How does the NSW commercial battery rebate work? A guide to new PDRS incentives

Australia has installed batteries at pace since the launch of the Cheaper Home Batteries incentive in July last year, adding nearly half a million new systems in just 12 months. 

Now, it’s business time. From 1 September 2026, eligible businesses in New South Wales will be able to access discounts on their batteries, as the NSW Government expands the Peak Demand Reduction Scheme (PDRS) to include commercial-scale batteries for the first time. 

Delivered under the Energy Security Safeguard, the new incentives create a pathway for eligible businesses to reduce the upfront cost of battery storage, while supporting the NSW grid by easing pressure during peak demand periods. 

For businesses considering backup generation or electricity storage, this is one of the most significant policy changes affecting commercial battery economics in NSW in recent years. Based on current certificate prices and project configuration, the incentive may reduce the upfront cost of an eligible battery project by around 20-50%. 

What is the NSW business battery rebate? 

While this is widely described as a business battery rebate, it’s not a separate fixed-payment rebate program. Instead, eligible projects generate Peak Reduction Certificates (PRCs) which have a market value and provide an upfront financial incentive.  

At the time of writing, the PRC value is $3, however certificate prices fluctuate with market conditions and are not guaranteed. 

The total incentive available depends on several factors, including: 

• battery capacity; 

• inverter size; 

• whether new solar is installed alongside the battery; 

• the market value of PRCs at the time; and 

• the final system configuration. 

Unlike earlier battery incentives that focused primarily on households, this scheme is designed to encourage businesses to reduce electricity demand when the grid is under the greatest pressure during periods of peak demand, helping stabilise the power system for all users in NSW. 

How the scheme works 

From 1 September 2026, eligible businesses in NSW can access PRCs for battery installations between 20 kWh and 30 MWh through two new activities: 

• BESS4 for battery systems with usable capacity greater than 20 kWh and up to 200 kWh; and 

• BESS5 for battery systems with usable capacity greater than 200 kWh and up to 30 MWh. 

Under the scheme, usable battery capacity is the measure that matters. It’s calculated as 90% of nominal battery capacity. 

Projects that include new solar PV alongside a battery may receive a higher incentive, although the PDRS does not directly provide incentives for the solar PV system.  

Why has NSW introduced this incentive? 

Commercial businesses use electricity differently to households, with many sites operating heavily during the day, experiencing large spikes in electricity usage and often facing large demand charges.  

Many of these users may also be exposed to wholesale electricity pricing or have existing rooftop solar. 

Battery storage can help businesses respond to these conditions by: 

• reducing peak demand charges; 

• storing excess solar energy for later use; 

• shifting consumption away from high price periods; 

• improving backup capability and resilience; and 

• supporting participation in future demand response and energy market opportunities. 

Although many businesses have long been aware of the benefits battery storage could provide, the upfront cost has presented a barrier blocking viable projects from proceeding. The new PDRS activities are intended to bridge that gap, as the NSW Government steps in to support eligible businesses.

Who is eligible? 

The key eligibility criteria for both activities include: 

• the site must be located in NSW; 

• the site cannot be a residential building; 

• the site must not be a data centre; 

• the site will not be eligible if it has previously received a BESS4 or BESS5 incentive; 

• any required planning approval must be obtained;  

• installation must occur on or after 1 September 2026. 

About the new activities: BESS4 & BESS5 

BESS4: small and medium business sites (20 kWh-200 kWh) 
To qualify under BESS4, the project must meet the following requirements: 

• usable battery capacity must be greater than 20 kWh and no more than 200 kWh; 

• the battery and inverters must be approved and listed with the Clean Energy Council (CEC); 

• battery duration must not exceed 6 hours; 

• installation must be carried out by an installer accredited with Solar Accreditation Australia (SAA); 

• installation must comply with AS/NZS 5139; 

• where new solar is installed, the solar (kW) to battery (kWh) ratio must be more than 1:4; and 
  
• BESS4 incentives can be stacked with the federal Cheaper Home Batteries program for eligible systems up to 100 kWh. 

BESS5: commercial, industrial and community batteries (200 kWh-30 MWh) 
For larger systems under BESS5, the requirements include: 

• usable battery capacity must be greater than 200 kWh and no more than 30 MWh; 

• the battery must pass UL9540A testing; 

• battery duration must not exceed 6  hours; and 

• where new solar is installed, the solar (kW) to battery (kWh) ratio must be more than 1:4. 

BESS5 supports much larger systems, including major commercial and industrial projects. However, certificate creation is capped, which means the full system size many may not always translate into additional incentive value. 

Do you need solar to qualify? 

Solar is not mandatory – battery only projects can still qualify under the scheme, which is good news for businesses that: 

• already have rooftop solar installed; 

• have limited roof space for additional solar; 

• are focused on reducing demand charges; 

• want to capture arbitrage value; and 

• need backup capability or improved resilience. 

However, businesses that install new solar alongside a new battery may receive a higher level of incentive. If a solar upgrade is already under consideration, combining the two may improve the economics of the project. 

Can businesses stack incentives? 

In some cases, yes. 

Battery systems under 100 kWh that qualify under BESS4 may also be eligible for the Federal Government’s Cheaper Home Batteries Program, subject to the final system design and program rules.  

This could create an opportunity for some smaller business projects to further reduce upfront cost. 

At this stage, BESS5 should not be assumed to have the same federal stacking pathway. 

How much is the incentive worth? 

There’s no fixed rebate amount. 

The value depends on battery size, inverter capacity and the configuration of your system, plus the PRC price at the time. 

The NSW Government has published a methodology for calculating certificate creation, but the final incentive value will vary by project. It’s best to validate any estimate with an experienced installer or project advisor. 

What influences the value of the incentive? 

Battery size, inverter size and project design are key factors in calculating the value of the incentive. 

The current published guidelines indicate that: 

• a higher incentive applies where new solar PV is installed with the battery; 

• usable battery capacity is calculated as 90% of nominal battery capacity; 

• certificates are capped at 4 hours multiplied by battery inverter capacity; 

• BESS5 incentives are effectively limited to the first 10 MWh of eligible capacity; 

• PDRS does not directly incentivise the solar PV component. 

Is a commercial battery right for your business? 

Eligibility is just the starting point. A strong battery business case depends on your: 

• load profile; 

• solar generation profile; 

• tariff structure; 

• demand charge exposure; 

• operational constraints; 

• backup requirements; 

• market participation opportunity; and 

• project capital cost. 

That analysis will help determine: 

• whether a battery is commercially viable; 

• what battery size is likely to be the best fit; 

• how the incentive changes project payback; 

• whether solar and storage should be assessed together. 

Questions about batteries for your business? 

Speak to our specialist team to learn more.