The ‘missing money’ gap for firming assets in Australia's NEM
4 min read 31 August 2025
If it solves the ‘missing money’ problem for firming assets, the NEM Review will have been a success.
Australia’s National Electricity Market (NEM) current energy-only design is generally working well, with renewables like wind, solar and short-duration storage already viable with little to no government support. Subsidies are mainly justified when governments want to accelerate deployment to hit climate or renewables targets, as seen through CIS and LTESA schemes.
Where the market falls short is in delivering firming capacity – long-duration batteries, pumped hydro, and OCGTs – due to the “missing money” gap between what these assets earn and what they need to be viable. The proposed Electricity Services Entry Mechanism (ESEM) seeks to close this gap by providing long-term firming contracts, enabling investment while sharing costs between consumers and the market.
Key challenges lie in accurately sizing system needs, designing fit-for-purpose contracts, supporting bid-readiness for complex projects, and integrating essential system services. The NEM Review’s success will hinge on whether the ESEM can attract timely investment in firming assets without governments having to directly build them.
Read the full article published by The Energy here.
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