Australia's electricity generation sector is evolving from its historic reliance on coal (black and brown) and, to a lesser extent, hydroelectricity to a more diverse mix which incorporates coal, gas and renewable energy sources.

Generation of energy in the national electricity market (NEM) is coordinated by the Australian Energy Market Operator (AEMO) across various energy regions and then sent to where it is needed. This central coordination is essential because generators are interconnected through transmission networks and the action of each generator affects the other generators in the network.

Generation of electricity can result from:

  • traditional high voltage large-scale generators
  • a wide variety of smaller distributed generation or embedded generation units. This includes smaller generation units on the consumer's side of the meter, in particular rooftop photovoltaic solar panels.

Electricity transmission

Transmission networks allow the bulk transport of electricity at high voltages from a range of generators to major demand centres. Distribution networks in turn transport electricity at lower voltages to end-use customers.

Transmission networks consist of towers and the wires that run between them, underground cables, transformers, switching equipment, reactive power devices, and monitoring and telecommunications equipment.

Transmission network service providers (TNSPs) build, maintain, plan and operate the network transmission networks in Qld, NSW, ACT, Vic, SA and Tasmania. These networks are interconnected to form the backbone of the national electricity market (NEM) which is the longest interconnected power system in the world and covers a distance of around 5,000 km.

Reliability refers to the extent to which customers have a continuous supply of electricity. Transmission networks are required to meet reliability standards that, in most cases, are set by state and territory governments.

Electricity distribution

Distribution networks transport electricity from transmission networks to end-use customers. The high voltage electricity that is used for transmission from the generator is converted into lower voltages by substation transformers. It is then carried in wires over poles - or in densely populated areas, in wires buried underground - to businesses and homes.

Distribution network service providers (DNSP) build, maintain and operate the distribution networks.

Embedded generation units often connect directly to the distribution network.

Similar to transmission networks, distribution networks are required to meet reliability standards that are set by state and territory governments.

End users

Industry, businesses and households use the electricity provided from generators via the transmission and distribution networks.

However, the electricity system is transforming with:

  • commercial customers generating their own power from distributed energy resources, also referred to as local or embedded generation, where power is generated on site at the point of consumption from sources such as gas, solar, wind or biomass.
  • an increasing number of residential customers using distributed energy resources such as rooftop solar photovoltaic units, energy efficient devices, smart meters and residential battery systems.