An Overview of the NEM
Australia's National Electricity Market (NEM) operates on a regional basis.
The NEM incorporates the wholesale trading of electricity in the interconnected eastern states of QLD, NSW, VIC, TAS and SA. WA and NT are not
part of the NEM as they are not physically interconnected to the eastern states.
It is important to note that the NEM is operated on Australian Eastern Standard Time (GMT + 10 hours) - which means NO daylight
savings. All data published by NEMMCO (and hence displayed in NEMforecast) is time-stamped on this basis.
The NEM is a compulsory wholesale market for electricity (in industry terminology this is sometimes called a "gross pool" as
distinct from a "net pool" which is the structure used in some other electricity markets). What this means is as follows:
- All electricity generated in the NEM (from facilities above a certain size) is traded through the NEM spot market, which is operated by NEMMCO (this is sometimes termed the "physical market" and is synonymous with a "pool" or "balancing" market);
- To manage the risk inherent in trading in any electricity market, wholesale market participants also participate in the financial market for contracts referenced to the spot price. These might be negotiated bilaterally, or purchased through over the counter (OTC) trading facilitated by any of a number of brokers, or purchased in the form of the electricity futures contracts traded on the Sydney Futures Exchange.
If you would like further information about the commercial structure of trading in the NEM, our Power Trading Schematic Market Map provides
a clear picture - for further information see the maps portal at www.marketmaps.info.
NEMforecast has been designed to provide a clear view of the future of trading in the NEM.