Home Battery & VPP Incentives NSW: What BESS1 and BESS2 Mean for Residential Battery Installers

The NSW home battery incentive landscape changed on 1 July 2026: BESS2, the battery VPP incentive, was significantly eased, and BESS1 has been selectively reintroduced for government and social housing program

For residential battery installers with customers already on a battery, or quoting one now, this is the first update to home battery rebates and VPP incentives in NSW since CHBP launched last year.

If you're onboarding a battery to a VPP under BESS2, or working on a government or social housing job that could fall under BESS1, here's what changed and what to check before you quote.

What Changed from 1 July 2026

BESS2 – VPP Onboarding BESS1 – Government & Targeted Programs
Name of Activity Onboarding a Battery Energy Storage System to a Virtual Power Plant Install a New Behind the Meter Battery Energy Storage System (government and targeted programs)
Eligibility Requirements
  1. Site must be residential or a small business.
  2. Battery must be contracted to an approved Demand Response Aggregator / VPP.
  1. Site must be a NSW State or Local Government facility, or delivered under a Minister-approved Exempt Energy Program (renters, public and Aboriginal Housing Office housing, EAPA recipients, or homes in a Renewable Energy Zone).
  2. Suspended for standard residential and small business installs since 1 July 2025.
Equipment Requirements
  1. Battery must be on the Clean Energy Council approved list at the time of VPP onboarding.
  2. Usable capacity between 2kWh and under 50kWh (usable capacity now standardised at 90% of nominal capacity).
  3. Incentive calculated on a maximum of 28kWh regardless of system size.
  4. Solar PV not required.
  5. Warranted energy throughput requirement remains 2.8 MWh/kWh.
  1. Battery must be on the CEC approved list.
  2. Usable capacity up to 28kWh.
Implementation Requirements Customer nomination forms can be signed up to 90 days after the VPP onboarding date. AEMO battery registration requirement has been removed.
Minimum co-payment None None
Incentive stacking Stacks with CHBP-discounted batteries and STCs Fully stackable with STCs and CHBP, for eligible government facilities

Usable Battery Capacity is now defined consistently across all battery activities as 90% of nominal capacity. If you're working from older product specs, check the CEC listing reflects the current figure before you quote.

Are you eligible for Battery Incentives?

Are you eligible for battery incentives?

Tell us if you're checking residential or commercial jobs, then answer a few quick questions to see what applies and get a checklist for each result.

1. What are you checking eligibility for?
2. What types of commercial sites do you install at? (select all that apply)
3. What combined usable battery capacities do you typically install? (select all that apply)
4. For your 20–200kWh business installs, do any of these sites include data centres?
2. Is the job part of a Minister-approved government housing program? Renters, public/AHO housing, EAPA recipients, or a home in a Renewable Energy Zone.
3. Will the customer be signing up to a VPP?
Or read the full eligibility criteria as text

BESS1 — Government housing program batteries: Reintroduced for Minister-approved programs only: renters, public and Aboriginal Housing Office (AHO) housing, Energy Account Payment Assistance (EAPA) recipients, and homes in Renewable Energy Zones. Stackable with STCs.

BESS2 — VPP battery certificates: For battery installs paired with a VPP sign-up. Eligible battery size 2–50kWh, incentive capped at 28kWh. Solar PV not required. Usable capacity counted as 90% of nominal capacity. Nomination forms can be signed within 90 days of onboarding.

BESS3 — Apartment buildings (Class 2, 4+ dwellings): 20–200kWh combined usable capacity. Solar PV not required. Stackable with the Cheaper Home Batteries Program up to 100kWh. Minimum co-payment $1,000 per implementation. Installer must be SAA-listed; standard planning and network approvals apply.

BESS4 — Small and medium business batteries: 20–200kWh combined usable capacity, excluding residential buildings and data centres. Solar PV mandatory at a 1:4 ratio to battery capacity. Minimum co-payment $5,000 per implementation. CDC or DA approval required. Installer must be SAA-listed.

