The New South Wales (NSW) Department of Climate Change, Energy Efficiency and Water (DCCEEW) [pronounced D’Queue by department personnel] introduced the Peak Demand Reduction Scheme (PDRS) in 2022. This scheme, which is administered by the NSW Independent Pricing and Regulatory Tribunal (IPART), uses a market-based mechanism to incentivise the installation and usage of energy efficiency strategies and demand reduction technologies such as:

• Efficient air conditioners
• Efficient pool pumps
• Large heat pump water heaters
• Commercial refrigerated cabinets; and now
• Residential Batteries

Residential batteries were included as part of a PDRS rule change, published on 6 September 2024, with an effective start date of 1 November 2024. Unlike rebate schemes, which have time horizon and fund limits, the PDRS is market-based and has no set end date. This is not to say that changes cannot be made to the scheme (as we have just seen, this can and will happen), but with the scheme administration funded until 2050, it should certainly be something that the renewable energy and energy efficiency industries are aware of.

If you are battery energy storage system (BESS) designer, installer, business developer or business operator, here is what you should know about the scheme.

1. Peak Reduction Certificates (PRC) – When you install a BESS, you will effectively be creating Peak Reduction Certificates or PRCs which can be traded in a regulated market by Accredited Certificate Providers (ACPs). You can look to become an ACP but its is far more likely that you will want to work with an ACP (List of ACPs).
   
2. BESS1 and BESS2 – The PDRS update has introduced two mechanisms for creating PRCs with the installation of a BESS. Firstly, BESS1 covers the installation of the system itself and, secondly, BESS2 covers contracting with a provider of Virtual Power Plant (VPP) services (Rule Change Information).
   
3. Eligibility for Peak Reduction Certificates (PRC) – To qualify for BESS1, the battery must meet certain specifications including:
   • Between 2-28 kWh in capacity
   • Listed on the Clean Energy Council (CEC) approved products list and meet additional requirements related to warranted temperature range and energy throughput (see Rule Change Information for more detail).
   • Installed in a home or small business that already has a solar PV system or installs one concurrently.
   • Covered by a 10-year warranty guaranteeing retention of 70% usable capacity (again, see Rule Change Information for more detail).
     
4. Documentation and Installation – After completing an installation, you’ll need to provide specific documentation, including pre- and post-installation photos, customer and installer signatures, and details about the installation. This documentation is crucial to ensure that the battery installation meets all required standards.
   
5. Working with an Accredited Certificate Provider (ACP) – You’ll submit the project details to an ACP who will process your claim for creating PRCs This will allow the rebate to be applied for the customer. When the nomination form is signed and submitted the ACP can create the certificates, pay the installer the agreed amount (after taking an administrative fee). That sum can then be passed onto the customer, but typically, this will be provided in the form of an upfront discount that appears on the quote. For administrative efficiency, you will likely want to work with an ACP who is accredited under both the PDRS and STC (Small-scale Technology Certificates) programs if you are also installing solar PV systems.
   
6. Calculating PRCs – The calculation of PRCs for BESS1 and BESS2 is defined in the Notice of Approval of the PDRS update (Approval of PDRS Amendment No. 2). The equation is something the ACPs need to worry about and not necessarily the installer but, in short, PRC calculations for BESS1 depend on:
   • A constant of 0.0853kW/kWh for BESS1
   • Usable Battery Capacity, in kWh, as recorded on the approved products list specified by the Scheme Administrator (IPART)
   • Firmness Factor, which is the likelihood that the capacity will be available during a system peak event and is likely set to “1” for all BESS
   • Lifetime which is currently set for BESS1 as 15 years
   • Network Loss Factor, which is different for each Distribution Network Service Provider but nominally ranges from 1.04 to 1.05
   • Summer Peak Demand Reduction Duration, which is typically 6 hours for BESS1
   • A conversion from kW to 0.1kW (eg a factor of 10) since one PRC is equal to 0.1kW of Peak Demand Reduction Capacity
   • Thus, for example a 14.2 kWh Tesla Powerwall 2, installed in Ausgrid area would create:
     14.2kWh x 0.0853 x 1 x 1.04 x 10 x 6 x 15=1133PRCs
     1133 PRCs at current market price of $2.45 (at the time of writing) is $2,775
     
7. Accreditation – The Battery MUST be installed by an installer with Grid-Connected Battery Storage ‘Design and Install” or “Install Only” Accreditation by Solar Accreditation Australia (SAA) according to the method guide.
   
8. Auditing – It can be expected that IPART will audit many of the first installations completed by each ACP and then, afterwards, inspections will occur on a rotating basis. Liability, sits with the ACP and if they, or their approved installers do the wrong thing, PRCs and/or accreditations can be revoked for continued non-compliance.
   
9. NSW Consumer Energy Strategy – We have recently seen the release of the NSW CES which outlines BESS rebates for eligible households and small businesses. This is different to the PDRS. The NSW CES has been funded by methods of delivering this funding are still under development. Again, the PDRS is different and BESS eligibility will be available from 1 November 2024.

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