Peak Demand Reduction Scheme

The Peak Demand Reduction Scheme (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 installing eligible:  

• battery energy storage systems
• air conditioners
• pool pumps
• large heat pump water heaters
• commercial refrigerated cabinets.

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. 

The Peak Demand Reduction Scheme Compliance Rule

We published the PDRS Compliance Rule (Compliance Rule) in October 2022, which is different from the PDRS Rule. The Compliance Rule provides more detail on how the Independent Pricing and Regulatory Tribunal (IPART), as the PDRS's administrator, calculates certificate targets. The Compliance Rule also details how electricity retailers and large users must estimate individual liability.

How the PDRS works

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

The PDRS 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). 

PRCs are created for eligible activities that reduce electricity demand during peak periods. These activities include installing select energy-efficient appliances, such as battery energy storage systems, pool pumps and air conditioners. The PDRS 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 PDRS continues to deliver in alignment with the objectives of the Energy Security Safeguard.

How we developed the PDRS

We outlined a plan to introduce a new certificate scheme in the NSW Electricity Strategy. This new scheme, which would become the PDRS, 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 PDRS.

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

The PDRS operates alongside the Energy Savings Scheme (ESS) 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 PDRS and ESS in the Energy Security Safeguard position paper.

We consulted with our stakeholders in 2022 to get industry feedback that was used to inform the PDRS Rule. To learn more about our consultation process, and rule changes since 2022, visit the history of PDRS rule changes page.

Get involved

We collaborate with industry through research and public consultation. We’ll keep you informed by updating activities regularly on our website and via email.  

Email us to learn more about and get involved in our research and consultation at [email protected]. 

Thank you for submitting your interest.