Re-linking the NEM: could fungible ESEM ‘bulk energy’ contracts be bankable? - Renew Economy

A proposed scheme to create standardised "bulk energy" contracts under an expanded Electricity Security and Energy Markets (ESEM) framework could allow renewable energy projects to bundle their output into fungible, bankable instruments. The model aims to make it easier for financiers to underwrite renewable capacity by giving intermittent solar and wind assets a tradeable, contractual form that behaves more like conventional power purchase agreements. Renew Economy reports the concept is under discussion as a potential tool to attract capital to the renewable transition.

Where this fits

This proposal sits squarely on the cost and reliability problem. Renewables are cheap per megawatt-hour in isolation, but their weather-dependent output requires either massive overbuilds to guarantee supply during low-generation periods, or firm backing, typically gas. Creating financial instruments that bundle and smooth intermittent output does not change the underlying physics: the grid still needs firming capacity and transmission overbuild. The proposal treats a financing problem as if engineering and physics constraints do not exist. It is also a sovereignty issue: Australia remains locked into a supply chain for panels, batteries, and inverters dominated by Chinese manufacturers powered by coal. Standardised contracts do nothing to address that structural dependence.

What it means

A better-packaged renewable contract may lower financing costs at the margin, but it cannot solve the need for firm dispatchable power or the material intensity of a renewables-only transition. Australia's grid will still require gas plants running below efficient capacity factors, or battery storage at costs and scale not yet demonstrated. A firm, energy-dense alternative, nuclear, would deliver low-emission power without weather dependency or Chinese supply-chain exposure, but remains legally prohibited. Standardising renewable contracts is engineering around a constraint that policy itself could remove.