Contact Energy Limited (ASX: CEN) is one of New Zealand’s largest integrated energy companies, operating a diversified portfolio of generation assets including geothermal, hydro and thermal power stations.
The company supplies electricity, gas and telecommunications services to residential, commercial and industrial customers across New Zealand. Contact’s generation portfolio is increasingly focused on renewable energy, with geothermal and hydro assets forming a significant proportion of total output.
As part of its long-term strategy, Contact is investing in renewable energy infrastructure and energy storage projects aimed at supporting New Zealand’s transition toward a lower-emissions energy system.
Contact delivered strong generation performance during February, supported by increased output across its geothermal and hydro assets.
Total electricity generated or acquired during the month reached 809 GWh, representing a 19.9 per cent increase compared with February 2025. This growth reflects improved operational efficiency and a more balanced generation mix across the company’s portfolio.
Wholesale electricity sales also increased significantly, with contracted sales reaching 816 GWh, up from 632 GWh in the prior corresponding period. This reflects strong demand from both the company’s retail segment and commercial and industrial customers.
Geothermal generation remained a key contributor, delivering 400 GWh, while hydro generation contributed 310 GWh during the month. Thermal generation was minimal, highlighting Contact’s continued shift toward lower-emissions energy sources.
Importantly, the company achieved a substantial reduction in unit generation costs, which declined to $41.70 per megawatt hour, reflecting improved operating efficiency and lower reliance on higher-cost generation sources.
Contact’s retail business continued to perform strongly during February, supported by increased customer connections and higher sales volumes.
Mass market electricity and gas sales reached 295 GWh, representing a 24.5 per cent increase compared with February 2025. This growth reflects both increased customer numbers and stronger demand across certain segments.
Customer netback remained stable at $160.23/MWh, indicating consistent pricing and cost management despite changing market conditions.
Total customer connections increased to approximately 678,000, up from around 637,000 a year earlier, highlighting ongoing growth in Contact’s customer base.
The company’s integrated business model, which combines generation and retail operations, continues to provide a degree of earnings stability by balancing wholesale market exposure with retail demand.
Electricity demand across New Zealand remained relatively subdued during February, reflecting both seasonal factors and milder weather conditions.
National electricity demand declined 1.0 per cent compared with February 2025, with broader demand also lower compared with February 2024. February 2026 was recorded as the coolest February since 2012, with average temperatures below historical averages.
Lower demand was particularly evident in certain regions, with variability across both the North and South Islands.
Wholesale electricity pricing also remained volatile during the period. Forward prices increased during the month, reflecting evolving market expectations for supply and demand conditions heading into the second quarter of 2026.
Despite softer demand, Contact’s diversified portfolio and contracted sales positions have helped mitigate the impact of short-term market fluctuations.
Hydro inflows during February were below average, with inflows into Contact’s Clutha catchment recorded at 73 per cent of the historical mean.
However, storage levels remained relatively stable. South Island controlled storage was approximately 98 per cent of average, while North Island storage was significantly higher at 164 per cent of average.
The relatively balanced storage position provides some operational flexibility heading into the autumn period, although ongoing variability in inflows remains a key factor influencing generation output.
Contact’s management continues to emphasise long-term value creation through disciplined capital allocation and investment in renewable infrastructure.
The company’s integrated operating model, combined with its growing renewable asset base, positions it well to benefit from structural changes in the energy market.
At the same time, Contact is maintaining a strong focus on operational efficiency, cost control and customer growth to support earnings stability in the near term.
Contact Energy enters the remainder of FY2026 with a strong operational foundation supported by increased generation capacity, stable customer growth and a robust development pipeline.
While below-average inflows and softer electricity demand present short-term challenges, the company’s diversified portfolio and disciplined operating approach provide resilience against market volatility.
Looking ahead, Contact is well positioned to benefit from ongoing electrification trends and the transition toward renewable energy across New Zealand.
The continued delivery of its renewable projects, alongside improvements in operational efficiency, is expected to support sustainable long-term growth and strengthen the company’s position within the evolving energy landscape.
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