PDRS Rule Changes for New Battery Incentives

As we fast approach the introduction of the NSW battery activities, BESS1 and BESS2, this afternoon, 6 September, saw a timely update from the Department of Climate Change, Energy, Environment and Water (DCCEEW) as a result of prior industry consultation held earlier in the year.

The following outlines those policies which will not see changes and a summary of key confirmations for each activity.

Unchanged Policy.

• • The commencement of BESS1 & BESS2 will remain 1 November
  • The useable capacity will remain at 2-28kWh
  • It remains only available to households and small businesses with no existing battery – this will be evaluated in future rule changes
  • Battery operating temperature set out in the warranty must be between -10°C to +50°C
  • Warranties will need to cover the system for 10 years and guarantee that 70% of the usable capacity will remain at the end of this period

BESS1: Behind-the-Meter Battery Installation.

Multiple batteries

• • Installing multiple batteries together as a system can be eligible for BESS1

Warranted Energy Throughput

• • For installations before 1 April 2026: 2.8 MWh per kWh of usable battery capacity.
  • For installations after 1 April 2026: 3.65 MWh per kWh of usable battery capacity.

Performance Warranties

• • 10-year coverage with a guarantee of at least 70% usable capacity remaining after this period.
  • This warranty aligns with typical lithium iron phosphate battery degradation rates and aims to protect consumers over a battery’s expected 15-year lifespan.
  • For hybrid systems (batteries with inverters), the warranty covers both the battery and inverter components, ensuring investment security and reliable performance in reducing demand.

BESS2: Demand Response Contract Participation.

Multiple batteries

• • Installing multiple batteries together as a system can be eligible for BESS2

Warranty Requirements for VPP Participation:

• • BESS2 mirrors BESS1 for energy throughput and capacity retention, with the same transitional warranty thresholds based on the installation date (2.8 MWh/kWh before April 2026, 3.65 MWh/kWh after).
  • Manufacturers must offer at least a 10-year warranty that guarantees 70% capacity, with coverage for ambient temperatures between -10°C and 50°C.
  • This rule ensures that batteries used in VPPs are fully covered, promoting long-term asset use and faster payback periods for high-cost equipment.

Transition to Higher Warranty Standards.

Cumulative Energy Throughput

• • By setting the 3.65 MWh/kWh requirement for post-April 2026 installations, the ESS is signaling the industry to transition toward higher standards. This level of performance already exists with some leading manufacturers, providing confidence in future market reliability.

The intention is to allow gradual adoption of these higher warranty thresholds, encouraging consumers to feel secure whether their battery system is used in a VPP or not.

The new Peak Demand Reduction Scheme (Amendment No. 2) Rule 2024 is effective from 13 September 2024 with battery activities commencing on 1 November 2024 and replaces all previous versions of the Rule.

Get in touch with our team of certificate specialists to find out how you can get involved in the upcoming NSW Battery Incentives generating PRCs.

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