Peak Demand Reduction Scheme Rule changes

The Peak Demand Reduction Scheme (PDRS) Rule was first published in September 2022. It outlines how Peak Reduction Certificates (PRCs) are managed for activities including:  

• Virtual Power Plants (VPPs)
• air conditioners
• refrigerated cabinets
• pool pumps.
• battery installations (suspended from 1 July 2025)
• commercial heat pump water headers (suspended from 19 December 2024)

Notice to market: Peak Demand Reduction Scheme target review

Until its suspension on 1 July 2025, the Peak Demand Reduction Scheme battery installation activity (BESS 1) was the largest source of certificate creation in the Scheme. We intend to consult on new Scheme activities to deliver additional peak demand reduction capacity.

However, we have identified a risk that certificate creation from new and remaining Scheme activities cannot scale in the short term to match the volumes produced by the BESS 1 activity.  

We therefore intend to review the 2026-27 Peak Demand Reduction Scheme target and consider reducing the target ahead of the 31 October 2025 deadline. Any target reduction will be made only where necessary to reduce the risk that Scheme participants pay penalties.

We anticipate that the Australian Government’s Cheaper Home Batteries Program will deliver at least as much peak demand reduction capacity in NSW as the Peak Demand Reduction Scheme’s BESS 1 activity would have in the same period.

Any changes to these targets will be updated here. Sign up here to also receive email updates about the Peak Demand Reduction Scheme and the Energy Security Safeguard. 

Latest Rule: August 2025 

Changes to the Peak Demand Reduction Scheme Rule were published on 29 August 2025 and commences on 12 September 2025.

Changes include: 

• Banning unsolicited door-knocking to promote and sell energy-efficient and demand reduction upgrades under the Peak Demand Reduction Scheme to support customers in making informed decisions and receiving high-quality upgrades.
• Extending the lifetime of air conditioner installation activities from 10 to 12 years, increasing the upfront incentive.

June 2025 Rule change

A change to the Peak Demand Reduction Scheme Rule was published on Tuesday 10 June 2025 and came into effect on Tuesday 1 July 2025. 

We made changes to the Rule, including:

• improving the Virtual Power Plant (VPP) process, increasing the incentive, and allowing 6 years’ worth of incentives to be claimed upfront for connecting to a Virtual Power Plant
• suspending battery installations under the Peak Demand Reduction Scheme due to the Australian Government’s Cheaper Home Batteries Program becoming available.

The previous NSW battery installation incentive cannot be combined with the Cheaper Home Batteries Program.

December 2024 Rule change

A change to the Peak Demand Reduction Scheme Rule was published and commenced on 19 December 2024. This introduced changes including:  

• greater flexibility for compliance with the Distributed Energy Resources (DER) Register requirement when installing batteries
• clarifying the definition of battery energy storage systems
• suspending the heat pump water heater activity until further notice.   

May 2024 Rule change

A change to the Peak Demand Reduction Scheme Rule was published on 24 May 2024, and commenced on 1 August 2024.

This change introduced 2 new battery activities that commenced on 1 November 2024.

This amendment also changed existing activities including:

• limiting the commercial water heater activity to larger units
• revising baselines and calculations for the high-efficiency pool pumps activity (SYS2).

It also removed 2 activities:

• old fridges and freezers (RF1)
• installation of high-efficiency motors (SYS1). 

Changes to the Peak Demand Reduction Scheme Rule

You can download all Peak Demand Reduction Scheme Rule change discussion papers, draft Rule versions and public submissions below.

These documents are only a guide and are not intended for any official Peak Demand Reduction Scheme purposes.