Peak Demand Reduction Scheme (PDRS)

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.