Contact Energy's February 2026 report reveals rising electricity and gas sales, improved generation efficiency, and robust hydro storage, underpinning a stable financial outlook for FY26.
- Mass market electricity and gas sales up to 295GWh from 237GWh year-on-year
- Unit generation costs nearly halved to $31.0/MWh for own generation
- Wholesale electricity sales increased to 816GWh with strong contracted volumes
- Hydro storage levels remain high at 98% (South Island) and 164% (North Island) of mean
- Renewable projects underway with $1.38 billion in capital expenditure planned
Rising Sales and Improved Efficiency
Contact Energy’s February 2026 monthly operating report highlights a notable increase in mass market electricity and gas sales, reaching 295GWh compared to 237GWh in the same month last year. This growth reflects stronger customer demand despite a cooler-than-average February, with national electricity consumption down 1.0% year-on-year but still supported by operational efficiencies.
On the generation front, Contact has achieved a significant reduction in unit generation costs. Own generation costs dropped to $31.0 per megawatt-hour, nearly halving from $60.30/MWh in February 2025. This improvement is a key driver behind the company’s enhanced wholesale performance, where contracted electricity sales rose to 816GWh from 632GWh, underscoring robust market positioning.
Strong Hydro Storage and Market Prices
Hydro storage levels remain healthy, with South Island controlled storage at 98% of mean and North Island storage at an impressive 164%. These elevated water reserves provide a buffer against supply volatility and support Contact’s renewable generation mix. Meanwhile, futures prices for the Otahuhu wholesale electricity market have climbed steadily, reaching $220.3/MWh for the second quarter of 2026 as of mid-March, reflecting tightening market conditions.
Renewable Projects and Capital Investment
Contact continues to invest heavily in renewable infrastructure, with four major projects under construction. These include the Glenbrook-Ohurua Battery 1 and 2, Kōwhai Park Solar, and Te Mihi Stage 2 geothermal development, collectively representing over $1.38 billion in approved capital expenditure. The company’s strategic focus on expanding battery storage and solar capacity aligns with New Zealand’s transition to a low-carbon energy future.
Environmental and Financial Outlook
Environmental metrics show progress, with greenhouse gas emissions from generation assets declining from 132kt CO2-e in Q2 FY25 to 90kt CO2-e in Q2 FY26. Freshwater usage has also decreased, reflecting improved operational sustainability. Broker consensus EBITDAF forecasts for FY26 remain stable around NZD 1 billion, excluding integration costs related to the Manawa Energy acquisition, indicating market confidence in Contact’s financial trajectory.
Overall, Contact Energy’s February operating report paints a picture of operational strength, cost efficiency, and strategic investment in renewables, positioning the company well amid evolving market dynamics and environmental expectations.
Bottom Line?
Contact’s blend of rising sales, lower costs, and renewable investments sets the stage for a pivotal year ahead.
Questions in the middle?
- How will Contact’s renewable projects impact generation mix and costs beyond FY26?
- What risks could arise from fluctuating wholesale electricity prices and hydro inflows?
- How might integration costs from Manawa Energy affect longer-term profitability?