From 1 September 2026, eligible apartment buildings, businesses, and industrial facilities may receive financial incentives to install battery energy storage systems through the NSW Peak Demand Reduction Scheme (PDRS).
The new BESS3, BESS4, and BESS5 activities are designed to encourage battery adoption, improve grid reliability, reduce peak electricity demand, and help organisations maximise the value of renewable energy.
Whether you’re managing an apartment complex, operating a small business, running a commercial or industrial facility, or installing battery systems, Energy Matters can help you understand the program, assess eligibility, and connect you with experienced installation partners.
Get FREE Quotes for commercial battery storage
Complete the form to receive up to 3 no-obligation quotes from local installers.
Quick summary
| Topic | Summary |
|---|---|
| Program starts | 1 September 2026 |
| Scheme | NSW Peak Demand Reduction Scheme (PDRS) |
| Activities | BESS3, BESS4 and BESS5 |
| BESS3 | Apartment buildings with four or more dwellings |
| BESS4 | Small and medium businesses |
| BESS5 | Commercial and industrial battery systems |
| Solar required | No. However, eligible solar PV installations may increase incentive values |
| Battery size | 20 kWh to 30 MWh, depending on the activity |
| Delivered through | Accredited Certificate Providers (ACPs) |
Understanding the expansion of the Peak Demand Reduction Scheme
The NSW Government is expanding the Peak Demand Reduction Scheme (PDRS) with three new battery activities, commencing on 1 September 2026. These activities support the installation of battery energy storage systems across apartment buildings, small and medium businesses, and larger commercial and industrial facilities.
By encouraging more organisations to install battery storage, the NSW Government aims to reduce peak electricity demand, improve energy reliability, support greater use of renewable energy, and help businesses and communities lower their energy costs.
Unlike traditional grants, these incentives are delivered through the creation of Peak Reduction Certificates (PRCs) under the PDRS. The value of the financial incentive varies depending on the project, battery size, and certificate market conditions.
Which battery incentive is right for you?
The new program includes two separate activities, each designed for different types of properties.
| Activity | Designed for | Eligible battery size |
|---|---|---|
| BESS3 | Apartment buildings with four or more dwellings | 20 kWh to 200 kWh |
| BESS4 | Small and medium businesses | Greater than 20 kWh up to 200 kWh |
| BESS5 | Commercial and industrial businesses | Greater than 200 kWh up to 30 MWh |
BESS3 apartment battery incentive
BESS3 has been created specifically for residential apartment buildings containing four or more dwellings. The activity supports shared battery systems that help improve energy efficiency and reduce electricity costs across multi-residential developments.
BESS3 eligibility requirements
| Requirement | Details |
|---|---|
| Building type | Apartment buildings with four or more dwellings |
| Battery size | 20 kWh to 200 kWh |
| Minimum battery allocation | At least 5 kWh per dwelling |
| Existing battery | No existing battery connected to the NMI |
| Installation location | Battery must be installed outdoors |
| Minimum financial incentive | $1,000 |
| Solar | Projects installed with new solar PV may qualify for higher incentives |
How battery capacity is assessed
For incentive calculations, the eligible battery capacity is the lowest of:
- The usable battery capacity
- Five kilowatt hours multiplied by the number of dwellings
- Four hours multiplied by the battery inverter output
This ensures incentives are based on the practical operating capacity of the system rather than simply the battery’s advertised storage capacity.
BESS4 small and medium business battery incentive
BESS4 has been introduced to help eligible small and medium businesses invest in battery energy storage. By reducing the upfront cost of battery installations, the activity aims to help businesses lower electricity costs, improve energy resilience, and maximise the value of onsite solar generation.
Battery storage can be particularly valuable for businesses with high daytime electricity consumption or significant rooftop solar generation, allowing excess solar energy to be stored and used when electricity prices are higher.
Suitable businesses may include:
- Retail stores
- Cafés and restaurants
- Medical clinics
- Small offices
- Workshops
- Service businesses
- Community organisations
- Childcare centres
- Small warehouses
BESS4 eligibility requirements
| Requirement | Details |
|---|---|
| Eligible properties | Small and medium businesses |
| Battery size | Greater than 20 kWh up to 200 kWh |
| Existing battery | Eligibility requirements apply under the PDRS |
| Solar | Eligible new solar PV may increase the available incentive |
| Delivered through | Accredited Certificate Providers (ACPs) |
BESS5 commercial and industrial battery incentive
BESS5 supports larger battery installations for commercial and industrial businesses requiring battery capacities greater than 200 kWh. The activity is designed for organisations with higher electricity demand that are looking to reduce peak demand, improve energy resilience, and increase the value of onsite renewable energy generation.
Suitable projects may include:
- Warehouses
- Manufacturing facilities
- Shopping centres
- Office buildings
- Schools
- Universities
- Hospitals
- Agricultural operations
- Local government facilities
BESS5 eligibility requirements
| Requirement | Details |
|---|---|
| Battery size | 200 kWh to 30 MWh |
| Eligible properties | Commercial and industrial sites only |
| Residential properties | Not eligible |
| Previous participation | Projects must satisfy all eligibility requirements contained within the Peak Demand Reduction Scheme Rule. |
| Incentive cap | Maximum of 10 MWh eligible capacity |
| Solar | New solar PV installations may qualify for higher incentives |
Installing solar at the same time
Projects that combine eligible new solar PV with battery storage under BESS3, BESS4 or BESS5 may receive higher financial incentives than battery-only installations.
To qualify, the battery installation must generally occur within 90 days before or after the installation of the new solar PV system, while meeting all other program requirements.
