NSW Energy Savings Scheme

The NSW Energy Savings Scheme (ESS) provides financial incentives to install energy efficient equipment and appliances in NSW households and businesses.

The ESS was established in 2009 under the NSW Electricity Supply Act 1995 and has been highly successful. Since its inception, the ESS has supported projects that will deliver more than 27,000 gigawatt hours of energy savings over their lifetimes. These savings are estimated to be worth around $5 billion in bill savings over the next decade or more.

The NSW Government recently consulted on major reforms to the ESS and the ESS Statutory Review Report 2020. See Consultation for further information.

The Energy Savings Scheme Rule (ESS Rule) details how Energy Savings Certificates are created. The current ESS Rule became effective on 30 March 2020, and now includes the 4 September 2020 Amendment to Activity Definition F1 of Schedule 1.

The NSW Government has committed to updating the ESS Rule on an annual basis. The regular annual updates to the ESS Rule are intended to:

• incorporate stakeholder feedback and evaluation results
• maintain the effectiveness of the ESS Rule through updates to savings factors, changes to the Rule requirements and adding activity schedules for new technologies
• complement changes to building and equipment standards
• incorporate new methods for Energy Savings, and 
• make other enhancements to the ESS Rule to maintain its integrity and/or reduce transaction costs. 

The Energy Savings Scheme (ESS) has incentivised the uptake of energy efficient lighting in NSW since the scheme’s inception in 2009. Lighting upgrades make up the majority of energy savings delivered through the scheme to date.

In 2017, the Department of Planning, Industry and Environment (DPIE) commissioned Lighting Market Impact Evaluation (LMIE) study, supported by a quantitative model. The evaluation found that the ESS has brought forward the uptake of LED lighting technologies and upgrades in NSW by 7 to 10 years. With LED lighting becoming the norm for new product sales, at current trends LEDs will soon replace most common lighting technologies. Please refer to the LMIE study and accompanying modelling assumptions report. 

In mid-2020, the NSW Government commissioned Beletich Associates, Common Capital and Light Naturally to review and update all three ESS deemed lighting methods to reflect the latest market and policy developments and provide detailed recommendations on the improved delivery of the lighting upgrades.

A targeted consultation workshop was held on Wednesday 9 September 2020 where Beletich Associates, Common Capital and Light Naturally presented their draft findings along with future options for lighting in the ESS. Please refer to a recording of the webinar and a copy of the presentation slides. 

Answers to questions raised in the webinar can be found in the Workshop Questions and Answers for the Targeted Consultation Workshop – Lighting in the Energy Savings Scheme.

Discussion papers on final ESS Rule changes, draft ESS Rule versions and public submissions are available for download via links in the table below.

The documents linked below are only a guide and are not intended for any official ESS purposes. Older versions of the ESS Rule can be found at the Scheme Administrator’s website.

In December 2020, the NSW Government increased the existing energy savings targets of the ESS for the years 2022 to 2025 and set new targets for the years from 2026 to 2050.

Schedule 5 of the NSW Electricity Supply Act 1995 sets out the new energy savings targets for the scheme. The target will increase by 0.5% each year from 2022, reaching 13% in 2030. The target will then remain at 13% until the end of the scheme in 2050.

In April 2020, the Minister for Energy and Environment released the ESS Draft Statutory Review and Energy Security Target and Safeguard Consultation Paper. Submissions closed in May and the ESS Final Statutory Review Report 2020 was tabled in Parliament in June 2020.

For more information about the 2020 ESS statutory review:

• NSW Energy Savings Scheme – Final Statutory Review Report 2020 (PDF 775KB) 
• Energy Savings Scheme Statutory Review 2020: Stakeholder submissions (PDF 753KB)

Energy Savings Scheme reviews 2014 and 2015

In 2014 and 2015, the NSW Government carried out a statutory review of the ESS and consulted on reforms. The ESS Statutory Review was completed in June 2015 and reforms to the scheme were introduced in October 2015.

For further information about the 2015 statutory review and scheme reforms:

• Review of the Energy Savings Scheme Position Paper (PDF 1.1MB)
• NSW Energy Savings Scheme Final Statutory Review Report (PDF 6.2MB)
• Review of the NSW Energy Savings Scheme Part 2: Options Paper (PDF 1.7MB)

Under the NSW Electricity Supply Act 1995, the Minister can grant full or partial exemption from ESS liabilities for an industry or activity that is both emissions intensive and trade-exposed.

Exemptions from the ESS are intended to ensure that NSW industrial energy users are not at a competitive disadvantage.

The energy user, such as a smelter, does not have to buy Energy Savings Certificates for the energy used for the exempt activity.

The Energy Savings Scheme exemptions process paper outlines the exemption process. ESS exemption applications are assessed based on the industry and activity identified by the Australian Government’s Clean Energy Regulator.

The ESS Exemptions Order effective 1 January 2021 grants current exemptions from the Energy Savings Scheme.

For more information about exemptions from the ESS, please contact sustainability [at] environment.nsw.gov.au.