Contact Energy yields a 70% higher net profit backed by potential deals with aluminium smelters

Contact Energy Limited, a New Zealand electricity generator, natural gas wholesaler, and electricity retailer, has experienced phenomenal financial growth in six months, ending December 31, 3023, buoyed by potential deals with aluminium smelters.

As per the report, Contact Energy has earned a net profit of $153 million, up 70 per cent from the previous year and the highest in the past four years, despite extreme market volatility.

Factors like increased energy costs and higher wholesale prices enabled the company to achieve this spectacular growth in profit. The need to “firm” intermittent renewable generation and high construction costs for thermal generation, particularly gas and wind power, contributed to the unexpected energy prices.

In the six-month financial report, Contact Energy Limited posted an update on its negotiation with Rio Tinto to supply energy to the Tiwai Point Aluminium Smelter. Contact Energy believes this new agreement will ensure a fair electricity cost while contributing to energy security and decarbonisation in the New Zealand aluminium industry.

Contact Energy also mentioned its future investment plans in renewable technologies. It has started refurbishing its Tauhara power station and expects to be done by late 2024. The refurbishment includes replacing the ageing Wairākei geothermal plant and developing a 100MW North Island battery and Kōwhai Park solar project. This project overall aims to enhance New Zealand’s energy security as the country progresses towards decarbonisation.

Contact Energy’s potential deals with aluminium smelters underscore the company’s strategic focus on contributing to decarbonisation in the New Zealand aluminium industry.