NSW Energy Security Safeguard
In November 2019, the NSW Government announced the creation of the Energy Security Safeguard to provide incentives for cost-effective energy savings and peak demand reduction measures. The Safeguard aims to improve the affordability, reliability and sustainability of energy.
The Safeguard includes 3 separate schemes:
- the existing Energy Savings Scheme (ESS) running until 2050, with an energy savings target gradually increasing to 13% by 2030 and an expanded set of eligible activities
- a new Peak Demand Reduction Scheme (PDRS) to support activities that reduce demand at peak times, including flexible demand response.
- a new Renewable Fuel Scheme (RFS) to incentivise the production of green hydrogen, with targets increasing to 67,000 tonnes (or 8 million GJ) by 2030.
The second emergency COVID-19 response bill package, passed by Parliament in May 2020, amended the NSW Electricity Supply Act 1995 to establish the Safeguard.
Higher ESS targets and the PDRS are expected to deliver a net economic benefit for New South Wales of $1.2 billion. Households and businesses choosing to implement energy saving and peak demand reduction activities are expected to save an additional $3.6 billion on their bills between 2022 and 2040.
The Renewable Fuel Scheme will commence in 2024. The scheme will provide a critical financial incentive for industry to bring forward investment in transformative projects and position NSW to capture first mover advantage for the State’s regional economies. The scheme could support an additional $6.4 billion in gross state product (GSP) and $212 million in emissions reduction benefits in present value terms. See the NSW Hydrogen Strategy for more information.
In September 2021, the NSW Government released the Energy Security Safeguard position paper. The paper sets out the Government’s final position on the design of the ESS and the PDRS, including reforms to the ESS, the design of the new PDRS, and reforms to improve scheme administration.
The paper also summarises stakeholder feedback received in response to the Energy Security Target and Safeguard consultation paper. The consultation was open from April to June 2020.
The NSW Government will align regulation, administration and compliance for the ESS, PDRS and RFS where possible. The Government will appoint IPART as the administrator and regulator of all three schemes.
Under the Net Zero Plan, the NSW Government will invest an additional $25 million in a Safeguard Acceleration Program to streamline implementation and support the expansion of the ESS and PDRS. This will reduce participation costs and help industry prepare for the introduction of the new peak scheme and broaden the activities they offer under the existing Energy Savings Scheme.
Further information about the Safeguard:
- Overview of the Energy Security Safeguard position paper (PDF 739KB)
- Energy Security Safeguard position paper (PDF 2.7MB)
- Energy Security Target and Safeguard consultation paper (PDF 671KB)
- The Energy Efficiency Opportunity List (PDF 420 KB)
- Appendix C: Energy Security Safeguard Scenario Projections (PDF 939 KB)
- Submissions on the Energy Security Target and Safeguard consultation paper (ZIP 15MB)
If you have any questions about the design of the Safeguard, please contact energysecurity [at] environment.nsw.gov.au.