One of Australia’s longest transmission lines in south-eastern Australia is nearing operational testing, creating a new pathway to share electricity between regions serving millions of homes, businesses and industries across the National Electricity Market (NEM).
Project EnergyConnect is an approximately 900-kilometre interconnector delivered by ElectraNet in South Australia and Transgrid in New South Wales, which connects into north-west Victoria.
Along its route, the interconnector traverses renewable energy zones (REZs), providing additional capacity to connect new generation and storage while ultimately linking three adjacent NEM regions.
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 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 electrify, 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 (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 can be integrated into the NEM, extensive planning and coordination is required to ensure the electricity market and power system are ready.
Project EnergyConnect will create a new transmission loop linking South Australia, Victoria and New South Wales, the first of its kind in the NEM. This will fundamentally change how electricity flows between regions and influence how the market manages network constraints, wholesale electricity prices and settlement arrangements.
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 its 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.
“For AEMO as system and market operator for the NEM, this means updating our 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 coordinated readiness program – spanning power-system operations, market systems, dispatch, settlements, registration, data and industry engagement – continues towards Project EnergyConnect commencing operation.
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.
Market integration is equally important. AEMO is coordinating a series of market, operational and procedural changes to support the introduction of Project EnergyConnect.
From 1 October 2026, AEMO plans to progressively bring Project EnergyConnect into operation, increasing energy transfers over time as conditions enable testing opportunities, expected through to the end of 2027.
Throughout, AEMO will continue to monitor testing and provide regular updates to industry.
As Project EnergyConnect moves towards full 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 and flexible NEM for the future.
ENDS