Genesis Energy's head office in Auckland. Photo: Supplied / Genesis Energy
Genesis Energy's full year profit dropped a third with low gas supply, hydro and wind levels and the outage of a power station unit squeezing earnings.
Key numbers for the 12 months ended June compared with a year ago:
- Net profit $131.1m vs $195.7m
- Revenue $3.04b vs $2.3b
- Operating earnings (EBITDA) $407m vs $523.5m
- Full year dividend 14 cents per share vs 17.6 cents per share
Operating earnings were down 22 percent on the previous year due to energy constraints.
The electricity company said lower rainfall, the country's gas shortage and the outage of its Huntly Power Station unit 5 lowered generation.
It had to burn more coal to make up for the shortage, which increased fuel costs by almost $170m and emissions by 60 percent.
Chief executive Malcolm Johns said gas supply will continue to be a problem, and it will need to keep using coal to provide energy security in the current market.
He said there was a strong correlation between gas and wholesale electricity prices.
"Genesis has been able to secure additional gas supply to support customers and generation at Huntly through agreements with market participants. Genesis has also taken a right to develop up to 10 PJ of gas storage with the Tariki Joint Venture. This will enable gas to be stored for use during winter months."
Johns said Genesis customers were not impacted by higher wholesale prices.
He said the company was set to build significant renewable generation including solar and wind farms.
"Over the next four years Genesis is targeting building 500MW of new renewable electricity and freeing up 500 MW of baseload generation at Huntly to support energy security. This is New Zealand's fastest, cheapest pathway to shoring up short term energy security in a high renewables grid.
"New Zealand has a capacity reserve requirement in current market settings. As we add more solar and wind to the grid, the country also needs an energy reserve setting, and all generators need to take a share of that energy reserve. The market will efficiently solve for both capacity and energy reserves once the settings are in place."
Johns said the volatility in the electricity and gas markets would likely continue to impact future earnings.