As the country's power crisis eases, Australia's energy market operator says it will remove its suspension of the major wholesale electricity market.
On Thursday, the limitations will be momentarily loosened before a final choice is made.
Following a spike in pricing, it took an extraordinary step last week and banned trading on the site.
New South Wales residents were also advised by officials to conserve electricity due to shortage worries.
Sydney, the largest city in the nation, is located in the state, which has a population of about 8 million people.
The Australian Energy Market Operator (Aemo) said on Wednesday that it will restart trading on Thursday at 4:00 a.m. in Sydney because it had "seen a clear improvement in market conditions" (19:00 BST Wednesday).
Before deciding to formally lift the suspension, it noted that it will keep an eye on the market for at least 24 hours.
In a televised press conference, Aemo CEO Daniel Westerman stated, "We have seen over 4,000 megawatts of power come to service since this time last week, and that means the danger of any deficit has diminished considerably."
Australia is one of the largest exporters of coal and liquefied natural gas, but since last month, it has been experiencing a power crisis.
It has long been criticised for not doing enough to reduce its emissions by investing in renewable energy sources because it still uses coal to generate three quarters of its power.
The nation has recently been affected by shortages of coal, power outages at many coal-fired power plants, and rising energy prices worldwide.
Energy demand has increased as a result of the cold weather and Australia's economy opening up following the relaxation of Covid-19 limitations.
All of this contributed to the wholesale market's power prices rising over the A$300 (£170; $208) per megawatt hour price ceiling imposed by Aemo.
However, numerous generators chose to hold back capacity since that cap fell below their cost of production.
Aemo said last Wednesday that it would set prices directly and pay generators for the deficit before taking the extraordinary step of shutting the market.
Additionally, it urged New South Wales households to "temporarily limit their energy usage."
Mr. Westerman claimed at the time that Aemo had prioritised grid security and keeping the lights on over all other considerations.
He said, "We requested generators to bid their facility back into the system, and that is occurring more frequently, providing us more awareness of generating in real time.