Power generator and retailer Genesis Energy says it is in advanced discussions to build New Zealand's biggest solar farm in northern Waikato.
The company, which earlier reported a 15 per cent decline in operating earnings to $167.2 million, said its "future-gen" programme was aimed at transitioning it away from baseload thermal generation and delivering on its commitment to ditch coal by 2025.
The 300 megawatt solar farm will dwarf Refining NZ's 27 megawatt solar development, which is aimed satisfying 10 per cent of the Marsden Point refinery's requirement.
Genesis said construction had begun on the new 450 GWh per annum Waipipi Wind Farm in Taranaki, through the Tilt Renewables partnership.
The wind farm will be operational in 2021.
Genesis said the solar and wind projects should collectively enable a reduction of 550,000 tonnes of carbon dioxide emissions a year.
The solar project would generate about 550 gigawatt-hours of electricity and would have "nice synergies" with the gas- and coal-fired generation Genesis operates at Huntly, chief executive Marc England said. Genesis also operates the Tongariro and Waikaremoana hydro schemes in the North Island and the Tekapo scheme in the South Island.
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In its result, Genesis said higher fuel costs had driven its first half net profit down by $40m to just $9m in the first half to December 31, but that it expected an improved second half.
The company announced a slightly improved interim dividend of 8.525c, up from 8.45c in the previous first half.
A strong retail performance was offset by challenging wholesale market conditions due to lower hydro generation and gas shortages.
England the second half was looking far better than the first.
"It's been a tough first half in the wholesale market although we expect it to be dramatically better in the second half," he said.
"We are all used to the volatility in the sector," he told the Herald.
"It just reminds us all of the dependence of the electricity sector has on water and the challenges that we face moving forward from an 85 per cent renewables to having a more renewable sector," he said.
"Our retail segment is going great guns. Churn is falling, loyalty is increasing, the cost of service is falling and margins are growing," he said.
"While we have had a turbulent first half due to low hydro levels and the high cost of thermal fuel, those should correct themselves in time."
Subject to normal hydro inflows and expected market conditions, it said its earnings before interest, tax, depreciation, amortisation and financial instruments for the year to June had been revised down slightly to a range of $360m to $370m from a previous range of was $360 to $380m.
During the period the Crown, as the majority shareholder in Genesis, received $45.1 million dividends of which $35.4 million was paid in cash and $9.7 million was paid in shares.
Genesis shares last traded on the NZX at $3.23 up 5c. The stock has gained 15 per cent over the last 12 months.
- Additional reporting BusinessDesk