New South Wales makes electricity retailers pay for energy efficiency. The mechanism is a certificate scheme: accredited providers do energy-saving work, the work earns tradeable certificates, and retailers buy those certificates to meet annual targets. The certificate is called an ESC, short for Energy Savings Certificate, and it sits alongside a second NSW certificate called a PRC. If you work in NSW, or you are a household looking at a heat pump, an appliance upgrade or a battery, they are worth understanding, because the value ends up in your quote.
This is the explainer. It covers what the certificates are, how the two schemes differ, who creates and buys them and how a NSW job compares with the federal STC system you may know better. We do not quote certificate counts or dollar values for NSW activities, because the activity rules change. Use the scheme’s own pages for current numbers.
ESCs in one paragraph
An ESC represents one megawatt hour of energy savings. The Energy Savings Scheme, or ESS, sets annual targets for electricity retailers, and they meet them by buying and surrendering ESCs. An accredited certificate provider creates ESCs by doing an approved activity, such as installing an efficient heat pump hot water system or upgrading commercial lighting. A set method turns the work into a number of megawatt hours saved, evidence is lodged and the regulator, IPART, checks and registers the certificates. See what an ESC is in NSW.
PRCs and the PDRS
The second scheme is the Peak Demand Reduction Scheme, or PDRS, which creates Peak Reduction Certificates, or PRCs. Where the ESS rewards saving energy, the PDRS rewards cutting demand at peak times, when the grid is under most strain. It includes activities such as efficient appliances and a battery incentive for connecting a battery to a virtual power plant. The older NSW battery incentive moved into the federal Cheaper Home Batteries Program in 2025, and the PDRS now carries an incentive for VPP connection. See the PDRS battery answer and PRC pricing.
| ESS | PDRS | |
|---|---|---|
| Certificate | ESC | PRC |
| What it rewards | Energy saved (MWh) | Demand reduced at peak |
| Typical activities | Heat pump hot water, lighting, commercial efficiency | Efficient appliances, battery and VPP-related activities |
| Regulator | IPART | IPART |
New ESS and PDRS rules commenced on 1 July 2026, so check the current rule and activity definitions before you rely on an older guide.
Who does what
- The accredited certificate provider (ACP) creates the certificates and carries the evidence and audit responsibility. See how to become an ACP in NSW.
- The installer does the work. In small businesses the installer and the ACP are often the same entity. Otherwise the installer works under an ACP’s agreement.
- The customer, a household or business, gets the benefit as a discount.
- Traders buy certificates from providers and sell to retailers.
- Retailers surrender certificates to meet their obligations.
How the value reaches your quote
For most customers the certificate value is a discount, not a cheque. A heat pump quote in NSW, for example, may show a federal STC discount and an ESC discount, each as a line. Neither is a payment to you. The ACP creates the certificates after the job, sells them and the quote already reflects the value. See the NSW heat pump rebate for the household view.
ESCs compared with STCs and VEECs
| STC | ESC | VEEC | |
|---|---|---|---|
| Jurisdiction | Federal | NSW | Victoria |
| Run by | Clean Energy Regulator | IPART | Essential Services Commission |
| Rewards | Small-scale renewable systems | Energy savings | Energy savings |
| Ends | 31 December 2030 | Scheme continues under its own rules | Scheme continues under its own rules |
| Who buys | Retailers and liable entities | Retailers | Retailers |
At the time of writing, STC spot has been roughly $38 to $40 and VEEC spot roughly $85 to $95. ESC pricing is a market price, which varies, so ask a trader or check recent market reports. See the NSW ESC price. For how a job can involve more than one certificate, the VEECs and STCs on the same job guide shows the principle in Victoria.
From the desk: the NSW method and activity rules are detailed, and they change on set dates. Before you quote an ESC discount, read the current activity definition for the exact product, and check the product is on the right list. A quote that assumes certificates the job does not qualify for is a quote you have to honour. Put the assumption on the page, and check that it still holds when the job is done.
A rough picture of the flow
- A customer asks for an efficient upgrade.
- The installer, or an ACP they work with, confirms the activity and the product qualify.
- The work is done and evidence collected, including photos, product details and customer consent.
- The ACP lodges the claim and IPART reviews it.
- ESCs are registered and sold to a trader or retailer.
- The ACP is paid, and the discount has already been given.
Timing varies. See how long NSW ESC payment takes.
What installers should know
If you do eligible work in NSW, certificates can be an income stream or a way to discount your price. Accreditation takes effort, and for a small number of jobs working under an existing ACP is often better. The step-by-step process for creating certificates is covered in how to create ESCs. For federal certificates on the same job, such as heat pump STCs, see hot water STCs and the resources hub.
Why NSW built it this way
Making retailers fund efficiency has a simple logic. Retailers sell electricity, and they have the customer relationships and the balance sheets to pay for upgrades that reduce demand. Rather than government paying for each upgrade, the scheme sets a target and lets the market find the cheapest savings. Accredited providers compete to deliver savings, certificates carry a price and the price signals where savings are cheapest. For a household the result is a discount. For an installer, it is a second certificate stream on certain jobs. For retailers it is a compliance cost that flows through to the electricity market, in the same way as the federal STC scheme.
What to do next
- If you are a household, ask your installer which NSW and federal certificates are in the quote.
- If you are an installer, read the current activity definitions on the NSW scheme website.
- Decide whether to become an ACP or work under one, using the ACP answer.
- Check the date of the rule you are relying on.
- For STC claims running alongside, see how it works and today’s rate.