Project EnergyConnect – Market Integration project


AEMO supports Australia’s complex and rapid energy transformation towards net zero emissions, enabling low-cost fired reneable energy and essential transmission to provide customers in the NEM with reliable, secure and affordable power. ElectraNet and Transgrid are partnering to deliver the 900km long energy interconnector Project EnergyConnect, connecting South Australia and New South Wales with an added connection into Victoria, to deliver a range of direct benefits for consumers including lower power prices and improved energy security.

Project EnergyConnect is delivered over two stages:

  • Stage 1 150 MW bi-directional capacity connection: between Robertstown and Buronga, release from mid-2024.
  • Stage 2 Combined transfer limit across Heywood and PEC interconnectors: 1,300 MW import into South Australia and 1350 MW export. Comprises the connection between Buronga and Wagga Wagga. Anticipated full capacity release from 1 July 2026.

Once the commissioning of Stage 2 is complete, it will create a parallel transmission configuration between three adjacent regions which presents new challenges for the NEM, especially for the way negative inter-regional settlement residue is managed.

AEMO has undertaken stakeholder consultation on Project Energy Connect Market Integration, with the final recommendations published on 9 February 2024. Further, a Rule Change Proposal was submitted to AEMC on 23 February 2024, seeking to recommend changes to the existing negative inter-regional settlement residue process.

AEMO has established the Project EnergyConnect – Market Integration (PEC-MI) project under the NEM Reform Program to implement resulting system and procedure changes collaboratively with industry.

PEC-MI is delivering market design changes to accommodate Stage 2. This includes: changes to AEMO’s systems, a rule change for negative residue management and relevant procedure changes.


The addition of PEC fundamentally changes elements of market design, and AEMO’s integration of PEC Stage 2 into AEMO’s systems is designed to:

  • Use the interconnector dispatch integration model
  • Revise existing automated Negative Residue Management constraints
  • Limit the application of interconnector clamping, to when aggregate loop IRSR is negative. This would limit the extent interconnector clamping is a driver of dispatch outcomes.
  • Reallocate negative inter-regional settlement residues when settlement, in aggregate, is in surplus across the three interconnectors for each trading interval.
  • Ensure negative inter-regional settlement residues reallocated are payable by the importing TNSP

The project will also include PEC into the Settlement Residue Auction (SRA).

Industry engagement

This initiative forms part of NEM Reform Program and market participants can get involved by visiting:

Record of activities

Procedure Changes

AEMO’s Procedures, guidelines and other documents that require changes include:

  • SO_OP_3705 Dispatch Procedure
  • Brief of automation of negative residue management
  • Methodology for the allocation and distribution of settlements residues
  • NEM Transmission Network Service Provider Negative Settlements Residue

Further information

For more information, please contact

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