What is the Peak Demand Reduction Scheme and why is it being introduced?

What is the Peak Demand Reduction Scheme and why is it being introduced?

The NSW Electricity Strategy outlined the NSW Government’s plan to introduce a certificate scheme to encourage dependable peak demand reduction, as part of the Energy Security Safeguard 

The NSW Government amended the NSW Electricity Supply Act 1995 to establish the Peak Demand Reduction Scheme (PDRS) in September 2021. The scheme’s primary objective will be to create financial incentives to reduce peak demand for energy by encouraging peak demand reduction activities. 

The NSW Government believes that the scheme will improve reliability by reducing NSW peak demand and affordability by placing downward pressure on wholesale electricity prices despite the costs of complying with the scheme being passed on by retailers to customers as a specific line item on their electricity bill. 

The aim of the scheme is to reduce the amount of electricity used at peak times, targeting electricity use between 2:30pm and 8:30pm Daylight Saving Time (ADST). This is the peak time for electricity use in both businesses and homes with air conditioners, TVs, lights, showers, baths and domestic appliances in full use. Businesses already exempt from the existing NSW Energy Savings Scheme will also be exempt from the PDRS.  

When will the PDRS come into effect? 

From November 2022, the Peak Demand Reduction Scheme (PDRS) liability will come into effect, with accreditation of certificate providers to commence on 1 July 2022. The NSW Government will collaborate with industry and provide support to facilitate the launch of the scheme.  

How are certificates created under the scheme? 

Certificates are based on the ability to provide 0.1kW of demand reduction for 1 hour during the compliance period. For example, 0.2kW of demand response available from 2:30 – 8:30pm would create 12 certificates. 

Certificates have an expiry date of three years, meaning that they can be surrendered in the compliance year they were created and in the two following compliance periods. This means a certificate created in 2022-23 can be surrendered for the 2022-23, 2023-24 or 2024-25 compliance periods. 

Who is covered in the scheme? 

Businesses considering ways to save on electricity costs can participate in the PDRS. Our Energy Solutions team may be able to provide guidance for customers who are in a position to implement eligible projects under the scheme. We encourage you to email [email protected] for further information. 

Any work undertaken must be done in conjunction with a government-approved supplier. These approved suppliers are known as Accredited Certificate Providers (ACPs). An ACP will explain the process and assist you to receive the incentive1 .