The NSW Energy Security Safeguard has two parts, and they count different things. The Energy Savings Scheme (ESS) rewards using less energy and creates Energy Savings Certificates (ESCs). The Peak Demand Reduction Scheme (PDRS) rewards using less power at the moments the grid is under most strain, and creates Peak Reduction Certificates (PRCs).
The idea in plain terms
Energy is kWh, and power is kW. A household can use the same kWh across a day but strain the grid if most of it lands in the evening peak. The PDRS values the kW cut at those times. That is peak demand reduction capacity: how many kW of demand an installed upgrade or controlled load removes in the scheme’s peak window, compared with a baseline.
The NSW government’s method guides define the peak window, the baseline and the calculation for each activity. We do not restate the formulas here, as they are changed by rule updates. Check the current PDRS method guide and the glossary entry on peak demand reduction capacity.
From capacity to certificates
- An eligible activity is carried out, such as a high-efficiency pool pump, an air conditioner upgrade, a heat pump or a battery that responds to the grid.
- The activity’s method calculates the capacity in kW against its baseline.
- An Accredited Certificate Provider creates PRCs for the capacity, for the number of years the activity allows.
- The PRCs are sold to liable parties, usually electricity retailers, who must surrender them to meet their targets.
The reported PRC price has been about $3 at the time of writing, which is low compared with ESCs, so check the live market: see the PRC price.
Batteries and VPPs
The NSW battery incentive moved into the federal program in 2025, and a PDRS incentive for VPP connection exists. BESS1 was suspended from 1 July 2025, and a NSW commercial battery incentive started on 1 September 2026 (reported). See what BESS1 suspended means and the NSW VPP incentive.
ESCs versus PRCs at a glance
| ESC (ESS) | PRC (PDRS) | |
|---|---|---|
| Measures | Energy saved | Peak kW reduced |
| Typical use | Hot water, lighting, commercial upgrades | Pool pumps, air conditioners, VPP batteries |
| Who surrenders | Liable retailers | Liable retailers |
What this means for installers
Know which scheme your work belongs to and who your Accredited Certificate Provider is: see becoming or using an ACP. Keep photos, serials and the customer agreement. For more about how installers are paid see NSW ESCs and PRCs for installers, and for the broader picture the NSW STC trading page, pricing and how it works.