Genesis Energy chief executive Marc England. Photo / NZ Herald
Genesis Energy chief executive Marc England. Photo / NZ Herald
Genesis Energy's operating earnings slipped by 3 per cent in its first half but the power generator and retailer upgraded its prospects slightly for 2022 - a year it says will be pivotal for the electricity sector.
The company's earnings before interest, tax, amortisation and fair value adjustments (ebitdaf) came to $210.3 million in the half while its net underlying earnings were $60.3m, up 1 per cent on the previous corresponding period.
The electricity sector has been the focus of a number of regulatory reviews, including the Electricity Authority's Wholesale Market Review and reviews of the August power outages.
Auckland-based Genesis' updated guidance was for ebitdaf of $430m to $440m for the current June year, subject to conditions, which would compare with last year's ebitdaf of $358m. The previous guidance was for ebitdaf of $420m to $440m.
Genesis, which runs the coal and gas-fired Huntly Power Station, said its result underlined the company's momentum as it invests for future growth in new renewable generation and enhanced customer experiences.
Chief executive Marc England said Genesis was building capability for the future.
"We're investing in enhanced digital capabilities, new sources of renewable generation, and in maximising the efficiency and output of our assets, all important for future growth as we manage the transition to a sustainable future," England said.
"This will be a pivotal year for the electricity sector and New Zealand's climate agenda," he said.
"There is significant investment in renewables being made, the Emissions Reduction Plan is due from the Government and Budget 2022 will allocate capital to our climate response.
"Genesis has a key role to play with agreements for wind and geothermal generation, expanding our portfolio into grid-scale solar, and continuing our work to ensure back-up generation at Huntly supports the transition."
Huntly remained a viable alternative to the proposed Lake Onslow pumped hydro scheme due to its location close to demand, infrastructure already in place, and its accessible workforce, he said.
Analysis Genesis had undertaken through to 2030 showed the electricity sector will be 96 to 98 per cent renewable by the end of the decade.
However, dry year risk and increased renewable intermittency will mean backup in the form of both peaking capacity and dry-year energy storage would still be required.
Biomass through Huntly's Rankine units could provide a relatively low-cost renewable backup option out to 2040, it said.
Genesis, which is just over half owned by the Government, raised its interim dividend by 1 per cent to 8.7 cps and said its dividend reinvestment plan would be reintroduced.
Genesis Energy's Huntly Power Station. Photo / NZ Herald
England told the Herald electricity provides New Zealand with probably one of the biggest opportunities for decarbonisation.
"We are seeing lots of new builds, projects being announced, and we have seen some debate about the market and whether the market is working or not, but really this is the year, we think, that will define the next 10 years for New Zealand and the opportunity is huge if it is managed well," England told the Herald.
"Our view is that we should not be afraid of adapting the market to be ready for longer term needs.
