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NSW Business Battery Incentive
Under the expanded Peak Demand Reduction Scheme
From 1 September 2026, incentives apply to bigger batteries and larger sites.
✓ Apartment buildings with four or more dwellings
✓ Small and medium businesses
✓ Commercial and industrial sites
Batteries from 20 kWh up to 30 MWh now qualify on NSW sites.
Get a free site assessment and find out how much you could claim!
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What are the new PDRS Battery Activities?
The Peak Demand Reduction Scheme (PDRS) is a NSW government scheme that rewards equipment that shifts electricity use away from the busiest hours of the day. The support comes as a certificate-based incentive rather than a fixed rebate amount.
Batteries have been part of the scheme for a while, but only small ones. BESS1 covers installing a new battery at a home or small business site, up to 28 kWh, roughly the size of a large home battery. BESS2 covers connecting an existing battery to a Virtual Power Plant (VPP).
From 1 September 2026, the eligible range expands to cover batteries up to 30 MWh, and three new activities for larger sites:
- BESS3 covers apartment buildings, for batteries from 20 kWh to 200 kWh.
- BESS4 covers small and medium business sites, for batteries from 20 kWh to 200 kWh.
- BESS5 covers commercial and industrial sites, for batteries from 200 kWh to 30 MWh, with the incentive counting the first 10 MWh.
Note that the sizes refer to usable capacity; the scheme calculates as 90% of the nominal capacity.
Download our quick guide on the new PDRS battery activities for more details.
How much is the PDRS battery incentive worth?
Unlike the federal Cheaper Home Batteries Program, the PDRS incentive is not a set dollar amount. An eligible battery earns certificates, and those certificates can be sold. The value is often applied as an upfront discount to the project cost, rather than a payment later.
Below are indicative figures for two types of battery installation:
| Project | PDRS Incentive | Payback without PDRS | Payback with PDRS |
| 200 kWh battery, no new solar | Approx. $44,100 | 9 years | 5.8 years |
| 200 kWh battery + 100 kW of new solar | Approx. $65,800 | 7 years | 3.8 years |
| 5 MWh battery, no new solar | Approx. $1,103,000 | 10 years | 6.5 years |
| 5 MWh battery + 2.5 MW of new solar | Approx. $1,646,000 | 7 years | 5.1 years |
Based on a certificate price of $3.50 and case studies published by the NSW government. Figures include GST.
While battery-plus-solar projects cost more to build, the PDRS provides higher incentive rates for batteries installed within 90 days of new or expanded solar systems, resulting in shorter payback periods despite the higher cost.
The figures above are indicative. What a specific site earns depends on the activity it falls under, the usable capacity of the battery, the output of the inverter, the distribution network it connects to, when the installation is completed, and a few other variables.
Get a complimentary site assessment to see the incentive figures your site can claim.
Who is eligible, and which activity applies?
| Applies to | Apartment buildings |
| Site type | Residential blocks of at least four dwellings |
| Site history | Must not have an existing battery at the same meter |
| Battery usable capacity | 20 kWh to 200 kWh |
| Eligible capacity | 5 kWh per apartment |
| Battery eligibility |
– Must be in the CEC Approved Batteries list – Usable capacity no greater than six times the inverter output – Able to connect to a Virtual Power Plant (VPP) |
| Installer |
– Must hold SAA accreditation for Grid-Connected Battery Storage ‘Design and Install’, or ‘Install Only’ – Must hold the appropriate licences and be in compliance with the relevant standards and legislation |
| Installation eligibility | Outdoors only (underground carparks not eligible) |
| Add/expand solar to receive higher incentives |
– Only available if no other NSW Government funding paid for the new or expanded solar – Solar size must be at least a quarter of the battery’s usable capacity – New or expanded solar installed within 90 days of the battery (before or after) |
| Minimum co-contribution | $1,000 per unit, ex GST |
| Applies to | Small and medium businesses |
| Site type | Any business, not a residential building or data centre |
| Site history | Must not have claimed BESS4 or BESS5 before |
| Battery usable capacity | 20 kWh to 200 kWh |
| Eligible battery capacity | Usable capacity |
| Battery eligibility |
