About CEIG

The Clean Energy Investor Group (CEIG) represents domestic and global renewable energy developers and investors. Its members oversee approximately 18GW of renewable energy capacity in the National Electricity Market (NEM) across 139 power stations. This combined portfolio is valued at more than $41 billion, with a future project pipeline estimated at more than 150GW across Australia.

Executive summary

CEIG supports the findings of the NEM Review Panel regarding the primary challenge facing new clean energy investment: the ‘tenor gap’, or the mismatch between long project lifespans and shorter available contract terms. However, the group expresses concern that the proposed design of bulk energy Electricity Services Entry Mechanism (ESEM) contracts for wind projects prioritises contract fungibility over the requirements for investment entry. Shortlisted contracts, including Dispatch-Weighted Average (DWA) swaps, capped time-of-day blocks, and baseload swaps, risk introducing additional cost, complexity, and wind-specific risks that could undermine confidence in the ESEM as a mechanism for new investment.

Introduction to the NEM Review

In November 2024, the Australian Government commissioned an independent panel to review NEM wholesale settings to promote investment in firmed renewable energy and reduce price volatility. Following a draft report in August 2025 and a contract co-design pilot in September-October 2025, the Final Report was released on 16 December 2025. It contained 12 core recommendations for short-, medium-, and long-term market improvements. Ministers agreed in principle to these recommendations in December 2025, with the exception of Queensland.

Context and investment trends

Investment in wind generation is currently stalling. Only 2 wind projects reached a Final Investment Decision (FID) in 2025 in the NEM, totalling 0.46GW, which represents a significant decrease from the 1.97GW achieved in 2024. Between 2023 and 2025, utility-scale photovoltaic (PV) projects reached FID at a rate 75% higher than wind projects. Key barriers cited for this trend include planning and regulatory delays, funding uncertainty, rising construction costs, and transmission constraints.

Cost of wind is increasing

While solar and battery capital costs continue to fall, wind costs are rising. Solar costs decreased by approximately 8% per year, and battery costs fell by 20% in 2024-25. Conversely, wind costs increased by 8% in 2023-24 and 6% in 2024-25. Despite these rising costs, grid modelling by AEMO shows wind is critical to achieving net zero at least cost. Wind generation places downward pressure on wholesale prices; a 1 GWh increase in wind generation can reduce daily prices by up to $1.30/MWh across major Australian markets.

CEIG’s position on ESEM and contract design

CEIG supports the use of standardised, fungible contracts to improve liquidity in the derivatives market but argues that investment entry must be the primary priority. While the group supports shortlisted ESEM contracts for shaping and firming services, it warns that standardised structures for bulk variable renewable energy (VRE) may not adequately reflect generation variability. CEIG advocates for regular tender processes based on price competition and recommends that AusEnergy Services (ASL) serve as the ESEM Administrator due to its commercial expertise.

Summary of contract co-design process

A pilot co-design process was convened with industry representatives, including firms such as AGL, ANZ, and Origin Energy. CEIG identified a ‘representation gap’ in this process, noting an absence of pure-play wind developers. This led to a prioritisation of contract fungibility over investment entry. CEIG recommends that future processes be industry-led, transparent, and inclusive of diverse representation, specifically requiring at least two pure-play wind developers.

Outcomes from the pilot CCD process

The Panel concluded that Ex-post Dispatch-Weighted Average (DWA) swaps are the preferred bulk VRE contract, though capped Time of Day (ToD) blocks remain a workable option. However, CEIG notes that DWA products are not commonly used for bulk energy today and may introduce unnecessary complexity and risk. Analysis indicates that TWA (baseload) swaps are unacceptable for supporting single-asset entry as they expose generators to unknown future revenue risks and price cannibalisation.

Summary CEIG recommendations

CEIG recommends that the 2026 contract co-design process must prioritise entry by ensuring contracts are investable and reflect wind generation profiles. The process should be collaborative and guided by transparent Terms of Reference. Learning from the pilot, the ESEM Administrator and the AER should facilitate rather than direct outcomes, allowing sufficient time for testing to ensure contracts are practical and financeable for developers.