Last updated: 8 September 2026 · Written by Alex Arnautovic, Solar Accreditation Australia Designer and Installer · NSW Electrical Contractor Licence 202500C
From 1 September 2026, an apartment building in NSW with four or more dwellings can claim a rebate on a shared battery installed on common property. The incentive is called BESS3 and it sits inside the NSW Peak Demand Reduction Scheme. It is the first NSW battery incentive that apartment buildings can actually use.
The PDRS is administered by IPART, the state’s independent pricing and regulatory tribunal, and it pays for cutting electricity demand at peak times. That is why an eligible battery has to be controllable remotely: the value to the grid is in what the building does not draw between 2.30pm and 8.30pm on the hottest days of the year.
No cheque arrives from the government. Your installation creates Peak Reduction Certificates, which are tradeable, and certificates for batteries can only be created by an Accredited Certificate Provider, who sells them into the certificate market across the battery’s 15-year deemed life.
What the building sees is an upfront discount, taken off the installer’s quote before the owners corporation pays anything. NSW puts it at about 30 to 40 per cent of the cost of installing a battery and solar together, and about 20 to 30 per cent for a battery on its own. The figures vary with the installer, the battery model and how awkward the site is to work on, so two quotes on the same building can differ by thousands. NSW addresses the discount to apartment owners, renters and strata managers alike, but only the owners corporation can commit to it, and residents see it in common-property costs rather than on their own bills.
The count is fixed at installation, from the design of the system rather than from how the battery later performs — so the value is known before the owners vote on it. Five separate incentives get called “the battery rebate” in conversation. Only one of them fits an apartment building’s common property.
| Incentive | Who it is for | Size range |
|---|---|---|
| BESS3 | Apartment buildings, Class 2, four or more dwellings | 20 to 200 kWh usable |
| BESS2 | A house or small business joining a virtual power plant | Up to 50 kWh, counted to 28 |
| BESS4 | Small and medium business sites | 20 to 200 kWh usable |
| BESS5 | Commercial and industrial sites | 200 kWh to 30 MWh |
| Cheaper Home Batteries | Federal, stacks on top of the above | 5 to 100 kWh nominal |
A battery inside your own flat is a different project under different rules, and a thinner one than most people expect. BESS1, the old NSW rebate for installing a battery, has been suspended since 1 July 2025, and the 2026 rule lifts that suspension only for government-owned sites and a handful of approved programs. BESS2 counts only Class 1 houses and small business sites. So an individual flat is left with the federal discount alone. Our NSW battery rebate page covers the house and single-meter case. For a business, or a mixed-use building with shops at ground level, BESS4 and BESS5 apply instead: BESS4 covers small and medium business sites, BESS5 larger commercial and industrial projects. Our commercial solar page is the better start for either business case.
To be eligible, four conditions set out in the Peak Demand Reduction Scheme (Amendment No. 2) Rule 2026 need to be met:
Class 2 is the National Construction Code classification for a building containing two or more sole-occupancy units, each of which must be a separate dwelling. In practice that covers the ordinary walk-up block and the apartment tower, and it is the classification most Sydney strata schemes sit in.
It does not cover everything that looks like apartments. Mixed-use buildings with retail below are often classified differently, and townhouses and villas are excluded on purpose — the government’s position is that those owners can already act individually. Check the classification on the occupation certificate before anyone starts costing a system, because it is the one condition that cannot be designed around.
The equipment has to qualify too. The battery must be on the approved product list, hold between 20 kWh and 200 kWh of usable capacity, be controllable by a Demand Response Aggregator over the internet, and carry a ten-year warranty guaranteeing 70 per cent of that capacity at year ten. Usable capacity is not the number on the brochure: it runs at about 90 per cent of nominal, so a battery sold as 55 kWh counts as roughly 50 kWh.
The size of the payment tracks the number of dwellings, not the size of the battery. These figures assume an Ausgrid connection and a battery large enough to reach the cap.
| Dwellings | Capacity counted | With new solar | Battery only |
|---|---|---|---|
| 4 | 20 kWh | ~$7,000 | ~$4,900 |
| 8 | 40 kWh | ~$13,900 | ~$9,900 |
| 12 | 60 kWh | ~$20,900 | ~$14,800 |
| 20 | 100 kWh | ~$34,800 | ~$24,800 |
| 30 | 150 kWh | ~$52,200 | ~$37,100 |
| 40 or more | 200 kWh | ~$69,600 | ~$49,500 |
Installing the battery alongside new solar is worth almost exactly 41 per cent more — or, read from the other end, going ahead without new solar costs about 29 per cent of it. Either way it is worth building the project around rather than treating as a bonus.
