An illustration of Australia with a magnifying glass over the top

About Australian energy markets

Learn about the different players and regulatory bodies who administer Australia's energy markets, so you can understand who you may need to contact, and why. 

Overview of Australian energy markets

There are a large number and variety of roles in Australian energy markets. Laws, rules and regulations apply to people engaging in energy at all stages of the market, so it's important to understand the role and context of your project within the broader market, and what rules might apply.

While similar roles and responsibilities apply to gas and electricity providers, these are governed in part by their own frameworks.

Generally, there are the following kinds of roles in traditional Australian energy markets:

  • Generators – those who generate electricity and those who produce gas from primary sources which then flows into the transmission network
  • Network operators – those who operate the transmission network which transports electricity and gas from Generators to the distribution network
  • Distributors – those who operate the distribution network which transports electricity and gas to residential and commercial buildings. 
  • Retailers (sellers) – the companies which sell electricity and gas to residential and commercial users, acting as middle-parties between users and Generators. 
  • Energy consumers – everyone from individuals to businesses to community groups who buy energy.
  • Regulators and rule-makers – Government and Industry bodies who manage and regulate the market. For example, the Australian Energy Regulator (AER) or the Australian Energy Market Operator (AEMO). 

However, as new technologies emerge, modern Australian energy markets are becoming more dynamic, and the lines between generators, retailers and customers are less clearly defined. For example, an energy consumer with rooftop solar can both consume and also generate and export electricity to the wholesale market, and as such has a two-way relationship with the network.

As technology changes, the rules that govern these markets need to adapt to facilitate new scenarios and enable innovation. The Energy Innovation Toolkit is part of that solution.

The National Electricity Market (NEM)

The National Electricity Market (NEM) is one of the largest interconnected electricity systems in the world. It covers around 40,000 km of transmission lines and cables, supplying around 9 million customers in Queensland, New South Wales, Victoria, Tasmania, South Australia, and parts of the Northern Territory. 

The NEM is also a marketplace through which generators and retailers trade electricity in Australia. It interconnects five states that also act as price regions: Queensland, New South Wales (including the Australian Capital Territory), South Australia, Victoria, and Tasmania. The NEM delivers around 80% of all electricity consumption in Australia.

Western Australia and the Northern Territory are not connected to the NEM. They have their own electricity systems and separate regulatory arrangements.

Gas markets

Most wholesale gas in Australia is sold and transported under bilateral agreements between producers, pipeline owners, retailers and major users. AEMO operates a number of wholesale markets, including the Declared Wholesale Gas Market (DWGM) and other markets supporting the secondary trading of gas and pipeline capacity. In addition, AEMO operates Australia’s gas retail markets, the Declared Transmission System (DTS) in Victoria, and bulletin boards that provide up-to-date gas market and system information. You can read more about gas markets here.

Market bodies and state entities

Several government agencies are responsible for energy in the NEM and gas markets. The three market bodies are:

  • The Australian Energy Regulator (AER)
  • The Australian Energy Market Commission (AEMC), and
  • The Australian Energy Market Operator (AEMO).

These organisations oversee the nation’s energy market and report to the Federal and State Government Energy Ministers. Each has a different role. The AEMC consults with stakeholders and drafts the rules which govern the NEM, and provides advice to government; the AER then enforces those rules, consults with stakeholders and drafts the regulations which exist underneath the laws; then AEMO manages the day-to-day operations of the market through which energy is bought and sold.  

From 1 July, the Energy Advisory Panel (EAP) will coordinate market bodies’ advice to governments under the National Energy Transformation Partnership on issues relating to the security, reliability, and affordability of Australia’s east coast energy system. The EAP will include the heads of the three market bodies (AER, AEMC and AEMO) and the ACCC as an observer. The EAP replaces the former Energy Security Board

There are several other bodies whose responsibilities relate to energy markets, including: 

  • Federal and State Energy Ministers (meeting through the Energy Ministers’ Meeting)
  • Energy Consumers Australia
  • State and Territory regulators 
  • State and Territory ombudsmen, and
  • State safety regulators. 

In addition to these, a large number of agencies, regulators, private companies and peak bodies operate in the energy market, and each have different (although sometimes overlapping) roles. For any energy project, you might be required to interact with several market bodies or state/territory regulators. The purpose of the Energy Innovation Toolkit is to make this easier – see how the Regulation Navigator tool can direct you to the right people, and how the Innovation Enquiry Service can help you with your regulatory questions.

Energy sector stakeholders

Here is an infographic setting out the key energy stakeholders at the national level:

Infographic of NEM Entities


Click on the below drop-down boxes to view an infographic of the stakeholders in each State and Territory.

NSW Stakeholders

Victorian Stakeholders

Queensland Stakeholders

SA Stakeholders

TAS Stakeholders

ACT Stakeholders

NT Stakeholders

WA Stakeholders

National energy legislation 

The operation of the National Electricity Market (NEM) and gas markets, and associated retail and consumer protection requirements are governed by a range of Commonwealth and state/territory legislation.  

Importantly, the NEM does not include Western Australia, which is governed by its own separate legislation. Energy in Western Australia is regulated by the Economic Regulatory Authority, which is outside the scope of the Energy Innovation Toolkit. 

Victoria has not adopted the national energy retail customer framework and has a separate set of retail rules. Retail rules in Victoria are regulated by the Essential Services Commission.  The Essential Services Commission is an Energy Innovation Toolkit Project Partner and has a role under its governing legislation in providing a Regulatory Sandboxing function for retail queries and waiver applications in Victoria.  

There are three overarching national laws which are relevant to the national regulation of energy markets the: 

  • National Electricity Law (NEL) 
  • National Gas Law (NGL), and the 
  • National Energy Retail Law (NERL). 
Electricity Gas Retail
National Electricity Law (NEL)  National Gas Law (NGL)  National Energy Retail Law (NERL)
National Electricity (South Australia) Regulations  National Gas (South Australia) Regulations  National Energy Retail Regulations 
National Electricity Rules (NER) National Gas Rules (NGR) National Energy Retail Rules (NERR) 

Where South Australia is noted, this is because the States and Territories have agreed to implement South Australian legislation in their own jurisdictions to give effect to the national energy legislation. 

Each of these laws has associated rules and guidelines as subordinate legislation which apply to a variety of market participants. More information about the legislation that applies can be found here.

State and territory energy legislation 

Victoria is governed by energy retail laws separate to those laws governing the rest of the national energy markets. The Essential Services Commission (ESC) is the regulator of energy retail laws in Victoria and is authorised under its own legislation to implement the Victorian component of the Energy Innovation Toolkit. You can read more about this here.

The ESC is established under the Essential Services Commission Act 2001, and it also has responsibilities under several pieces of Victorian energy legislation, including the Electricity Industry Act 2000 and the Gas Industry Act 2001

In addition to Victorian specific legislation, other state and territory regulators manage a range of jurisdictional energy frameworks. 

  • Our Regulation Navigator is an interactive tool which can help identify which state licensing requirements could potentially apply to your business model.
  • Our Innovation Enquiry Service provides informal feedback to help you understand what energy regulations might apply to your innovative idea, and can explain which state and territory regulators you will need to contact, and why. 

Find out more