How Is Contact Energy Turning Stable Sales into Rising Wholesale Revenue?
Contact Energy's June 2025 report reveals stable mass market electricity and gas sales with improved netback prices, alongside rising wholesale revenues and ongoing renewable energy investments.
- Mass market electricity and gas sales slightly down but netback prices improved
- Wholesale electricity sales and net revenue increased year-on-year
- Stable unit generation costs despite higher own generation expenses
- Hydro storage levels above average in both North and South Islands
- Significant capital investment in renewable projects underway
Steady Retail Performance with Improved Pricing
Contact Energy's monthly operating report for June 2025 highlights a largely stable retail business, with mass market electricity and gas sales totaling 410GWh, a slight dip from 416GWh in June 2024. However, the company achieved a notable increase in mass market netback prices, rising to $146.32 per megawatt-hour from $126.34 the previous year, reflecting improved pricing power in a competitive market.
Wholesale Business Sees Revenue Growth
The wholesale segment showed stronger momentum, with contracted electricity sales climbing to 810GWh compared to 795GWh a year earlier. Net revenue from electricity and steam also rose significantly to $186.08 per megawatt-hour, up from $167.12, underscoring favourable market conditions. Electricity generation remained steady at 846GWh, with unit generation costs stable at $54.27 per megawatt-hour, despite a rise in own generation costs to $47.3 from $42.1.
Robust Hydro Storage and Market Pricing
Hydro storage levels remain healthy, with South Island controlled storage at 95% of mean and North Island at an impressive 148% as of mid-July 2025. This bodes well for generation flexibility and cost management. Meanwhile, Otahuhu futures prices for the fourth quarter of 2025 have edged higher, settling at $138.3 per megawatt-hour in mid-July, signaling market confidence in electricity demand and pricing.
Renewable Projects Drive Future Growth
Contact Energy continues to invest heavily in renewable infrastructure, with three major projects under construction, the Glenbrook Battery Energy Storage System (BESS) expected online in early 2026 with a $163 million budget; Kowhai Park Solar, slated for mid-2026 at $273 million; and the substantial Te Mihi Stage 2 geothermal project, targeted for late 2027 with a $712 million investment. These projects align with the company’s strategic focus on sustainable energy and long-term resilience.
Corporate Costs and Environmental Progress
The report also notes $17.9 million in unallocated corporate costs related to the proposed acquisition of Manawa, including transaction and integration expenses. On the environmental front, Contact Energy reports a reduction in greenhouse gas emissions from generation assets and ongoing commitments to biodiversity and community initiatives, reinforcing its ESG credentials.
Bottom Line?
Contact Energy’s June results set the stage for a pivotal year as renewable investments ramp up and acquisition costs weigh on near-term profitability.
Questions in the middle?
- How will the Manawa acquisition impact Contact Energy’s financials and operations going forward?
- What are the expected operational benefits and timelines for the Glenbrook BESS and Kowhai Park Solar projects?
- Can Contact maintain or improve wholesale net revenue amid evolving market dynamics and generation costs?
