Contact Energy Delivers Stronger March Operating Performance as Renewable Build-Out and Storage Position Support the Outlook

About Contact Energy Limited

Contact Energy (ASX: CEN) is a New Zealand-based integrated energy company with retail, wholesale and renewable generation exposure across electricity, gas and related infrastructure. Its operating profile combines customer sales, geothermal, hydro and thermal generation, contracted wholesale sales and a growing renewables development pipeline. The latest monthly operating report highlights stronger March volumes, lower generation costs, elevated storage levels and continued progress on its battery, solar and geothermal projects.

March reflected stronger demand and improved operating momentum

The March operating update points to firmer momentum across both the customer and wholesale businesses. Mass market electricity and gas sales reached 359GWh in the month, up from 282GWh a year earlier, while customer netback came in at $172.45/MWh. Electricity ICPs rose to 457,500, gas ICPs increased to 77,000 and total customer connections lifted to 684,000, showing continued scale across the retail base. Telco connections also rose to 141,000, indicating broader growth in customer relationships beyond core energy supply.

That stronger demand backdrop was reflected more broadly across the electricity market. National electricity demand in March was up 4.1 per cent on March 2025 and 1.0 per cent on March 2024, with the nationwide average temperature sitting at 15.8 degrees Celsius, right on the long-run March average. This suggests the uplift was not simply weather-driven, but supported by firmer underlying consumption across the system.

The customer business also benefited from a higher average electricity sales price of $381.65/MWh, although direct pass-through costs also remained significant at $165.56/MWh. Even so, the broader message is that Contact entered the final quarter of FY26 with improving customer volumes and a larger retail footprint than a year ago, which helps underpin earnings resilience across the integrated model.

Wholesale volumes lifted and generation costs moved lower

The wholesale business was another area of strength during the month. Contracted wholesale electricity sales, including volumes sold to the customer business, totalled 903GWh, up from 701GWh in March 2025. Electricity and steam net revenue was $130.99/MWh, down modestly from a year earlier, but the larger change came through operating costs and generation mix. Electricity generated or acquired rose to 925GWh from 767GWh, while unit generation cost including acquired generation fell to $56.24/MWh from $70.12/MWh. Own generation cost dropped even more sharply to $35.3/MWh from $57.0/MWh.

Those cost movements are meaningful because they improve the economics of Contact’s integrated wholesale-retail model. Lower generation cost supports margins, particularly when combined with higher contracted volumes and a larger generation base. Geothermal generation was 387GWh and hydro generation was 338GWh in March, while thermal generation was only 17GWh, well below the 127GWh recorded in the prior corresponding period. Acquired generation volumes were also higher, including 53GWh via PPA and 129GWh of other acquired generation.

In practical terms, that reflects a more favourable generation mix, with renewable and acquired sources doing more of the heavy lifting and thermal generation playing a much smaller role. This helped reduce both cost and emissions intensity relative to the same period last year. The data shows greenhouse gas emissions from generation assets fell to 67kt CO2-e in the third quarter from 271kt a year earlier, while generation emissions intensity dropped to 0.032kt CO2-e per GWh from 0.136kt.

Hydro and storage conditions provide a supportive backdrop

Storage conditions remain an important part of the outlook, and the latest update points to a relatively constructive position. South Island controlled storage stood at 99 per cent of mean in mid-April, while North Island controlled storage was at 182 per cent of mean. Total Clutha scheme storage was 108 per cent of mean, even though inflows into Contact’s Clutha catchment during March were 85 per cent of mean, following softer February inflows at 73 per cent.

That storage profile matters because it improves system flexibility and reduces pressure on thermal generation. Elevated North Island storage in particular gives Contact more optionality in how it manages generation and contracting through the coming months. It also supports a stronger position against wholesale price volatility, even as forward pricing has eased from late February levels. The Otahuhu futures settlement wholesale price for the third quarter of 2026 was $170.95/MWh as at 14 April, down from $189/MWh at 31 March and $192.10/MWh at 27 February.

While lower forward pricing can reduce upside for generators, Contact’s integrated model means a more balanced exposure across wholesale generation and retail supply. In that context, the key positive is the combination of healthy storage, lower generation costs and continued demand support, which should help offset some of the volatility often associated with future wholesale curves.

Development pipeline continues to build longer-term renewable optionality

Another important feature of the March update is the continued progress on Contact’s renewable growth pipeline. Glenbrook-Ohurua Battery 1 is now online, with final commissioning completed in March, and has now been removed from the active construction list. The projects still under construction include Kōwhai Park Solar, expected online in the third quarter of calendar 2026 with approved project costs of $273 million; Te Mihi Stage 2 geothermal, expected online in the third quarter of calendar 2027 with approved costs of $712 million; and Glenbrook-Ohurua Battery 2, expected online in the first quarter of calendar 2028 with approved costs of $235 million.

This pipeline is strategically important because it deepens Contact’s renewable generation base while also improving flexibility through storage. Te Mihi Stage 2 adds further geothermal depth, while Kōwhai Park expands solar capacity and the second Glenbrook-Ohurua battery extends storage and balancing capability. Together, these projects support the group’s longer-term transition toward a broader, more flexible renewable portfolio.

The company also reported contracted gas volume for the next 12 months of 8.5PJ, including contracted swaps. That gives some additional operating support within the transition period, even as the business continues to lean more heavily into lower-emissions generation and storage over time.

The integrated model continues to show balance across retail, wholesale and development

What stands out in the March report is the degree of balance across the portfolio. Retail volumes improved, contracted wholesale sales lifted, generation and acquired volumes increased, storage conditions were supportive, and renewable developments kept moving. Although total electricity and steam net revenue was slightly lower than a year ago, the fall in generation cost helped improve the overall operating picture. Customer netback in the nine months to March also rose to $154.99/MWh from $144.69/MWh, showing that the retail economics have improved on a year-to-date basis despite normal monthly fluctuations.

The operating report also shows Contact retaining a meaningful mix of geothermal and hydro generation, which can be particularly valuable in a volatile wholesale environment. That renewable-heavy mix not only lowers cost and emissions, but also supports a clearer strategic identity as a flexible, lower-carbon utility with a growing storage footprint.

Outlook

Contact Energy appears to be entering the final stretch of FY26 with supportive operating conditions. March showed stronger customer and wholesale volumes, a lower-cost generation mix, healthy storage levels and continued progress on key renewable projects. The immediate outlook should remain influenced by hydrology, forward prices and broader market demand, but the current position looks constructive. With Glenbrook-Ohurua Battery 1 now online and larger projects at Kōwhai Park, Te Mihi Stage 2 and Battery 2 progressing, Contact continues to strengthen the generation and storage platform that underpins its medium-term growth profile.