Contact Energy's May 2026 report reveals increased mass market electricity and gas sales alongside reduced generation costs and robust hydro storage levels. The company continues to invest heavily in renewable projects amid mixed wholesale price trends.
- Mass market electricity and gas sales up 26% year-on-year
- Unit generation cost drops to $37.11/MWh from $49.26/MWh
- Wholesale electricity sales rise to 1,027GWh
- Hydro storage well above average in both islands
- $1.5 billion committed to renewable projects under construction
Sales and Generation Efficiency Improve
Contact Energy (NZX:CEN) recorded a notable 26% increase in combined mass market electricity and gas sales for May 2026, reaching 461GWh compared to 365GWh a year earlier. Retail gas sales also nearly tripled to 143GWh from 55GWh in May 2025. This uplift in customer demand came alongside a modest rise in mass market netback to $148.13/MWh, up from $145.13/MWh.
On the wholesale side, contracted electricity sales climbed to 1,027GWh, a 34% increase over the prior year. However, net revenue per MWh dipped to $159.86 from $169.49, reflecting softer wholesale prices. Electricity generated or acquired rose to 1,034GWh from 842GWh, driven by expanded renewable output and acquired generation.
Generation Costs Fall Sharply
Contact’s unit generation cost, including acquired generation, fell significantly to $37.11/MWh from $49.26/MWh in May 2025. Own generation costs improved even more dramatically, dropping to $24.31/MWh from $42.27/MWh. This marks a continuation of the cost efficiencies seen in recent months, supporting margins despite some pressure on wholesale prices.
Hydro Storage Remains Strong Amid Seasonal Variability
Hydro storage levels remain a bright spot, with South Island controlled storage at 120% of mean and North Island storage at 149% of mean as of 11 June 2026. The Clutha scheme storage also stands at 127% of mean. While inflows into Contact’s Clutha catchment were 89% of mean for May, this follows a period of variability with April inflows at 123% and March at 85%, underscoring the seasonal nature of hydro resources in New Zealand’s energy mix.
Renewable Projects Drive Capital Investment
Contact continues to invest heavily in renewable infrastructure, with $1.5 billion committed across four major projects under construction. The $273 million Kōwhai Park Solar project is expected online by Q3 2026, followed by the $712 million Te Mihi Stage 2 geothermal plant in Q3 2027. Battery storage is being expanded with the $235 million Glenbrook-Ohurua Battery 2 due in Q1 2028, while the $316 million Glorit Solar project targets Q4 2028. The solar projects are delivered through a 50/50 joint venture with Lightsource bp, reflecting Contact’s ongoing strategic partnerships in renewables.
Environmental and Social Metrics Show Progress
Contact’s ESG data for Q3 FY26 highlights a significant reduction in greenhouse gas emissions intensity from generation assets, dropping to 0.032 kt CO2-e per GWh from 0.136 kt CO2-e in the prior year. Freshwater use and geothermal fluid discharge metrics remain closely monitored, while biodiversity efforts continue to ramp up with 352 native trees planted and increased pest control activities. The company also reports a rise in community initiatives supported and a modest shift towards greater gender diversity in management and the board.
Bottom Line?
Contact Energy's May results reflect operational gains and ongoing renewable investments, but softer wholesale prices temper near-term revenue prospects.
Questions in the middle?
- How will fluctuating wholesale prices affect Contact’s earnings in the coming quarters?
- What impact will the completion of major renewable projects have on generation costs and capacity?
- Can Contact sustain its momentum in reducing emissions while scaling up renewables?