The national power system in Australia known as the National Electricity Market (NEM) begins with the acquisition of primary energy sources. These include sunlight, wind, water, coal, and gas.

A left to right picture of the supply chain which includes starts on the right with electricity generation, then the transmission network, distribution network, retailers and commercial and residential users

In the classic supply-chain model of electricity:

  • Generators make electricity from these primary sources which then flows into the transmission network
  • The transmission network then transports electricity to the distribution network
  • The distribution network then transports electricity to residential and commercial buildings

This model includes a market in which retailers arrange for delivery of electricity to customers, who then pay for this electricity.

Characteristics of a functioning energy system

A functional electricity system is

  • Reliable with:
    • enough generation and sources of generation
    • enough capacity and redundancy in transmission and distribution (poles and wires)
    • customers needs, wants and demands being met, with supply meeting demand
  • Secure with everything working within prescribed technical parameters
  • Regulated effectively with:

Changing electricity system

With the global emergence of new technologies, the modern Australian energy system is less linear and more dynamic.

In terms of the energy market, the lines between generators, retailers and customers are less clearly defined. The customer can now be at any place on the supply chain.

Some commercial customers are now seeking to generate their own power from sources such as gas, solar, wind or biomass. Power from distributed generation (also referred to as embedded generation) is generated on site at the point of consumption.

An increasing number of residential customers are also using rooftop solar photovoltaic units, energy efficient devices, smart meters and residential battery systems.

For up-to-date information on the generation mix in the National Electricity Market (NEM), please view the Australian Energy Regulator’s State of the Energy Market reports and the AREMI spatial data platform.