The national electricity market (NEM) is at the beginning of its fourth transition, from a centralised, fossil-fuel based system to a decarbonised, decentralised, digitalised system of large- and small-scale renewable generation and storage. Benefits cited in the literature include placing downward pressure on electricity prices and the creation of thousands of jobs in regional communities. Key risks facing the transition include the short-term impact on energy affordability and the challenge of building electricity infrastructure at an unprecedented rate and scale at a time when there are significant skills, labour and material shortages.

This paper provides an overview of the NEM and its complex regulatory and operational framework. It also identifies trends and risks across the electricity supply chain, explores recent electricity price rises, and sets out the Australian and New South Wales government's reform programs.