Mercury (ASX:MCY) Sets FY25 Hydro Target, Locks in Long-Term Energy Partnerships

2 min read | April 16, 2025 04:19 PM AEST | By Team Kalkine Media

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Mercury (ASX:MCY) Sets FY25 Hydro Target, Locks in Long-Term Energy Partnerships — Image source: Shutterstock

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Highlights

Targets 3,400 GWh hydro generation in FY25

Inks 10-year supply deal with Fonterra

Boosts energy supply to New Zealand Aluminium Smelters

Mercury (ASX:MCY) has announced a forecast hydro generation of 3,400 GWh for the financial year 2025, reflecting the challenges of continued dry conditions and historically low inflows in the Waikato catchment. The hydro generation outlook indicates the ongoing impact of climate variability on renewable energy production in New Zealand, with the company preparing for tighter supply management in the year ahead.

Despite this conservative hydro generation estimate, Mercury (MCY) is making strategic progress through new long-term electricity supply agreements with major industrial clients, reinforcing its role as a critical energy partner in New Zealand’s shift toward electrification and sustainability.

A key development is Mercury’s ten-year agreement with Fonterra (NZX:FCG), one of New Zealand’s largest dairy producers. Starting from August 2025 and July 2026, Mercury will supply approximately 260 GWh of electricity annually to power operations at Fonterra’s Edgecumbe and Waitoa sites. This agreement supports Fonterra's broader sustainability goals, particularly the transition from fossil fuels to electric power at its manufacturing facilities.

Further strengthening its industrial energy portfolio, Mercury (MCY) began supplying power to New Zealand Aluminium Smelters (ASX:RIO) in January 2025. This agreement initially covers 50MW of electricity, with an increase to 75MW planned by 2027. The arrangement aligns with efforts to provide a stable energy supply to one of the country's largest electricity consumers, while also enhancing Mercury’s long-term revenue predictability.

Together, these developments demonstrate Mercury’s strategic balance between managing hydro resource variability and securing demand through long-duration partnerships with key industrial players. The contracts reflect strong market confidence in Mercury’s generation capabilities and its commitment to enabling large-scale electrification across various sectors.

While hydro generation forecasts are subject to environmental conditions, Mercury’s proactive approach in securing future electricity demand positions the company well for navigating market volatility. These long-term agreements are also likely to support future investments in renewable infrastructure and grid reliability.

As energy markets evolve and the pressure for decarbonization intensifies, Mercury (MCY) continues to play a central role in facilitating New Zealand’s clean energy future by aligning its generation strategy with the needs of major industrial users.

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