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About the Peak Demand Reduction Scheme (PDRS)
Explore what the Peak Demand Reduction Scheme (PDRS) is, how it works, and how it can affect your business.
What is the Peak Demand Reduction Scheme?
Starting in the summer of 2022/23 the Peak Demand Reduction Scheme is a certificate-based demand management incentive from the NSW Government.
Hot summer afternoons, as people return home from work and put on the air conditioner and then start cooking dinner, this is when the most pressure is put on the NSW electricity system. By creating financial incentives for households and small businesses to reduce their electricity usage during these peak demand hours, the electricity grid is less likely to experience blackouts or price spikes.
How does it work?
Aligned with the existing Energy Security Safeguard, the Peak Reduction Scheme is based on an energy savings target that rises from 0.5% peak demand reduction in 2022/23 to 10% peak demand reduction in 2029/30. Retailers like SmartestEnergy are required to purchase and surrender Peak Reduction Certificates based on their share of the NSW market. This obligation is calculated from their share of demand during the 4 highest demand days of the peak season, which runs through November to March each year.
The cost of these certificates is then shared across retail customers. Retailers will have slightly different ways of displaying this cost, but the impact to the total invoice value is expected to be very low.
The scheme is administered by the Independent Pricing and Regulatory Tribunal (IPART), who oversee regulation in water, gas, electricity and transport industries in NSW. They administer certificate creation and surrender, as well as monitoring participant reporting obligations.
What are Peak Reduction Certificates (PRCs)?
Peak Reduction Certificates (PRCs) are tradable certificates generated through incentivising households and businesses to reduce energy consumption during hours of peak demand; 2:30pm to 8:30pm in the peak season. This is done through similar activities as under ESS (including air conditioners, heat pump water heaters, refrigerated cabinets, non-primary fridge and freezers, and pool pumps).
How does this affect my company?
A new line will be included on invoices for NSW sites with PDRS rate under the Environmental Charges section. For 2024 this rate will be 0.014 c/kWh adjusted annually. SmartestEnergy customers are unlikely to be eligible to create certificates, however if you need more information on becoming an Accredited Certificate Provider then please see the IPART website for more details.
Next steps
SmartestEnergy will closely monitor the scheme as it evolves, and any future changes to this scheme will be updated here for your information. If you would like to know more about PDRS or how other charges on your invoice, please contact us here.
You can find out more about PDRS on the Energy NSW website
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