BESS5 — Commercial and industrial batteries: 200kWh+ combined usable capacity. Solar PV mandatory at a 1:4 ratio to battery capacity. DA approval required. Minimum co-payment is currently under consultation. Installer must be SAA-listed.

This tool gives a general guide based on published PDRS criteria and is not a formal eligibility determination. BESS1 eligibility is strictly program-gated, so confirm enrolment status and final eligibility with NCBA before quoting.

BESS1: A Narrower Battery Incentive for Government and Social Housing

BESS1's original residential rebate was discontinued when the federal Cheaper Home Batteries Program launched on 1 July 2025. It hasn't come back for standard jobs. What has come back is a targeted version for government facilities and Minister-approved Exempt Energy Programs, covering renters, public and Aboriginal Housing Office housing, EAPA recipients, and homes in Renewable Energy Zones.

For eligible sites, the requirement to register batteries with AEMO has been dropped, and BESS1 now stacks fully with STCs and CHBP where the site is a government facility. If most of your work is standard residential installs, BESS2 is the activity to focus on. If you're delivering under one of these programs, BESS1 is worth checking against ever

BESS2: The NSW Home Battery VPP Incentive

If your customer already has a home battery, or you're about to install one, BESS2 is the most direct home battery incentive to keep earning from it in NSW. The solar PV requirement has been removed entirely, so a battery-only system can now qualify for this VPP incentive. The eligible size band has widened to 50kWh, though certificates are still calculated on a maximum of 28kWh, so oversizing past that point won't add incentive value.

Customers now have up to 90 days after onboarding to sign nomination forms, giving more room to get the paperwork right without losing eligibility. Gross incentives of roughly $1,000 to $1,500 are being seen in the market, depending on battery size and model.

The battery needs to be on the CEC approved product list at the time of onboarding, so it's worth checking current listings before you commit a customer to a VPP contract. Delistings do happen.

Planning Commercial Residential installations that will fall under BESS1 or BESS2?

Call us on (02) 9939 5559 or register your interest below and NCBA will be in touch to help you plan eligible projects ahead of the 1 September 2026 start date

Why Work With Us

Two activities, two different eligibility gates, and a co-payment structure that keeps shifting with every Rule update.

Getting it wrong after the install is expensive.

Our experience facilitating incentives in NSW means:

  • Eligibility checked against the current PDRS Rule before you commit to a job, not after

  • Certificate administration handled at scale, from onboarding through to trading

  • A team who knows the difference between what BESS1 covers now and what it used to cover

If you're quoting residential or VPP battery jobs, talk to NCBA before you commit the customer.

Fast Payments. Zero Delays

We’re here to keep your cashflow ticking over. We pay you fast and on time, so you can grab the gear you need and keep smashing out installs without missing a beat.

Adaptable and Flexible

When we say bespoke service, we mean it. We work with you to adapt the systems you already have in place.

No Headaches or surprises

We know the Scheme requirements, eligibility and changes, so you don’t have too. Our team, and your dedicated account manager work to protect you so you get no unpleasant surprises.

Frequently Asked Questions

Have a broader question about how the scheme works? See our full NSW Peak Demand Reduction Scheme FAQ.

  • BESS1 was suspended for standard residential and small business installs from 1 July 2025, when CHBP launched. It has been selectively reintroduced for NSW Government facilities and Minister-approved Exempt Energy Programs only, including public and AHO housing, EAPA recipients, and Renewable Energy Zone homes.

  • BESS2 is the activity for onboarding a residential or small business battery to a Virtual Power Plant. From 1 July 2026, solar PV is no longer required, eligible battery sizes run from 2kWh to 50kWh, and incentives are calculated on up to 28kWh of usable capacity.

  • Yes. BESS2 applies to existing batteries being onboarded to a VPP, not just new installs, provided the battery is on the CEC approved product list at the time of onboarding.

  • Batteries must be on the Clean Energy Council approved product list for both activities. There's no SAA installer accreditation requirement under BESS1 or BESS2, unlike the new commercial activities BESS3, BESS4 and BESS5.

  • The updated PDRS Rule commenced 1 July 2026.

For more information: NSW PDRS Rule and changes

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