NSW Government
NSW Climate and Energy Action

Peak Demand Reduction Scheme

 

Peak Demand Reduction Scheme (PDRS) updates

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About the Peak Demand Reduction Scheme

The Peak Demand Reduction Scheme (the PDRS) aims to reduce peak electricity demand in NSW. It started in 2022 and will end in 2050.  

To reduce demand on the grid, the PDRS is providing financial incentives to households and businesses to reduce energy consumption during periods of high demand. Incentives are available for activities involving eligible:  

By reducing the electricity consumption of households and businesses when demand is high, we'll help lower the cost of electricity and reduce the risk of power outages in NSW. This will help households and businesses in NSW save around $1.2 billion on their bills between 2022 and 2040.  

By shifting the times when electricity is used and using more renewable energy generation in the system, we’ll help hit NSW targets of reducing emissions by 70% by 2035 and achieving net zero by 2050.  

How the Peak Demand Reduction Scheme works

The Peak Demand Reduction Scheme incentivises the reduction of peak demand during summer afternoons and evenings when demand for electricity is highest in NSW.

The Scheme sets a peak demand reduction target for electricity retailers and large electricity users. To meet their targets based on their contribution to peak demand, energy retailers and large energy users are required to create or buy Peak Reduction Certificates (PRCs).

Peak Reduction Certificates are created for eligible activities that reduce electricity demand during peak periods. These activities include installing select energy-efficient appliances, such as pool pumps and air conditioners, or responding to peak events through participation in a VPP. The Peak Demand Reduction Scheme Rule details how certificates are created.

To ensure the Rule remains relevant to current technical and market conditions, we consult with industry stakeholders regularly. This ensures the Scheme continues to deliver in alignment with the objectives of the Energy Security Safeguard.

How we developed the Peak Demand Reduction Scheme

We outlined a plan to introduce a new certificate scheme in the NSW Electricity Strategy. This new scheme, which would become the Peak Demand Reduction Scheme, was developed to encourage dependable peak demand reduction as part of the Energy Security Safeguard. 

Following the publication of the Energy Security Safeguard position paper in 2021, the NSW Electricity Supply Act 1995 was amended to establish the Peak Demand Reduction Scheme.

Following public consultation, we decided that peak demand would be measured over the summer period. These measurements are used to set the Peak Reduction Certificate targets for energy retailers and large energy users.

The Scheme operates alongside the Energy Savings Scheme under the Energy Security Safeguard. Together they incentivise households and businesses to reduce both overall energy usage and during periods of peak demand.

You can read more about the establishment of these schemes in the Energy Security Safeguard position paper. 

We consulted with stakeholders in 2022 to get industry feedback that was used to inform the Peak Demand Reduction Scheme Rule. Learn more about our consultation process and Rule changes here. 

Get involved

We collaborate with industry through research and public consultation. Sign up below to receive updates and opportunities get involved.  

If you have questions about the Peak Demand Reduction Scheme email us at [email protected]. 




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