Expert view

“Great care is needed in designing the Electricity Services Entry Mechanism – from contract types to key features – to ensure it supports the transition effectively. CEIG agrees that standardisation and fungibility are important, but the ultimate test is whether the ESEM can live up to its name — to be an effective mechanism to facilitate entry into the market. The ESEM contracts must be fit-for-purpose to unlock the large-scale investment needed to decarbonise the Australian economy and must be designed to give investors the confidence to commit capital."

We welcome the establishment of a Contract Co-design working group in 2026 to refine the Panel's approach. Over the last few months and with our advisors Baringa Partners, CEIG put together some commercial advice that was published alongside the final report. We are keen to pick up those conversations in 2026 to ensure that contracts are fit-for-purpose, particularly those to be offered to wind developers. As the providers of capital for tomorrow’s infrastructure, investors must be closely consulted in this critical process."

Marilyne Crestias Head of Policy & Advocacy, Clean Energy Investor Group

Expert view

“Building trust in rural and regional communities for the energy shift is critical to keeping Australia’s energy transition on track and to delivering energy projects at the lowest possible cost. Which is why we are disappointed that the review panel considers the achievement of broader social and economic outcomes through renewable energy projects to be ‘non-financial considerations’. This means they will not be embedded in the ESEM process (as currently done under the Capacity Investment Scheme), but as optional additional processes.

We strongly support the comment by the review panel that a ‘community-led strategic planning process’ — at the REZ level — would play an important role strengthening coordination, reducing the burden on developers, and enabling a streamlined framework for project development that drives positive social outcomes. But what we need to see now is ownership on who is obligated to deliver this."

Andrew Bray National Director, RE-Alliance

Expert view

“The NEM Review confirms what the market is already seeing. As large-scale batteries grow, electricity prices are being increasingly influenced by storage opportunity costs and how effectively they are optimised through their bidding.

The ESEM will succeed if batteries are operated to deliver energy, shaping and firming when the system needs them. Embedding the ESEM in legislation makes it enduring, but reliability outcomes still depend on procurement settings and the performance of an asset. The NEM Review is unusually frank about the derivatives market falling behind the physical transition. Batteries are being built into a market that still struggles to price long-term flexibility properly.”

Sahand Karimi CEO, OptiGrid

Expert view

“The report recommends a broad slate of mechanisms, designed to maintain market liquidity while ensuring new assets can be built when needed. A key aspect is the development of a ‘new language’ of financial contracts that will standardise the valuation and trading of energy output from renewables and batteries. In practical terms, this makes the price of renewable energy transparent and lets buyers source clean power from the market without complex operator-specific negotiations. These contracts will support the workings of a new entry support mechanism, the ESEM, where their standardised form will allow transparent comparison of the value offered by different projects and later allow that value to be recycled into the private market.

The report has now been endorsed by four out of five NEM jurisdictions, with the lack of support from Queensland notable but not unexpected. While the Panel were careful in designing recommendations to deliver – not impose – jurisdictional policy, it was always going to be harder to make the case for reform to a state with energy policy better aligned with the status quo. The saving grace may be that Queensland has not publicly rejected the review, either. With luck, discussions will continue and a pathway will be found that offers clear value to all states.”

Thomas MacDonald Senior Consultant, Baringa

Expert view

“In response to stakeholder concerns, the Panel refined its approach to Price Responsive Resources (PRR), notably shifting large consumer energy resources (CER) aggregations from active dispatch to visibility-only reporting. It is helpful the Panel acknowledged that mandating dispatch mode for all resources was impractical and could stifle innovation. However, these refinements did not constitute a retreat from the position that mandatory visibility is essential for operational efficiency. The Panel rejected the alternative of improving forecasting through modelling and machine learning.

What is striking is that the NEM review did not seem to grasp the full implications of a DER/CER-dominated future and it failed to adopt a demand-side-first approach. The reforms are focused narrowly on supporting supply to replace failing coal generation, which is a large task, but a bigger picture view of wraparound reforms, especially to support the uptake and utilisation of flexible demand would have lowered the cost of the transition.”

Gabrielle Kuiper Energy, sustainability and climate change professional

Expert view

“We believe we’re at a tipping point with on average about 61% of households across the NEM having a smart meter — this ranges from about 39% of the ACT to 100% in Victoria. This digitisation of the electricity market suggests we’re out of tipping point in terms of volume with the potential to move from an analogue type energy market in selling kilowatts and megajoules to a services type market which would align with the AEMC’s pricing for a consumer drive in future. We’ve also seen a rebalancing in electricity retail contracts where proportionally more cost is being allocated into the fixed charge. A deep dive into time of use pricing and how retailers respond to network tariff design shows that there are major differences in retailers' practices between jurisdictions.”

Gavin Dufty National Director Energy Policy and Research, St Vincent de Paul Society Australia