Australian electricity system and market: Electricity grid

Through the National Electricity Market (NEM), Australia operates one of the world’s longest interconnected electricity networks, stretching over 5,000 kilometres. The electricity system is undergoing a profound transformation to renewable energy, driven by exceptional solar and wind resources and ambitious policy targets: 82 per cent renewables in the electricity mix by 2030. The momentum of this transformation is already evident: Australian households are global leaders in rooftop solar and the uptake of battery storage, and in the fourth quarter of 2025 renewables met more than half of electricity demand in the NEM for the first time. At the same time, grid expansion, security of supply and affordability remain key challenges. This briefing series offers an overview of the key structures and central debates surrounding Australia’s electricity system and market.

The second briefing focuses on the NEM’s grid infrastructure. It explains the complex, state-fragmented planning framework for the transmission network and shows how major expansion projects are increasingly being slowed by cost overruns, lengthy permitting procedures and growing public opposition. The briefing also outlines the role of Renewable Energy Zones (REZs), which are intended to spatially coordinate generation and network planning and accelerate the roll-out of renewables – but in practice continue to face significant implementation hurdles. Finally, it explains the NEM’s open network access regime, including how Marginal Loss Factors (MLFs) and Generator Performance Standards (GPS) work. Both are widely regarded as particularly demanding by international standards and can create substantial locational risks for project developers.

The briefing is available as a PDF in German.

Further publications in this series

• First briefing: Market design and regulatory framework

• Third briefing: Renewable energy expansion

• Fourth briefing: Energy storage