National Electricity Market: Near-term optimisation

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National Electricity Market: Near-term optimisation

Optimisation of the National Electricity Market
Early-stage proposal (Stage 1)
Efficient Markets
Problem/Opportunity timeframe
Near term (0-5 years)
Proposed By
Infrastructure Australia identified proposal
Date added to the IPL
14 February 2019


The National Electricity Market (NEM)  serves almost 90% of Australia’s population. It faces significant challenges as electricity generation shifts away from thermal electricity generation, towards a more diverse but intermittent portfolio of fuels, such as wind and solar, backed up by dispatchable generation, such as pumped hydro. The power system is also adapting to changing patterns of consumer demand, predominately caused by the uptake of residential solar power.

This transition will need to be effectively managed to ensure the reliability, security and affordability of electricity for users.

In the near-term, there is an opportunity to optimise the NEM by increasing system connectivity, strength and transfer capacity. 

Near term investments in supporting infrastructure, such as network capacity and systems services, will also create a more reliable and secure power system that can better withstand variable consumer demand and unplanned events.

The power system’s resilience and reliability can also be enhanced by increasing the capacity to transmit electricity across regions, increasing fuel diversity and geographic coverage.

The Australian Energy Market Operator has released its updated 2020 Integrated System Plan (ISP), which was first released in 2018 and formed part of the evidence base for this proposal.

Medium- to longer-term uncertainty of managing the transition to a more diverse portfolio of fuels is also included in the Infrastructure Priority List as a Early-Stage Proposal.


The 2020 ISP has identified four categories of transmission projects – Committed, Actionable, Actionable with decision rules, and Future ISP projects. This proposal relates to the committed projects that would improve interconnections between NEM regions, and make better use of existing assets. These are critical to address cost, security and reliability issues, and are underway, having already received their regulatory approval. They include:

  • increasing transfer capacity between the Queensland and New South Wales NEM regions
  • transmission capacity to the Western Victoria Renewable Energy Zone
  • South Australia system strength remediation, as recommended in the 2018 ISP.

Next steps

Proponent(s) to be identified.