NSW Peak Demand Reduction Scheme (PDRS)

The New South Wales government has announced changes to it’s Peak Demand Reduction Scheme (PDRS) effective from 1 July 2025.

In 2024, the NSW government introduced a solar battery subsidy as part of its PDRS. The scheme offered significant savings off the up-front installation costs of a battery for homes and businesses with existing solar, and a further (smaller) incentive for businesses and households that connect a battery to a Virtual Power Plant (VPP).

With the introduction of the federal government’s Cheaper Home Batteries Program, the NSW government has altered its subsidy to work in conjunction with the national scheme.

The latest change to the solar battery subsidy aligns with the objectives of the Peak Demand Reduction Scheme (PDRS) that launched back in 2022 and will run through to 2050.

How much is the new NSW PDRS subsidy for 2025?

From July 1 2025, the NSW solar battery incentive will offer rebates of up to $1,500 for solar batteries that connect to a Virtual Power Plant (VPP).

The available incentive offered to residential and business customers will be determined by the size of the battery, the location of install and the market prices of the rebate certificates.

The New South Wales government announced that it’s upfront rebate to reduce the cost of new solar batteries will cease from July 1 2025. In it’s place, is the Australian government’s battery rebate. Though, it may seem counterintuitive to reduce the size of the NSW rebate, homeowners and businesses will be better off with the introduction of the federal rebate and the increase to the NSW VPP rebate.

Who is eligible for the NSW PDRS subsidy?

To be eligible for the 2025 NSW PDRS battery subsidy, residents and businesses must install a new battery between 2 kWh and 28 kWh in size and connect it to a Virtual Power Plant (VPP). The battery must be installed by an approved solar battery supplier under the PDRS.

Approved suppliers – known as Accredited Certificate Providers or ACPs – are accredited by the Scheme Administrator (IPART) to provide installation and upgrades under the Peak Demand Reduction Scheme (PDRS).

How to claim the NSW PDRS incentive?

Approved suppliers under the PDRS will begin offering the new solar battery incentive from 1 November 2024.

Approved PDRS suppliers will pass the savings directly to the consumer and be responsible for claiming these incentives for work completed from 1 November 2024 onwards.

Consumers will see the new solar battery incentive amount for connecting to a VPP of up to $1,500 reflected in the invoice that they receive from the approved supplier at the time of connection. The approved supplier under the PDRS will be able to provide more information on incentive amount and eligibility based on the size of the battery.

Further progress for the Peak Demand Reduction Scheme (PDRS)

The latest solar battery incentive reflects further progress for the Peak Demand Reduction Scheme (PDRS).

The New South Wales Government’s Peak Demand Reduction Scheme or PDRS is a key initiative that is intended to reduce energy demand during peak hours.

Launched back in 2022, the Peak Demand Reduction Scheme set a peak demand reduction target for the electricity retailers and large users in a bid to reduce energy usage during hours of peak demand. For electricity retailers and large users, the PDRS means that they must create or buy peak reduction certificates (known as PRCs) for activities that reduce energy usage during hours of peak demand.

By reducing peak demand and lowering energy consumption during peak times, the scheme aims to lower the cost of electricity for all users and reduce the risk of outages in New South Wales. It’s estimated that these initiatives will save households and businesses some $1.2 billion on energy bills between 2020 and 2040.

Final thoughts

The latest alteration to the NSW solar battery subsidy is good news for consumers and a positive initiative to bolster the government’s Peak Demand Reduction Scheme.

The government’s decision to announce the initiative back on 24 May 2024 – some five months before the subsidy begins, has attracted some criticism from approved PDRS suppliers that voiced concerns over how the pending incentives will impact sales during the interim period.

At the time of writing, the New South Wales government has not yet placed a limit on the number of incentives available or for how long they will be available.