Executive summary of update

This update introduces significant changes to NSW's energy schemes, primarily by creating new compliance exemptions for energy storage and recalibrating future targets. A new exemption for "scheduled bidirectional units" (e.g., large-scale batteries) reduces compliance obligations under the Energy Savings Scheme (ESS) and Peak Demand Reduction Scheme (PDRS). The update also drastically reduces the PDRS target for 2026-2027 from 7.5% to 0.5%. Furthermore, it effectively defers the start of the Renewable Fuel Scheme by removing targets for 2024-2026 and significantly lowering the initial 2027 target. Finally, it amends the formulas for calculating ESS penalties and certificate fees, moving to a fixed base-year calculation. The primary intent is to support energy storage technologies and adjust the ambition of demand reduction and green hydrogen schemes.

Impacted parties

This update most significantly impacts scheme participants in the Energy Savings, Peak Demand Reduction, and Renewable Fuel schemes, particularly operators of energy storage assets and prospective green hydrogen producers.

Change Analysis

1. New Compliance Exemptions for Energy Storage

• What has changed**: A new definition for scheduled bidirectional unit has been added in Clause 3. New clauses 29AAA and **59D have been inserted, which state that electricity purchased for use by these units is not considered a "liable acquisition". This means such electricity purchases are now excluded from the calculation of a scheme participant's compliance obligations under the Energy Savings Scheme (ESS) and the Peak Demand Reduction Scheme (PDRS).
• Why it matters: This change creates a significant financial benefit for operators of large-scale energy storage systems, such as grid-scale batteries....