– Must be in the CEC Approved Batteries list – Usable capacity no greater than six times the inverter output, which is a maximum of six hours of storage – Able to connect to a Virtual Power Plant (VPP) |
| Installer |
– Must hold SAA accreditation for Grid-Connected Battery Storage ‘Design and Install’, or ‘Install Only’ – Must hold the appropriate licences and be in compliance with the relevant standards and legislation |
| Add/expand solar to receive higher incentives |
– Solar size must be at least a quarter of the battery’s usable capacity – New or expanded solar installed within 90 days of the battery (before or after) |
| Minimum co-contribution | $5,000 per unit, ex GST |
| Applies to | Commercial and industrial |
| Site type | Any business, not a residential building or data centre |
| Site history | Must not have claimed BESS4 or BESS5 before |
| Battery usable capacity | 200 kWh to 30 MWh |
| Eligible battery capacity | The first 10 MWh |
| Battery eligibility |
– Must be tested to UL9540A – Usable capacity no greater than six times the inverter output, which is a maximum of six hours of storage – Able to connect to a Virtual Power Plant (VPP) |
| Installer | Must hold the appropriate licences and be in compliance with the relevant standards and legislation |
| Add/expand solar to receive higher incentives |
– Solar size must be at least a quarter of the battery’s usable capacity – New or expanded solar installed within 90 days of the battery (before or after) |
| Minimum co-contribution | N/A |
All capacities refer to usable capacity, which the scheme calculates as 90% of nominal capacity.
Get a complimentary site assessment to see the incentive figures your site can claim.
Frequently Asked Questions
How is this different from BESS1 and BESS2?
BESS1 and BESS2 are the scheme’s existing battery activities targeting smaller sites.
- BESS1 covers installing a new battery at a home or small business site, up to 28 kWh, and requires solar at the same meter.
- BESS2 covers connecting an existing battery to a virtual power plant under a 12-month contract, and doesn’t apply to apartment buildings.
These three new activities are larger, open to site types the scheme didn’t previously reach, and don’t require solar or a VPP contract.
How is the PDRS incentive amount worked out?
There are two factors that set the certificate value:
1. How much peak demand the battery can shift, because that’s what the scheme is built for. A bigger battery, paired with an inverter that can move that energy fast enough, shifts more demand and earns more certificates.
2. What a certificate is worth when it’s sold. NSW law requires electricity retailers to buy a set number of certificates every year, and that obligation is what gives a certificate its price. That certificate price moves with the market, so the same battery installed at a different time can earn a different amount.
Is there a minimum the site has to pay?
For BESS3 the site contributes at least $1,000, and for BESS4 at least $5,000, excluding GST, for each battery unit. BESS5 has no minimum co-payment requirement.
Do we need to install solar to qualify?
No. A battery on its own is eligible under all three activities. But new or expanded solar installed within 90 days of the battery (before or after) earns a higher rate of incentives.
Note that the new solar has to be at least a quarter of the battery’s usable capacity. For example, a 100 kWh battery needs at least 25 kW of new solar to be eligible for the higher incentive rate.
Do we need to join a VPP?
No. The requirement is that the battery has the capability to connect to a VPP, so a site can elect to join one later.
Can a site claim more than once?
No. A site can claim under BESS4 or BESS5 once, and a subsequent expansion cannot claim again.
Can we claim the federal battery discount as well?
The federal Cheaper Home Batteries Program covers batteries up to 100 kWh, so a BESS5 battery sits well beyond it. But BESS3 and BESS4 can be stacked with the federal program where the battery is under 100 kWh and connected to new or existing solar.
Can this be combined with the federal solar STCs?
What about Flexible Trading Arrangements (FTA) from 1 November?
The NSW scheme rewards the installation, with all fifteen years of certificates created once the battery is connected, approved and operational on the network.
Flexible Trading Arrangements govern how the battery is metered and which retailer it trades with across its operating life. A battery connected and approved prior to FTA commencement on 1 November 2026 should be able to benefit from the new rule.