National Electricity Market (Near-term optimisation)

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Optimisation of the National Electricity Market
Priority Initiative
Infrastructure Category
Near term (0-5 years)
50_National Electricity Market (Near-term optimisation)


There is an opportunity to optimise the National Electricity Market (NEM) by improving connections between different regions and increasing system strength. Improved connections between Queensland, New South Wales and Victoria can defer the need for major capital investment, increase competition in the NEM and improve network reliability.

The Australian Energy Market Operator released the Integrated System Plan (ISP) in 2018, which forecasts a continuing trend away from thermal electricity generation, and towards a more diverse portfolio of fuels, including wind and solar. In order to effectively make this transition, the ISP recommends further capital investment in transmission capacity to connect to new fuel sources. It also identifies low system strength in many parts of the South Australian energy network, which can result in stability and resilience issues.

Medium- to longer-term connectivity and reliability improvements to the NEM are also included in the Infrastructure Priority List as a High Priority Initiative.

Proposed initiative

The ISP identifies three groups of investments over the near, medium and long term. This initiative relates to the Group 1 investments, which are potential near-term investments that would improve interconnections between NEM regions, and which make better use of existing assets. These are:

  • increasing transfer capacity between the New South Wales, Queensland and Victoria NEM regions
  • reducing network congestion for existing and committed renewable energy developments in western and north¬western Victoria
  • improving network system strength in South Australia.

These potential near-term investments are subject to change as the ISP is updated to reflect the dynamically changing nature of the power system.

The investments and their timing will also be subject to detailed assessment of their costs and benefits by network infrastructure owners.

Next steps

Proponent(s) to be identified.