW activity, while BESS5 batteries are largely above it. Whether the same battery can create both in a given case depends on the rules at the time. See stacking PDRS with STCs and battery rebates for businesses.

What a PRC is worth

PRC prices are market-driven and have been low; reported at about $3 at the time of writing. That figure is reported and moves, so do not quote it as fixed. The PRC count depends on the activity formula and capacity. See PRC price.

What this means for installers

  • Confirm the building and customer types before quoting.
  • Check product requirements and any VPP or demand response conditions.
  • Plan for a longer paperwork chain than a residential job.
  • Pair the solar and battery design, because the one-quarter solar rule drives system size.

Work out who is the ACP, how the PRC value reaches the customer and how long payment takes. See NSW ACP fees and payment timing.

From the desk: Large batteries mean large capital costs and long approval timelines. Lock the activity eligibility in writing before you order equipment.

For solar on the same job, STCs can be sold through STC trading, and the battery side for homes is in battery STCs.

For comparison of the NSW certificates with STCs see STC vs VEEC vs ESC.

Follow-up questions

People also ask

When do BESS3 to BESS5 start?
From 1 September 2026.
Does the battery need solar?
Reported rules for BESS4 and BESS5 require new solar of at least a quarter of the battery's usable capacity, so a battery-only job may not qualify.
Can I also claim federal battery STCs?
The federal program covers batteries of 5 to 100 kWh usable with up to 50 kWh counted, so large commercial batteries mostly sit outside it.

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