Genesis Energy has lifted first-half earnings 28 percent as low hydro-lake levels in the South Island boosted the company's demand for wholesale electricity and announced plans to completely phase out coal use by 2030.
Coal mining. (file image)
Earnings before interest, tax, depreciation, amortisation, and fair value adjustments, the favoured measure of power companies, rose to $199.5 million in the six months ended December 31 from $155.7m a year earlier, it said on Wednesday.
Revenue climbed 26 per cent to $1.21 billion.
Net profit dropped 24 per cent to $28.4m as depreciation, depletion and amortisation costs jumped about 41 per cent to $103.5m and the fair value of financial instruments posted a loss of $19.7m, turning around a gain of $1.9m in the year-earlier period.
Genesis's wholesale division lifted earnings 29 per cent to $106.4m, the biggest contribution to the group, while Kupe contributed earnings of $55.7m, a gain of 75 per cent.
Genesis has a 46 percent stake in the Kupe Joint Venture, which owns the Kupe oil and gas field in the offshore Taranaki Basin.
"Wholesale performance was very strong for the half year with record wholesale prices for November and December and higher than average generation," chief executive Marc England said.
New Zealand's spring and summer months left hydro-lakes in the South Island at levels below average, meaning Meridian Energy and Contact Energy were more reliant on the wholesale market than their rivals with North Island hydro-storage.
According to Mr England, Genesis's diverse generation portfolio played a central role in maintaining the reliable supply of electricity when hydro lake storage is low but coal only makes up a small portion of total grid electricity generation and
"New Zealand now needs a plan to move away from a dependency on it," he said.
Chairwoman Jenny Shipley says that by 2025 Genesis has committed to not use any coal to generate electricity in normal market conditions and aims to phase it out completely by 2030.
The company had planned to wind up the coal-fired units at the Huntly power station by the end of 2018, but extended their life for another four years in 2016.
The shares rose 0.4 per cent to $2.39 and have gained 10 per cent over the past year.