The national electricity market (NEM) covers South Australia, Tasmania, Victoria, New South Wales, the Australian Capital Territory and Queensland.

Characteristics of a functioning energy system

A functional electricity system is

• reliable with:
  • enough generation capacity to meet consumers' demand for power. This capacity is provided through:
    • generation, from large centralised generators like hydro, coal and gas plants and wind and solar farms, as well as decentralised generation like rooftop solar
    • demand response - when customers agree to reduce their electricity use in return for a payment or other reward
  • enough capacity in transmission and distribution (poles and wires)
     
• secure with everything working within prescribed technical parameters
   
• regulated effectively with:
  • governance
  • rules
  • guidelines and standards

Changing electricity system

The power system is transitioning, with a large number of renewable generators like wind and solar farms connecting, while older generators are retiring.

At the household level, the last decade has seen a significant increase in the uptake of new technologies such has rooftop solar photovoltaic systems, battery storage and ‘smart’ energy management systems, collectively referred to as distributed energy resources (DER).

These changes are being driven by:

• government policies to support the uptake of renewable energy to reduce emissions
• the rapidly decreasing cost of renewable technology
• changing consumer preferences.

For up-to-date information on the generation mix in the national electricity market, please view the Australian Energy Regulator’s State of the Energy Market reports and the AREMI spatial data platform.