The National Electricity Market is made up of Australia’s wholesale electricity market and electricity transmission grid. It's the world’s biggest interconnected power system. More than $11 billion of electricity is traded each year, to meet the needs of almost nine million consumers.

The National Electricity Market

The NEM provides a trading market for buying and selling electricity. Generators create electricity, and sell it, via bids, into a central pool. National demand is constantly changing, so the market ensures it's met by using sophisticated systems to send signals each five minutes to the generators, telling them how much energy to dispatch. The energy price is calculated. Spare capacity is kept for emergencies.

The energy is bought by large industries, as well as energy retailers who sell it on to households and small businesses. The market is managed by the Australian Energy Market Operator (AEMO). Hydro Tasmania is well-placed to sell extra electricity when prices are high (often caused by high mainland demand), because our hydropower systems can respond quickly to the extra demand.

Lower-priced energy from the mainland can be imported across Basslink during periods of lower demand (for example - overnight), meaning Hydro Tasmania can manage its generation portfolio efficiently and economically.

The NEM makes supplying energy a competitive business environment, which has price benefits forcustomers. There are rules and systems to ensure energy security and reliability in each geographical region.

Learn more in the Introduction to the National Electricity Market fact sheet produced by AEMO.


In 2006, Tasmania's energy market changed. One of the world’s longest undersea cables, Basslink, was developed to link Tasmania to the National Electricity Market (NEM).

Basslink is owned and operated by Basslink Pty Ltd which is owned by Keppel Infrastructure Trust.

Basslink is a high-voltage direct-current (DC) cable. It's almost 300 kilometres long, and crosses Bass Strait between the George Town substation in northern Tasmania and the Loy Yang Power Station in Victoria. A smaller cable (known as a metallic return) is laid alongside the main cable, to completion the circuit via a return current.

Alternating current (AC) from the Tasmanian grid is converted to direct current (DC) and fed into Basslink near George Town. Once the current travels via Basslink to Loy Yang, it's converted back to AC and connected to the Victorian region of the NEM. Using DC reduces transmission losses.

Basslink can export electricity from George Town to Loy Yang at up to 630 megawatts (MW), and can import from Loy Yang to George Town at up to 500 MW. 

The Basslink cable supplies some of the peak load capacity to Australia’s eastern regions using Hydro Tasmania’s clean, renewable energy. Overnight, Tasmania takes some of the excess base load capacity from the coal-fired generators on the mainland. Hydro Tasmania benefits by selling higher-priced peak load. The cable has also been used to supply Tasmania during drought, because most of Tasmania’s on-island generation comes from hydropower.

Transport of Electricity AEMO