A Peak Reduction Certificate (PRC) is a small certificate in a big market, and for a while it was a good one. Today it trades at about $3 (reported), far below where many creators and brokers expected. The reasons are not mysterious. A single policy decision changed both the supply and the demand for PRCs within a few months, and the market repriced. This article lays out the sequence.
What a PRC is
PRCs are created under the NSW Peak Demand Reduction Scheme (PDRS) for activities that reduce electricity demand at peak times, such as batteries that discharge in the evening peak, certain efficient appliances and demand response. Electricity retailers have a target to meet, set as a share of their sales, and surrender PRCs to meet it. The scheme runs alongside the Energy Savings Scheme, which produces ESCs. For the basics see what a PRC is worth and our PDRS battery incentive answer.
The sequence
- PDRS includes home batteries. For a period NSW paid a battery incentive through PRCs. It was a significant source of certificate supply, and a significant driver of the targets set for later years.
- The federal program launches. The Cheaper Home Batteries Program began on 1 July 2025 and delivers a larger discount through STCs. NSW decided against stacking the two rebates, and the PDRS home battery incentive (BESS1) was suspended from 1 July 2025.
- PRC supply expectations collapse. With home batteries out, the expected flow of PRCs fell well below what the 2026-27 target assumed.
- The target is slashed. Reporting at the time said NSW cut the 2026-27 PDRS target from 7.5% to 0.5% in response to the forecast shortfall, to avoid penalising scheme participants. On the day of the announcement the PRC price was reported to fall from about $2.86 to about $2.60.
- The price settles near $3. A smaller target means less demand, and with supply still present from other activities, the market clears at a low level.
The numbers are as reported at the time, and you should confirm the current target on the NSW Energy Sustainability Schemes and Energy NSW pages.
Why a smaller target means a lower price
Retailers buy PRCs to avoid a shortfall penalty. If the target is 7.5% and supply is short, retailers compete for certificates and the price rises towards the penalty. If the target drops to 0.5%, they need very few, and any surplus has nowhere to go. That is the difference between a market near its penalty rate and a market near the floor.
| Scenario | Demand | Supply | Likely price |
|---|---|---|---|
| High target, supply short | High | Low | Up toward the penalty |
| High target, supply ample | High | High | Mid-range |
| Low target, supply ample | Low | High | Low |
2026 sits in the third row. The decision to cut the target was meant to protect retailers from a shortfall that was no fault of theirs. It also protected the scheme’s credibility, but it cost certificate creators their expected margin.
What a $3 PRC means in practice
At about $3 a PRC, a job that creates 50 PRCs is worth $150. That is little more than a rounding error on most jobs, which is why many installers who built business plans on PRCs have moved on. For comparison, STCs have held roughly $38 to $40 against a $40 ceiling, and a 14 kWh federal battery creates about 95 STCs worth some $3,660. The federal scheme is where the volume has gone.
What is still available in NSW
- The federal Cheaper Home Batteries Program, with a factor of 6.8 at the time of writing, stepping to 5.7 on 1 January 2027 and 5.2 on 1 July 2027
- A PDRS incentive for VPP connection (check the scheme’s rules for the current activity and amount)
- A NSW commercial battery incentive from 1 September 2026 (reported)
- ESCs under the Energy Savings Scheme for eligible activities such as heat pump hot water and air conditioning
Read NSW VPP battery incentive before promising a customer anything specific.
From the desk: Do not build a quote on a PRC value without checking today’s price and the activity’s current eligibility. We have seen installers quote a PRC incentive from last year’s rules for a job that no longer creates any. Check the scheme page, then the price, then the quote.
Is this the bottom?
A low price does not mean a floor. With a 0.5% target, demand is thin, and the price is sensitive to the supply of other PRC-creating activities. The next target decision, and any new activity added to the scheme, will move it. A change is more likely to come from policy than from the market. If you hold PRCs, you are waiting on regulation, not on sentiment.
Lessons for creators
- Do not rely on a single scheme. Certificate markets are policy markets, and policy changes with little notice.
- Follow the consultation papers. The NSW Government publishes position papers for rule changes, and those are the early warning.
- Keep your cost base flexible. A business that needs a PRC price of $10 to be profitable is exposed to a decision it cannot influence.
- Look at the biggest certificate. For battery installers, that is the STC.
What it did to the business case for battery installers in NSW
Before the change, many NSW battery quotes carried a PRC-funded incentive. After it, the quote carries STCs instead. A 14 kWh battery at a factor of 6.8 creates about 95 STCs, around $3,660 at $38.50, and that is far larger than anything PRCs offered at about $3 each. So for the typical home battery customer, the drop in PRC prices matters much less than the move of the incentive from one scheme to the other. The households that feel it are those who expected a stacked incentive from both, which NSW chose not to allow.
Reading the PRC market from here
Three signals are worth watching: the target for the year after 2026-27, any new activities added to the PDRS, and the volume of PRCs created through the VPP connection incentive and the commercial battery incentive from 1 September 2026 (reported). If new activities create a steady flow of PRCs while the target stays small, the price will stay low. If the target rises while supply stays thin, it can recover quickly. Because the price is only a few dollars, small absolute changes are large in percentage terms, so a move from $3 to $4 is a rise of a third. Keep that in mind when you read a headline about the “surge” in PRC prices.
For the sister certificate, read ESC price history.
What to do next
- Check the current PRC and ESC prices from a broker update before pricing any NSW job
- Read NSW ESS 2026 changes and ESC price history
- For batteries, run the numbers in the battery STC calculator
- See what we publish on battery STCs and pricing
- The pillar is ESCs and PRCs