PDRS BESS1 vs BESS2 explained, and NSW battery incentives vs federal

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

NSW installers and homeowners often ask about “BESS1” and “BESS2” because they were the two battery activities in the Peak Demand Reduction Scheme (PDRS). They do different things, and the arrival of the federal Cheaper Home Batteries Program changed how they fit together. This page explains the mechanism; for exact current rules, check the NSW Energy Sustainability Schemes site, because activity definitions change.

BESS1 and BESS2 side by side

BESS1 ran from 1 November 2024 and was suspended after 30 June 2025, once the federal program began on 1 July 2025. BESS2 continued and was enhanced. Treat the detailed dollar figures you see on installer websites with care, since they depend on battery size and the scheme’s current factors.

How this sits beside the federal program

The Cheaper Home Batteries Program, from 1 July 2025, gives STCs for batteries of 5 to 100 kWh usable capacity, with up to 50 kWh eligible. The battery must be CEC-approved and VPP-capable, installed by an accredited installer, one per property, and works with new or existing solar. The factor is 6.8 at the time of writing, stepping down to 5.7 on 1 January 2027 and 5.2 on 1 July 2027. Since 1 May 2026, the first 14 kWh counts at 100% of the factor, 14 to 28 kWh at 60% and 28 to 50 kWh at 15%. See our battery STC calculator and battery STC guide.

So for a typical NSW home battery, the picture is: the federal STCs deliver the upfront discount, and NSW’s BESS2 may add a VPP connection incentive via an accredited certificate provider. Whether a given job can use both is a question for the scheme rules, not for this page.

NSW versus Queensland, for batteries

Queensland’s Battery Booster program is closed. NSW therefore stands out among the states with a continuing state-level battery incentive, though it is VPP-linked rather than a general installation rebate. A NSW commercial battery incentive was also reported from 1 September 2026; check the scheme page for terms. Federal STCs apply in both states, so the federal discount does not differ by state, and the zone does not matter for battery STCs.

Who deals with which certificate

STCs go through the REC Registry and can be traded; PRCs are created by an accredited provider under the NSW scheme. If you are an installer, most NSW battery claims at your end involve STCs. See accreditation compared for how NSW accredited providers fit, and VPP-capable vs VPP-enrolled.

Common installer questions

Installers ask whether an old BESS1 enquiry can still be honoured: not for installations after 30 June 2025, as the activity is suspended. They ask whether a VPP connection has to be in place on the day of installation: check the BESS2 rules and the accredited provider’s requirements, since timing matters. They ask whether the federal STCs reduce the NSW incentive or the reverse: the two are separate mechanisms, but the stacking rules are the scheme’s to state, so confirm them. And they ask what to tell customers about the NSW commercial battery incentive reported from 1 September 2026: that it exists as reported, that terms apply, and that they should check the NSW scheme page. Do not quote dollar figures you cannot trace to the scheme.

A fair verdict

BESS1 is the past, BESS2 is the VPP-linked present, and the federal STC discount is the main upfront incentive. If you are quoting a battery in NSW, check three things: the federal factor and tier for the install date, the battery’s eligibility, and the current PDRS activity rules. Our battery submission guide covers the paperwork and /escs-prcs/ covers NSW certificates. For a plain installer walkthrough, see the Cheaper Home Batteries installer guide.