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Highlights
- The New Zealand electricity market is witnessing a rise in its prices due to reduced lake levels and limited gas supply.
- Genesis Energy enters into a long-term agreement with Contact Energy for the supply of renewable energy by the latter.
- Contact Energy delivers a solid FY21 performance, thereby rewarding its shareholders with a dividend of 21cps.
New Zealand boasts some of the globally acclaimed energy stocks generating most of their electricity supply through renewable sources like hydro, solar, wind, etc., although the country’s demand for energy is just a small fragment of the global electricity consumption.
As per reports, out of the total electricity generated, the share of electricity generated from renewable energy stood at 80.8% in 2020.
Moreover, its renewable electricity generation is the third highest among the OECD countries.
Rise in electricity prices
It is noted that due to low lake levels and constraints related to gas supply, New Zealand witnessed a rise in electricity prices by 3%, paid by producers in the June quarter of 2021.
The prices paid by the electricity and gas supply producers climbed 17% in the above-mentioned quarter.
As a result, in order to heat their homes, the consumers may feel the heat of high electricity bills this winter season.
With this background, let us look at the five NZX and ASX-listed energy stocks amid the price surge.
Source: Copyright © 2021 Kalkine Media
Mercury Energy Limited (NZX:MEL; ASX:MCY)
New Zealand's leading electricity generation and electricity retailing Company is known as Mercury Energy Limited, which produces electricity from 100% renewable sources.
The Company had recently revealed that the Electricity Authority (EA) has published its final report on the actions to correct the UTS (Undesirable trading situation) pertaining to the December 2019 floods, when during that period, hydro generators were experiencing record-breaking inflows.
MEL respects the decision of EA on the issue of UTS as it holds a significant position in monitoring and reforming the electricity market for the ultimate benefit of the consumers, despite sharing a different viewpoint.
On 20 August, at the time of writing, Mercury Energy fell by 0.15% at NZ$6.79.
Related read; 5 cheapest power shares in New Zealand
Genesis Energy Limited (NZX:GNE; ASX:GNE)
Being a diversified energy company, Genesis Energy Limited boasts 500K customers across NZ.
The Company recently declared a long-term strategic agreement with Contact Energy, wherein the latter would supply renewable energy to the former for 15 years, which will commence from 1 January 2025.
With the help of this deal, Genesis expects to deliver its Future-Gen strategic targets as well as remove at least 1.2 tonnes of yearly carbon emissions by 2025.
However, financial details regarding the said agreement have not been revealed.
At the time of writing, Genesis Energy was down by 1.18% at NZ$3.350, on 20 August.
Do read; Genesis Energy (NZX:GNE): How is the Company tapping into solar power?
Contact Energy Limited (NZX:CEN; ASX:CEN)
As per the Reader’s Digest Trusted Brands survey, Contact Energy Limited has been voted as the most trusted gas and electricity provider of the year.
In its recently released FY21 results, the Company reported an EBITDAF of NZ$553 million and a profit of NZ$187 million for the year ended 30 June 2021, mainly on accounts of strong asset availability and a disciplined approach to managing the fuel.
CEN had successfully navigated through the issues related to the low rainfalls and prevailing challenges pertaining to reliable gas supply.
The Company has declared an impressive final year dividend of 21 cps, which will be paid on 15 September.
Moreover, it is looking forward to FY22, with a clear strategy equipped with high-quality assets.
At the time of writing, Contact Energy decreased by 0.36% at NZ$8.190, on 20 August.
Related read; Meridian and Contact Energy join hands for ‘biggest’ green hydrogen plant
Infratil Limited (NZX:IFT; ASX:IFT)
Infratil Limited operates in diverse sectors like energy, telecommunications, infrastructure, etc. In its Annual Meeting which was held online today, resolutions were passed by the shareholders for the election and re-election of its directors.
Also, the Company’s Board has been authorised to fix the auditor's remuneration.
Shares of Infratil fell by 0.53% at NZ$7.450, on 20 August, at the time of writing.
Did you miss reading; How are 10 NZX energy stocks contributing towards achieving decarbonisation?
Mercury NZ Limited (NZX:MCY; ASX:MCY)
Another electricity supplying company that produces energy from renewable sources is called as Mercury NZ Limited.
The Company delivered sound FY21 results, which were recently published. Its EBITDAF was recorded at NZ$463 million and NPAT stood at NS$141 million, thereby delivering a resilient performance amid the uncertainties prevailing in the market.
It would pay a final dividend of 10.2 cps on 30 September, thereby taking the total dividend to 17.0 cps for the year.
Moreover, it has given an EBITDAF guidance of NZ$590 million and dividend guidance of 22.0 cps for FY22, underpinned by strong investment in energy generation assets as well as the acquisition of Tilt Renewables’ NZ assets.
At the time of writing, Mercury NZ declined by 0.22% at NZ$6.785, on 20 August.
Bottom Line
Energy companies supplying electricity across Aotearoa are its lifeline. Though with low lake levels, these companies are witnessing a surge in electricity prices, but with a continuous shift towards 100% renewable sources, the problem would be sorted out to a great extent soon.