Combining solar and battery storage also enables businesses to increase self-consumption, reduce electricity purchased from the grid, and improve long-term energy savings.
How are battery incentives calculated?
Every battery project is different, so there is no fixed financial incentive under BESS3, BESS4 or BESS5.
The final financial incentive depends on several factors, including:
- Eligible battery capacity
- Battery inverter output
- Whether new solar PV is installed
- Peak Reduction Certificate values
- Project location
- Scheme requirements under the PDRS
Because certificate values fluctuate, the final incentive can vary over time.
Estimate your potential battery incentive
Understanding how much financial incentive your project may be eligible to receive is an important first step when planning a battery installation.
Because incentives under the NSW Peak Demand Reduction Scheme are delivered through Peak Reduction Certificates (PRCs), the final value can vary depending on factors such as battery capacity, project design, certificate market prices, and whether eligible solar PV is installed as part of the project.
To helpapartment owners, small businesses, commercial organisations and installers better understand the potential value of a project, the NSW Government provides an online Certificate Estimator.
Please note: The Certificate Estimator provides an indicative estimate only. Actual incentive values may differ following a full project assessment and confirmation of eligibility.
Information for installers
The introduction of BESS3, BESS4, and BESS5 creates new opportunities for accredited solar and battery installers to expand into apartment, commercial, and industrial battery projects across New South Wales.
Whether you’re already delivering commercial battery installations or looking to enter this growing market, understanding the Peak Demand Reduction Scheme (PDRS) requirements is essential. Working with an Accredited Certificate Provider (ACP) can help eligible projects access financial incentives while ensuring compliance with scheme requirements.
Energy Matters welcomes enquiries from experienced installation partners interested in supporting commercial battery projects throughout metropolitan and regional NSW.
What installers need to know
Successful BESS3 and BESS5 projects involve more than simply installing a battery. Installers should ensure they understand the technical, administrative, and compliance requirements before commencing any eligible project.
Key considerations include:
- Meeting all licensing and accreditation requirements.
- Using battery systems that meet the scheme’s technical requirements.
- Confirming project eligibility before installation.
- Completing all required documentation and commissioning records.
- Working with an Accredited Certificate Provider (ACP) to facilitate certificate creation.
- Obtaining any required network approvals before installation.
- Meeting all applicable electrical safety standards and Australian Standards.
Opportunities for installers
The introduction of BESS3, BESS4 and BESS5 is expected to increase demand for battery installations across a broader range of properties throughout New South Wales.
From shared apartment battery systems through to small business and large commercial installations, installers have an opportunity to expand their services into one of Australia’s fastest-growing energy sectors.
The NSW Government’s Safeguard Acceleration Program has been established to help installers connect with Accredited Certificate Providers (ACPs) and participate in the delivery of eligible battery projects.
Finding an Accredited Certificate Provider (ACP)
Financial incentives under the Peak Demand Reduction Scheme are delivered through Accredited Certificate Providers (ACPs). These organisations are responsible for creating Peak Reduction Certificates (PRCs) and administering projects that meet the scheme’s eligibility requirements.
If you’re an installer looking to participate in BESS3 or BESS5, the NSW Government’s Safeguard Acceleration Program can help connect you with participating ACPs and provide information about entering the program.
Frequently asked questions
The new BESS3, BESS4, and BESS5 activities commence on 1 September 2026 under the NSW Peak Demand Reduction Scheme.
BESS3 supports apartment buildings with four or more dwellings. BESS4 supports eligible small and medium businesses installing battery systems between greater than 20 kWh and 200 kWh. BESS5 supports larger commercial and industrial battery systems between greater than 200 kWh and 30 MWh.
No. Battery-only projects may still be eligible. However, eligible projects installed with new solar PV may receive higher financial incentives.
Eligibility depends on the battery activity and the specific requirements of the NSW Peak Demand Reduction Scheme. For example, BESS3 requires there to be no existing battery connected to the National Metering Identifier (NMI). BESS4 and BESS5 also include eligibility requirements relating to existing battery systems and previous participation in the scheme. Energy Matters can help determine whether your project meets the applicable criteria.
There is no fixed incentive amount. The value depends on the eligible battery capacity, project design, certificate values, and applicable PDRS requirements.
Yes. Apartment buildings with four or more dwellings may qualify under BESS3, provided they meet the program’s eligibility requirements.
Yes. Depending on the size of the proposed battery system and the project’s eligibility, organisations such as schools, local councils, agricultural businesses, universities, healthcare facilities, and other commercial or community organisations may qualify under either BESS4 or BESS5. Eligibility will depend on the battery capacity and the requirements of the Peak Demand Reduction Scheme.
Most commercial battery projects require network approvals, and some larger installations may also require planning approvals depending on the site and local council requirements.
The battery system must meet the technical requirements of the Peak Demand Reduction Scheme and use eligible equipment installed by appropriately qualified professionals.
BESS4 supports eligible small and medium businesses looking to install battery energy storage systems. It bridges the gap between apartment battery projects under BESS3 and larger commercial or industrial battery installations under BESS5.
If your business operates in New South Wales and your proposed battery system falls within the eligible capacity range and satisfies the scheme requirements, it may be eligible for a financial incentive under BESS4.
The appropriate battery activity depends on your property type and the size of the battery system being installed.
- BESS3 supports apartment buildings with four or more dwellings and battery systems between 20 kWh and 200 kWh.
- BESS4 supports eligible small and medium businesses installing battery systems greater than 20 kWh and up to 200 kWh.
- BESS5 supports commercial and industrial battery systems greater than 200 kWh and up to 30 MWh.
If you’re unsure which activity applies to your project, the Energy Matters team can help assess your eligibility and recommend the most appropriate pathway.