The NEM spans Australia’s eastern and south-eastern coasts and comprises of five interconnected stats that also act as price regions: Queensland, New South Wales(including ACT), South Australia, Victoria and Tasmania.
Western Australia and the Northern Territory are not connected to the NEM, primarily due to the distance between networks.
How the NEM works
The NEM is a wholesale electricity market in which generators sell electricity and retailers buy it to on-sell to consumers. There are over 100 generators and retailers participating in the market, so it is highly competitive and therefore an efficient way of maintaining relatively competitive electricity prices in the wholesale market.
Fast Facts
- The NEM commenced operation as a wholesale spot market for electricity in December 1998.
- The NEM incorporates around 40,000km of transmission lines and cables.
- The NEM supplies about 204 TWh (terawatt hours) of electricity to businesses and households each year.
- $11.5 billion was traded in the NEM in FY2020–21
- the NEM supplies approximately 10.7 million customers.
- The NEM has a total electricity generating capacity of 65,252 MW, it has approximately 14GW of distributed solar (as at December 2021) collectively the largest generator in the NEM.
Energy Resources (Generation Mix)
At current rates of development, there could be sufficient renewable resources available to meet 100% of underlying consumer demand in certain periods by 2025. Here are the generation resources that make up our NEM today.
Electricity Supply Chain
Transport of electricity
- Generator — produces electricity
- Generator transformer — converts low voltage electricity to high voltage for efficient transport
- Transmission lines — carry electricity long distances
- Distribution transformer — converts high voltage electricity to low voltage for distribution
- Distribution lines — carry low voltage electricity to consumers
- Homes, offices and factories — Use electricity for lighting and heating and to power appliances.
Process
- Generators produce electricity from a range of sources, including coal, solar, water, wind, biomass, and geo-thermal.
- Generator transformers then convert low-voltage electricity to high voltage for efficient transport.
- Transmission lines carry the electricity long distances — these are the big power pylons and lines that you might have seen.
- Some large industrial customers take electricity direct from the transmission lines.
- For all other customers, the electricity goes to local transformers, where distribution businesses convert the high-voltage electricity back to a low voltage for distribution via the poles and wires you see on a typical suburban street.
- These poles and wires carry the electricity to customers in homes, offices, and factories. Some homes and businesses also have solar panels and and/or battery storage systems to generate and store their own electricity.
