Navigating the NEM access standards reforms: key energy insights
In a significant move toward modernising Australia’s electricity grid, the Australian Energy Market Commission (AEMC) has recently introduced two ‘Packages’ in a major reform and potential reform of the National Electricity Market (NEM) access standards.
Both packages stem from the Australian Energy Market Operator’s (AEMO) 2023 comprehensive review of technical requirements for connection and are aimed at meeting the evolving demands of Australia’s electricity grid.
We outline the key take-aways from both ‘Packages’ and discuss their potential implications for developers of energy projects.
Package 1: Modernising connection requirements
Following stakeholder consultation in 2024, the AEMC published its final determination on 'Package 1' of improvements and updates to the NEM access standards, having regard to changes in technologies and their capabilities.
'Package 1' aims to make grid connections faster and more cost-effective for renewable energy generators and developers, helping to facilitate the transition to a low-emission energy system and further bridging the gap towards the 82 per cent renewable energy target.
Key changes include:
amending access standards by plant type: NEM access standards will now apply by plant type rather than registration category, ensuring a consistent approach to managing system security and reflecting the increasing variety of plant and technologies connecting to the grid.
generator reforms: integrated resource systems and synchronous condensers to align with best power system performance, streamlining connection and improving the overall resilience of the power system.
faster connection processes: by making the standards more prescriptive and reducing ambiguity, it is anticipated that delays and costs for new NEM entrants will decrease.
The 'Package 1' updates are set to commence on 21 August 2025.
Package 2: Addressing emerging technologies and load growth
The AEMC has also published the draft ‘Package 2’ consultation paper which proposes new requirements for large energy users to improve power system security. These measures are aimed at ensuring the grid can accommodate the growing demand from large load users, such as data centres, while maintaining stability and reliability across the NEM.
Within the ‘Package 2’ consultation paper, AEMC has published data from AEMO demonstrating the size of connection enquiries and connection applications for new data centres. While only a subset of these connection enquiries will ultimately be connected, the diagram below, provided by AEMO to AEMC[1], indicates there is likely to be significant growth in the size of data centres connecting to the NEM.
Reforms that strengthen system resilience have recently become increasingly pressing following the North American Eastern-Interconnection large load incident in which 1500 MW of load was disconnected from the grid.
Accordingly, the key propositions include:
- new access standards for large loads: forecasting of large, inverter-based loads, including data centres, has prompted AEMC to facilitate the planning and design of large loads in a way that supports future security.
- new access standards for HVDC: allowing HVDC (High Voltage Direct Current) link owners to procure system strength services from a third party to meet short circuit ratio requirements – demonstrates flexible connection options to accommodate the variable nature of generation and large load demands.
- enhanced System Strength Requirements: stronger requirements for system strength to maintain grid stability with the increasing penetration of renewable energy sources.
What do the Packages mean for energy developers?
The reforms could have substantial impacts on developers of energy projects:
shorter connection timelines: the updated connection requirements and streamlined processes may shorten the connection timelines for projects and facilitate market entry and project delivery in shorter timeframes.
updates in regulatory compliance: transition provisions under Package 1 will determine whether projects follow the old or new standard, depending on their stage in the connection process. The new access standards will only apply by default for connection enquiries that have not received an NSP response by 21 August 2025. It is expected that more detailed standards should provide developers with clearer expectations and reduce regulatory uncertainty.
Conclusion
The AEMC’s introduction of Package 1 and the proposed Package 2 reforms marks a considerable step in modernising the NEM to better support Australia’s energy transition. By updating connection standards and addressing the needs of both new renewable generation and large energy users, these reforms aim to enhance grid resilience, reduce connection delays, and improve regulatory clarity.
This article was prepared with the assistance of Karun Dhaliwal, Law Graduate.
[1] Australian Energy Market Commission, Consultation paper: Improving the NEM access standard - Package 2 (Report, 2025) 18.
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