We examine how the proposed Electricity Services Entry Mechanism (ESEM) contracts would work, how they divide risk between buyers and sellers, and the key questions that remain unresolved.
The proposed Electricity Services Entry Mechanism (ESEM) offers long-term contracts to new generation and storage projects, covering bulk energy, shaping and firming.
The contracts are designed to be standard enough for retailers and large energy users to value and trade, while still helping new projects secure finance. To do this, they leave project-specific risks with sellers and transfer broader market risks to buyers.
The ESEM Administrator, the body responsible for administering the mechanism, would buy contracts before selling them into the market, with any losses recovered from electricity users in the region.
An industry-led co-design process identified preferred contract structures in August 2026. This article explains how the three proposed contracts work, where risk sits, and which design questions remain unresolved.
The full article is now live in the CORE Markets platform.
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