There is no upper limit on how many dwellings a building can have, but past 40 the figures stop climbing, because the scheme’s 200 kWh ceiling binds before the dwelling count does.
Treat these as indicative, not as a quote. Certificates are traded, so the value moves. Every figure on this page is worked at $3.10 a certificate — the lower forward price for the period when the first BESS3 systems go in, not the spot price, which held at $3.35 through early September 2026. We would rather a building be pleasantly surprised than come up short against its own budget. The market can move sharply: in November 2025 the price fell from $2.86 to about $2.60 in a day when the government cut the scheme target. Ask for the certificate value as a line item in every quote, with the price it assumes stated next to it. Your network shifts the figure slightly too — Ausgrid 1.04, Endeavour and Essential 1.05 — so a building outside Ausgrid collects about one per cent more.
This is where most projects lose money without anyone noticing.
The calculation counts the smallest of three numbers:
A 10-dwelling block installing 100 kWh is credited for 50 kWh. The other half earns nothing from the rebate and has to justify itself on bill savings alone. The same 100 kWh battery in a 20-dwelling building is credited in full and collects twice as much. Nothing about the hardware changed.
So the order of decisions matters. Work out the cap first, then choose the battery. Dwellings multiplied by five is the largest usable capacity worth buying for rebate purposes. Going bigger is a decision about the building’s actual load — reasonable in a block with lifts, a pool pump or ducted air conditioning on common property, just not one the rebate will pay for.
Four-dwelling buildings sit in an awkward gap. The scheme requires more than 20 kWh of usable capacity to qualify but counts only 20 kWh at four dwellings, so the first few kilowatt-hours are structurally unpaid. The arithmetic evens out from six to eight dwellings up; below that, check the project stands on its own before relying on the rebate.
Two different limits apply to battery duration and they are not the same number.
To qualify, the battery’s usable capacity may be up to six times the inverter output. To be paid, the scheme counts no more than four times the inverter output. The government’s position paper puts it plainly: battery duration is “capped at 4 hours under an incentive cap and 6 hours under an eligibility cap”. The gap between the two is unpaid capacity.
A 120 kWh battery on a 20 kW inverter is a legal BESS3 system: six times twenty is 120, so it passes the equipment test. But four times twenty is 80, so 40 kWh earns nothing. In a 24-dwelling building otherwise credited for 120 kWh, that undersized inverter costs roughly $13,900.
The rule to hold onto is simple: the inverter should be at least the counted capacity divided by four. To collect on 100 kWh you want 25 kW of inverter; on 200 kWh, 50 kW.
This is a design decision, not a paperwork one, and it is why battery size alone tells you nothing: a quote giving only kilowatt-hours cannot be compared with one that gives the counted capacity too.
The battery must be installed outdoors. Not in the basement car park, not in a plant room, not in a services cupboard. The requirement is absolute and it is the constraint that ends more apartment projects than any other, because the basement is the obvious place and the basement is out.
The reasoning is fire safety, and the position paper is explicit: a battery in a confined space that goes into thermal runaway releases toxic gas with nowhere to disperse, next to the parts of the building people escape through.
So the first question is not which battery, it is where. The building needs a piece of common property outside, ventilated, reachable for service, at a workable distance from the main switchboard. On a tight inner-city site that can be the whole project in one question, and it is worth answering before the committee spends time on anything else.
Alongside that, the work has to meet AS/NZS 5139, be done by a licensed electrician accredited with Solar Accreditation Australia, and have all planning and network approvals in place before any certificate is created.
That last point has a consequence nobody advertises. Under the state planning policy a battery is exempt development only while it stores no more than 20 kWh — and BESS3 starts above 20 kWh, so every BESS3 system by definition needs planning approval of some form. Not usually difficult, but it is calendar time, and it sits in front of the installation rather than behind it.
The decision belongs to the owners corporation, not to the strata committee and not to the strata manager. The committee does the groundwork and puts the motion, the owners corporation votes at a general meeting, and the money comes from the capital works fund or a special levy.
