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About the National Electricity Market (NEM)

NEM overview 

  • The National Electricity Market (NEM) incorporates around 40,000 km of transmission lines and cables.
  • It supplies about 200 terawatt hours of electricity to businesses and households each year.
  • It supplies around 9 million customers.
  • It has a total electricity generating capacity of almost 54,421 MW (as at December 2017).
  • $16.6 billion was traded in the NEM in the financial year 2016–17.
  • Strategic reserves of demand and generation resources of more than 1000 MW for 2017-18.

The NEM commenced operation as wholesale spot market in December 1998. It interconnects five regional market jurisdictions – Queensland, New South Wales (including the Australian Capital Territory), Victoria, South Australia, and Tasmania. Western Australia and the Northern Territory are not connected to the NEM.

The NEM involves wholesale generation that is transported via high voltage transmission lines from generators to large industrial energy users and to local electricity distributors in each region, which deliver it to homes and businesses.

The transport of electricity from generators to consumers is facilitated through a ‘pool’, or spot market, where the output from all generators is aggregated and scheduled at five-minute intervals to meet demand.

The pool is not a physical thing, but a set of procedures that AEMO manages in line with the National Electricity Law and National Electricity Rules.

The market uses sophisticated systems to send signals to generators instructing them how much energy to produce each five minutes, so production is matched to consumer requirements (spare capacity is kept ready for emergencies), and the current energy price can be calculated.

NEM infrastructure comprises both state and private assets managed by industry participants.

You can learn more in our National Electricity Market (893 KB, pdf) fact sheet.

For more information on the NEM, please contact the Support Hub.

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