A major new electricity connection linking South Australia, Victoria and New South Wales has entered operational testing, creating a new pathway to share electricity across the National Electricity Market (NEM).
Project EnergyConnect is a 900-kilometre interconnector that will fundamentally change how electricity flows between regions through the creation of a new transmission loop linking the three states, the first of its kind in the NEM.
Delivered by ElectraNet in South Australia and Transgrid in New South Wales, the project traverses renewable energy zones providing additional capacity by connecting new generation and storage and influencing how the market manages network constraints, wholesale electricity prices and settlement arrangements.
Project EnergyConnect was first included in AEMO's 2020 Integrated System Plan (ISP) and has progressed through planning, regulatory approval and construction, with operational testing and integration into the NEM now underway.
AEMO Group Manager, Operations Resilience, Teresa Smit, said transmission plays an important enabling role in connecting and sharing electricity from new generation sources to meet increasing demand.
“The extension of the existing 44,000km transmission network throughout the NEM is underway to support a near doubling of electricity consumption by 2050 as homes, businesses and industry increasingly electrify and while ageing coal-fired generation progressively retires,” Ms Smit said.
“Transmission connects new generation and storage to the grid, helping move electricity from where it is generated to where it is needed and allowing lower-cost electricity to be shared between regions," she said.
The 2026 ISP, released in June, identified renewable energy, firmed with storage and backed up by gas-powered generation, all connected through transmission, as the least-cost pathway for the NEM.
This included the supporting role of consumer energy resources, such as rooftop solar and residential batteries.
The ISP found that while transmission accounts for around $6 billion of the $106 billion (in today's dollars) in annualised capital investment identified to 2050 under the Step Change scenario, AEMO's modelling shows that, in the most likely scenario, these investments can avoid around $30 billion in additional capital, operating and fuel costs by enabling the interconnected system to operate more efficiently.
Market integration
While transmission projects are often associated with large towers and powerlines spanning long distances, building the infrastructure is only part of the task.
Before Project EnergyConnect integration into the NEM, extensive planning and coordination was required to ensure the electricity market and power system are ready.
In 2022, AEMO commenced a work program with industry through dedicated working groups and forums to develop the market, system and procedural changes needed to integrate Project EnergyConnect as part of the NEM Reform program.
"Integrating a new transmission line of Project EnergyConnect’s unique characteristics requires extensive preparation across power system operations, market rules and industry readiness,” Ms Smit said.
“As system and market operator for the NEM, this means AEMO must update market, settlement, dispatch and registration arrangements to recognise the new interconnector and the more complex conditions created by a looped network,” she said.
AEMO's readiness program brought together specialists from across operations, markets, technology, data and industry engagement to prepare for the interconnector's introduction.
"Operational preparations, including updating network constraints, control-room displays, procedures, training and escalation pathways, help ensure the power system remains secure and efficient as network conditions change,” said Ms Smit.
AEMO is also coordinating a series of market, operational and procedural changes to support the introduction of the interconnector.
From 1 October 2026, AEMO will progressively bring Project EnergyConnect into operation, increasing energy transfers as conditions enable testing opportunities, with full commissioning expected by the end of 2027.
As Project EnergyConnect moves into operation, it highlights the important role transmission plays in connecting consumers with new sources of electricity, sharing energy across regions and supporting the least-cost transition of the power system. Together with new renewable generation, storage and consumer energy resources, it will help create a more connected, flexible and efficient NEM for the future.
ENDS