Genesis and Partners Secure 150 MW Huntly Capacity for 10 Years

A Strategic Response to Energy Vulnerability

In a decisive step to bolster New Zealand’s energy resilience, Genesis Energy has joined forces with Mercury, Meridian, and Contact to sign detailed agreements centered on Huntly Power Station. These agreements, spanning a decade, are designed to ensure critical backup electricity generation and fuel availability, addressing the precarious supply conditions witnessed during the harsh winter of 2024.

That winter exposed vulnerabilities in the national energy mix, with a rapid decline in natural gas supplies, coupled with low hydro lake levels and diminished wind generation, creating a significant supply pinch. The new agreements aim to mitigate such risks going forward, particularly given the uncertain medium-term outlook for gas availability.

Huntly Power Station, The Backbone of Security

Huntly Power Station, New Zealand’s largest power generation site, plays a pivotal role when renewable sources underperform. Its three Rankine units, each capable of 240 MW, can operate on gas or coal, providing a flexible and reliable generation option. Genesis is also exploring biomass as a cleaner alternative to coal, signaling a potential shift towards more sustainable fuel sources in the future.

One of the Rankine units was slated for decommissioning in early 2026, but the new agreements underpin significant investment to keep it operational until 2035. This commitment ensures that the station remains a cornerstone of national energy security.

Huntly Firming Options and Fuel Reserves

The agreements include Huntly Firming Options (HFOs) for 150 MW, divided equally among Contact, Mercury, and Meridian. These contracts grant buyers virtual access to generation capacity, not energy itself, allowing them to call on this capacity as needed to stabilize the grid and manage price volatility.

Additionally, Genesis will establish a solid fuel reserve of up to 600,000 tonnes, initially composed of coal but with plans to transition to biomass as it becomes viable. This reserve acts as a buffer for dry winters with low hydro inflows, further strengthening the security of supply.

Notably, the existing short-term HFOs demonstrated their value in early 2025 by enabling holders to conserve hydro lake water, helping to avoid the wholesale price spikes seen the previous year.

Looking Ahead, Regulatory Review and Market Impact

The agreements are subject to review by the Commerce Commission, with an intended start date of 1 January 2026. If approved, these arrangements will not only secure Huntly’s capacity but also open the door for Genesis to offer further HFOs and risk products to a broader market, including independent retailers and industrial customers.

This initiative represents a significant capital commitment and a strategic pivot to balance New Zealand’s renewable ambitions with pragmatic energy security measures.