Contact Energy’s Generation Cost Falls 32% as Sales Surge to 385GWh
Contact Energy's October 2025 report reveals rising electricity and gas sales, improved netbacks, and reduced generation costs, supported by robust hydro storage and advancing renewable projects.
- Mass market electricity and gas sales increased to 385GWh
- Unit generation cost decreased to $35.93/MWh, own generation cost at $30.2/MWh
- Contracted wholesale electricity sales rose to 997GWh
- Hydro storage levels significantly above mean in both islands
- Renewable projects underway with $1.1 billion in approved costs
Strong Sales Growth and Improved Margins
Contact Energy’s October 2025 Monthly Operating Report highlights a notable increase in mass market electricity and gas sales, reaching 385GWh compared to 320GWh in October 2024. This growth is complemented by an improved mass market netback of $146.09 per megawatt-hour, up from $133.29 the previous year, signaling enhanced profitability in retail operations.
The wholesale segment also showed strength, with contracted electricity sales climbing to 997GWh, a substantial rise from 699GWh a year earlier. Despite a slight dip in electricity and steam net revenue to $116.76/MWh from $136.30/MWh, the overall volume growth supports a positive outlook for wholesale earnings.
Lower Generation Costs and Robust Hydro Storage
Contact Energy achieved a significant reduction in unit generation costs, which fell to $35.93/MWh from $52.62/MWh in October 2024. Own generation costs were even lower at $30.2/MWh, down from $38.7/MWh, reflecting operational efficiencies and possibly favourable fuel or maintenance conditions.
Hydro storage levels remain a key strength, with South Island controlled storage at 151% of the mean and North Island at 120%. The Clutha scheme storage is also robust at 135% of mean, supported by inflows into the Clutha catchment at 195% of average. These elevated water reserves provide a buffer against dry conditions and support stable hydroelectric generation.
Advancing Renewable Energy Projects
Contact Energy continues to invest heavily in renewable infrastructure. The Glenbrook-Ohurua battery energy storage system (BESS) is expected online in Q1 2026 with a $163 million budget. The Kowhai Park Solar project, delivered in partnership with Lightsource bp, targets Q2 2026 completion with $273 million in approved costs. The largest undertaking, Te Mihi Stage 2 geothermal project, is scheduled for Q3 2027 with a $712 million investment.
These projects underscore Contact’s commitment to expanding its renewable portfolio, aligning with broader climate goals and enhancing long-term generation sustainability.
ESG Progress and Operational Integration
The report also details environmental, social, and governance (ESG) metrics, showing a reduction in greenhouse gas emissions from generation assets and ongoing biodiversity initiatives such as native tree planting and pest control. Operational data now fully integrates Manawa Energy since July 2025, providing a comprehensive view of Contact’s expanded asset base and operational footprint.
Overall, the October report paints a picture of a company improving operational efficiency, growing sales volumes, and investing strategically in renewables, while maintaining strong environmental stewardship.
Bottom Line?
Contact Energy’s October results set the stage for continued growth and cost discipline, but market and weather variables remain key to watch.
Questions in the middle?
- How will the integration of Manawa Energy impact Contact’s future cost structure and earnings?
- What are the risks to generation costs if fuel prices or maintenance needs shift unexpectedly?
- How will the timing and execution of renewable projects influence Contact’s competitive position?
