Safeguard design

The Safeguard was established after we amended the NSW Electricity Supply Act 1995, as part of the second emergency COVID-19 response bill package, passed by NSW Parliament.

In September 2021, we released the Energy Security Safeguard position paper. It set out our final position on the design of the Energy Savings Scheme and the Peak Demand Reduction Scheme. This included reforms to the Energy Savings Scheme, the design of the new Peak Demand Reduction Scheme, and reforms to improve scheme administration. This paper also summarised stakeholder feedback received in response to the Energy Security Target and Safeguard consultation paper.

In December 2021, we amended the Electricity Supply Act 1995 to include the Renewable Fuel Scheme, which was introduced in the NSW Hydrogen Strategy.  

In October 2022, we amended the Electricity Supply (General) Regulation 2014 to give effect to reforms announced in the Energy Security Safeguard position paper and to create regulations for the Peak Demand Reduction Scheme.

The Safeguard schemes

The Energy Security Safeguard (Safeguard) consists of the Energy Savings Scheme, the Peak Demand Reduction Scheme and the Renewable Fuel Scheme.

Each of the 3 Safeguard schemes are certificate schemes that create financial incentives. This supports households, businesses and industry to change how they use energy and encourage producers to create green hydrogen. Together, the schemes will help our energy systems be more affordable, reliable and sustainable. 

The Energy Savings Scheme provides incentives to improve energy efficiency. The Peak Demand Reduction Scheme incentivises the reduction of energy usage during hours of peak demand. The Renewable Fuel Scheme will provide incentives from 2024 to produce green hydrogen.

The 3 schemes were established under the NSW Electricity Supply Act 1995. The Electricity Supply (General) Regulation 2014 provides more detail on how the schemes work.

We review the schemes every 5 years to check they have met their objectives and make adjustments where needed. The next review of the Energy Savings Scheme and Peak Demand Reduction Scheme will begin in 2024 and will be published in 2025. The first review of the Renewable Fuel Scheme will be published in 2029. 

We set out how certificates are created, how they can be accessed and what specific activities are included. This is done through the publication of a rule for each scheme. 

The Rules are reviewed and updated on an annual basis. This ensures they stay relevant to the technical and market conditions in which they operate. This is known as the Rule change process.

Rule change process

We start each rule change process by researching market conditions, new developments and technologies, as well as consulting with our stakeholders. This helps us decide what rule changes may need to be made to ensure the scheme remains relevant to the market conditions.

We then hold a public consultation explaining our proposed rule changes to ensure we are engaging with the wider NSW community.

Following consultation, the rule is finalised and published in the NSW Government Gazette. This means that the rule is now legislated and implemented. By including these processes, we can:

• incorporate stakeholder feedback and evaluation results
• make changes to rule requirements, such as adding new equipment standards
• add activity schedules for new technologies
• make enhancements that maintain rule integrity and/or reduce transaction costs
• improve harmonisation with other schemes.

Planned changes as of April 2024

Below are planned changes for each of the schemes until 2025. Dates are correct as of April 2024 and we will update them if timelines change or we have new information.

In the figure below, ‘Gazettal’ is the Rule publication date and ‘Change effective’ indicates the date that these changes come into effect.

If you have any questions about the design of the Safeguard or its schemes, please contact [email protected].