Reduced Thermal Output Signals Shift in Genesis Energy’s FY26 Strategy
Genesis Energy reported a robust start to FY26, boosted by strong hydro generation and strategic digital investments, setting a positive tone for the year ahead.
- Hydro generation up 24% to 904 GWh due to above-average rainfall
- Thermal generation down 498 GWh reflecting reduced coal and gas use
- Huntly Battery Energy Storage System foundations ready for December deliveries
- Biomass supply agreements signed with Carbona and Foresta, supported by $6M EECA funding
- Digital transformation program on track with $145M investment in key systems
Strong Hydrological Conditions Drive Generation
Genesis Energy kicked off FY26 with a notably strong first quarter, underpinned by favourable hydrological conditions that boosted hydroelectric output by 218 GWh compared to the prior year. This 24% increase to 904 GWh was supported by lake levels rising to 113% of average by the end of September, providing ample water security heading into the summer months. The company’s diversified generation portfolio demonstrated resilience, with hydro playing a pivotal role in offsetting thermal generation needs.
Thermal Generation and Portfolio Optimisation
Reflecting the strength of its renewable assets, Genesis reduced reliance on coal and gas-fired thermal generation, which fell by 498 GWh year-on-year to 784 GWh. This shift aligns with the company’s strategic focus on portfolio optimisation and emissions reduction. The Huntly power station’s planned outage for Unit 5 commenced in early October, with 2 PJ of gas successfully on-sold to the market, demonstrating effective operational management during maintenance periods.
Advancing Renewable and Storage Projects
Progress continues on the Huntly Battery Energy Storage System (BESS), with foundations laid and equipment deliveries scheduled for December. Transformer manufacturing is on track for commissioning in Q1 FY27, marking a significant step in enhancing grid flexibility and supporting renewable integration. Additionally, Genesis has secured key biomass supply agreements, signing a memorandum of understanding with Carbona for 120,000 tonnes per annum and a term sheet with Foresta for 180,000 tonnes per annum. The company also secured $6 million in funding from the Energy Efficiency and Conservation Authority (EECA) to support biomass development, underscoring its commitment to sustainable energy sources.
Digital Transformation on Track
Genesis’s digital investment program remains firmly on course, with a $145 million budget allocated to three major initiatives – billing and customer relationship management (CRM) system modernisation, finance system upgrades, and enhancements to wholesale and market trading platforms. The first release of the new billing and CRM platform is set to go live by the end of October, covering approximately 50,000 installation connection points (ICPs), with subsequent releases progressing well. These upgrades aim to improve customer experience and operational efficiency.
Stable Kupe Joint Venture and Retail Growth
The Kupe Joint Venture, in which Genesis holds a 46% stake, reported stable production levels above operator forecasts, despite a slight year-on-year decrease in oil and gas sales volumes. Retail customer numbers edged up by 0.9% to approximately 503,000, supported by growth in electric vehicle customers and expanded fast-charging infrastructure through ChargeNet, now exceeding 520 fast chargers nationwide. These developments highlight Genesis’s ongoing efforts to capitalise on electrification trends and customer engagement.
Looking Ahead
Genesis reaffirmed its FY26 guidance, buoyed by the strong start and strategic initiatives underway. The company plans to elaborate on its Gen35 strategy, capital allocation framework, and long-term earnings pathway at its upcoming Investor Day in Taupo on 26-27 November 2025, an event likely to provide deeper insights into its growth trajectory and sustainability ambitions.
Bottom Line?
Genesis Energy’s strong Q1 performance and strategic investments position it well for a transformative FY26.
Questions in the middle?
- How will the Huntly BESS impact Genesis’s generation mix and grid services once operational?
- What are the financial implications of the biomass supply agreements and EECA funding on future earnings?
- How might evolving hydrological conditions affect Genesis’s renewable generation and thermal reliance in coming quarters?