Brimming hydro lakes and less use of coal and gas have powered Genesis Energy to a strong lift in half year profit, as it moved to raise $400m to finance new generation projects.
Chief executive Malcolm Johns said increased hydro-generation across the country allowed Genesis to buy cheaper electricity on the wholesale market, divert gas towards industrial customers, and reduce expensive coal and gas-fired generation at Huntly.
That resulted in the company posting record operating earnings.
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"Among the factors influencing the result were improvements in how we trade our portfolio, improved fuels management systems and the improved positioning of our customer books."
"At the same time, we progressed our renewable generation pipeline for self-sufficiency in the future."
The company said it would raise $400 million in a sale of new shares, with $100m to new investors and a $300m renounceable rights offer for existing shareholders.
The Government confirmed it would invest up to $198m to maintain its 51% stake.
"Genesis' proposed investments will directly contribute to enhancing energy security, including through enabling Genesis to bring more flexible capacity to the market which can be used to address dry-year risk," Finance Minister Nicola Willis said.
Johns said the capital injection would speed up investment in renewable generation and "firming" capacity such as batteries and flexible thermal backup, reducing reliance on fossil fuels.
"We can execute this plan in a five to six-year window, without that funding, we're looking at 10 to 15 years," he said.
"Acceleration of opportunities that meet Genesis' capital allocation framework are expected to both enhance value for Genesis' customers as well as shareholders by bringing forward earnings growth and strengthen Genesis' ability to support New Zealand's energy security.
Genesis' maintained its full year earnings forecast between $490m-$520m.
Johns said wholesale power prices were expected to normalise as hydro conditions eased, meaning Genesis would likely run more gas-fired generation in the second half of the year.
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