Which resolution you use changes the odds. A battery on common property is a change to common property, and section 108 of the Strata Schemes Management Act 2015 requires a special resolution. Section 5 defines that as one defeated if more than 25 per cent of the value of the votes cast are against it — a quarter of the votes actually cast can stop it.
Section 132B sets a lower bar: a sustainability infrastructure resolution is defeated only if 50 per cent or more of the votes cast are against. It covers changes to common property made to reduce the scheme’s energy use or its greenhouse gas emissions, and it lists purposes rather than equipment — batteries are not named in it, electric vehicle charging is. Whether a battery on common property qualifies therefore turns on how the motion is characterised, which is a legal question rather than a technical one. Settle it with your strata manager before the motion goes on the agenda, because re-running a failed vote costs a full meeting cycle.
The 90-day rule shapes the procurement. The higher rate applies only where new solar goes in within 90 days before or after the battery, and only where that solar did not receive NSW Government funding. The order does not matter, but an existing array does not unlock it however new it feels. If the roof can take panels, buy the new solar systems and the battery as one contract — a slipped date on either drops the project to the lower rate.
Three things to take to the meeting:
Start before the meeting, not at it. The meeting cycle is the long pole and nobody can compress it. A committee that wants a battery working through the following summer should be collecting quotes now and putting a costed motion — not a proposal to investigate — to its next general meeting.
The two programs stack. The federal one is the Cheaper Home Batteries discount, delivered through the Small-scale Renewable Energy Scheme, and the government’s stated position is that a project can take both for batteries under 100 kWh.
The federal side is smaller than the headline suggests, because it tapers hard:
| Usable capacity | Federal rate |
|---|---|
| First 14 kWh | about $250 per kWh |
| Above 14 up to 28 kWh | about $150 per kWh |
| Above 28 up to 50 kWh | about $38 per kWh |
| Above 50 kWh | nothing |
Those rates are not published as dollar figures anywhere. They come from the STC factor of 6.8 certificates per usable kilowatt-hour for May to December 2026, a market price of around $37 a certificate, and the capacity bands above — so they move as the market does.
On a 50 kWh common-property battery that comes to roughly $6,500, against about $17,400 from BESS3 on the same system in a 10-dwelling building. The state incentive is close to three times the federal one here, the reverse of the position for a house.
The federal program stops at 100 kWh nominal, about 90 kWh usable. A battery larger than that is outside it entirely, not merely capped, so between roughly 90 kWh and the BESS3 ceiling of 200 kWh the state incentive is the only one available — which matters from about 18 dwellings up.
The federal rate then falls on 1 January 2027, from 6.8 to 5.7 per usable kWh, a cut of about 16 per cent. On that 50 kWh battery the federal contribution drops from roughly $6,500 to roughly $5,400, and it steps down again every six months until the program closes in 2030.
1 September 2026. The date that matters is the date the installation is completed; anything finished earlier falls outside BESS3.
At least four, and the building has to be Class 2 under the Building Code. The scheme also counts no more than 5 kWh per dwelling, so the dwelling count sets both eligibility and the ceiling on the payment.
No. A battery on its own qualifies, at a lower rate — about 29 per cent fewer certificates. Solar is not a condition, it is a multiplier.
Not on the existing array. The higher rate is tied to solar newly installed within 90 days before or after the battery. A building with older panels can claim at the lower rate, or add capacity inside that window — NSW is explicit that additional solar counts, not just a first array.
No. BESS3 requires the battery to be installed outdoors, for fire and off-gassing reasons. If there is no suitable outdoor location on common property, the project does not proceed under this activity — which is why we check siting before anything else.
No. There is no application form. You qualify through the installer: they confirm eligibility, apply the discount to the quote, and an Accredited Certificate Provider handles the certificates afterwards. Its size is not fixed by the government, which is why NSW tells building owners to collect several quotes and ask installers whether they offer it.
Three things decide the number, and a single site visit settles all three: whether the building is Class 2 with four or more dwellings, whether there is a workable outdoor location on common property, and what counted capacity the dwelling count and inverter allow.
The assessment is free and carries no obligation. We confirm the network and the counted capacity, then hand the committee a costed motion it can put to a general meeting, with the certificate value broken out and the assumed price on the page. If the building does not qualify, we say so at that visit rather than after a quote.
Sydney Air & Solar has been installing solar across Sydney since 2000. NSW Electrical Contractor Licence 202500C, and Solar Accreditation Australia Designer and Installer — the accreditation required to create certificates under both the state and federal schemes.
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