Genesis Energy Raises FY26 EBITDAF Guidance on Strong Hydro and Cost Control

Hydro Strength Drives Earnings Upgrade

Genesis Energy (NZX:GNE, ASX:GNE) has recalibrated its FY26 EBITDAF guidance upward to NZ$515–545 million, up from NZ$490–520 million, buoyed by a strong operational performance in Q3. The standout driver was a 55% surge in hydro generation to 745 GWh, underpinned by above-average water storage levels sitting at 117% of the long-term average as of late April. This hydrological boon has propelled the company’s renewable output and trimmed reliance on thermal generation.

While hydro power flourished, thermal generation plummeted 75% to 236 GWh, with Huntly’s Unit 5 largely offline due to market conditions and strategic fuel management. Gas was redirected to higher-value industrial customers, reflecting a disciplined approach to resource allocation amid evolving market dynamics.

Customer Base Shrinks as Focus Shifts to Margin Quality

Genesis reported a 6.6% decline in total customers to 491,532, continuing its deliberate portfolio optimisation strategy prioritising margin quality over sheer volume. This strategic pivot has seen a reduction in lower-margin customers, aiming to unlock better unit economics and more efficient energy allocation. Despite the drop in customer numbers and total electricity sales falling 94 GWh year-on-year, the company achieved an 11.2% uplift in electricity netback to NZ$173/MWh, driven by improved pricing and a value-over-volume approach.

The integration of Frank into the Genesis brand was completed during the quarter, simplifying the retail offering and enhancing customer proposition. Electrification initiatives also gained traction, with EV plan customers rising 42% year-on-year and public charging infrastructure supported through partnerships such as ChargeNet’s NIFF funding.

Renewables and Digital Projects Progressing Steadily

Genesis continues to advance its Gen35 strategy, with significant capital expenditure earmarked for renewables and digital transformation. Construction commenced on the 136 MW Tihori solar farm near Edgecumbe, with further progress at Leeston and Rangiriri solar projects. Battery energy storage system (BESS) development at Huntly is on track, with Stage 1 nearing commissioning and Stage 2 having reached final investment decision (FID).

Digital initiatives remain on schedule, including upgrades to billing and customer relationship management platforms, with residential migrations planned for Q2 FY27. The company is also exploring gas storage economics at Tariki and advancing biomass projects in collaboration with Natures Flame, reflecting a diversified approach to future energy solutions.

Kupe Production Impacted but Within Expectations

The Kupe Joint Venture, in which Genesis holds a 46% stake, experienced production setbacks due to two unplanned plant outages totaling 16 days. Oil production declined 36% to 23,000 barrels, while gas sales dropped 0.6 PJ year-on-year. Despite these disruptions, underlying performance remains aligned with operator forecasts, and asset optimisation efforts continue.

Meanwhile, Genesis maintains a robust coal stockpile exceeding one million tonnes, with stable supply chains and no immediate impact from export restrictions. The company is also trialling Australian coal as a potential alternative to Indonesian supplies to improve ash specifications.