Nexa Advisory welcomes the opportunity to provide a submission on the National Electricity Market (NEM) wholesale market settings regulatory reforms.
This submission focuses on the conditions required for the Electricity Services Entry Mechanism (ESEM) and strategic reserve to support timely replacement, credible coal closure commitments and transmission delivery. Nexa maintains its support for a permanent Market Making Obligation that improves liquidity, transparency and access to derivative markets, supported by transparent and inclusive contract co-design, and for the effective integration of price-responsive and consumer energy resources into the wholesale market.
Nexa supports the ESEM as a reform to strengthen long-term investment signals for renewable generation and storage.
However, even the best-designed ESEM, or any other investment support mechanism, cannot on its own close the short- to medium-term investment gap. Success depends on two underpinning conditions: credible coal closure certainty and timely transmission delivery. Both require government action alongside market reform.
Firm, enforceable coal retirement commitments must be backed by the out-of-market strategic reserve Nexa has advocated. A targeted reserve provides reliability insurance, giving governments confidence to allow coal to close on schedule and investors a clearer signal to commit to replacement generation and storage. Without these measures, delayed investment can prompt further coal extensions, prolonging consumer exposure to ageing plant outages, tighter supply and higher, more volatile prices.
Transmission is the other essential pillar and continues to be the missing link. It is critical nation-building infrastructure that requires bipartisan support and sustained Commonwealth and state leadership. Governments must resolve duplicative approvals and regulatory hurdles to move priority projects from scenario planning into delivery, while maintaining environmental protections, meaningful community engagement and fair outcomes for landholders.
Key recommendations
- Establish firm coal closure commitments backed by strategic reserves – jurisdictions should establish firm, enforceable retirement dates, with narrowly defined and transparent exceptions. Targeted, out-of-market strategic reserves should provide the reliability insurance needed to enable scheduled closures and strengthen signals for replacement investment.
- Retain state responsibility for reserve procurement with independent safeguards – state Energy Ministers should retain discretion to direct competitive procurement through ESEMA, informed by published, independent assessments of reliability need and consumer value, nationally consistent requirements and clear activation triggers. Reserves must be available in time to support the relevant closures.
- Deliver priority transmission as critical national infrastructure – secure bipartisan support and joint Commonwealth and state leadership to streamline planning and environmental approvals, remove unnecessary regulatory duplication and meet connection dates for both ESEM-supported and market-led generation and storage.
- Hold regulated transmission monopolies accountable – strengthen regulatory scrutiny of costs, on-time and on-budget incentives, and public reporting of project milestones, overruns and delays. Make contestability the default for major projects where feasible and assess credible non-network and market-led alternatives alongside network augmentation.
- Establish an actionable National Delivery Plan coordinated by ESEMA – align jurisdictional commitments, coal closures, ESEM procurement and enabling infrastructure under ECMC oversight. Publish delivery milestones and responsible agencies, with a two-way feedback loop into existing planning processes and escalation when progress slips. The Anticipated Entry Trajectory (AET) and tender plan should remain procurement instruments within this delivery framework.
Read our submission here: Nexa Advisory – NEM Review Regulatory Reforms submission