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Highlights
- Contact Energy has signed deals with 2 firms to supply renewable electricity for 10 years.
- Contact also signed a renewable electricity deal with Genesis in August.
- The Group aims to increase demand for its renewable electricity by replacing thermal generation.
Contact Energy Limited (NZX:CEN;ASX:CEN) is the largest privately-owned energy company in NZ. CEN has a focus on sustainability and generates 80% of the electricity using renewable resources.
The energy company has signed 2 new contracts with Pan Pac Forest Products, a manufacturer of forestry products, and Oji Fibre Solutions, a paper company, to supply renewable electricity. Contact will provide both Pan Pac and Oji with a part of their electricity needs through until 2034.
RELATED READ: Contact Energy (NZX:CEN) releases operating report for August 2021
New electricity agreements are the result of a buying process run by the Major Electricity Users Group (MEUG). This will support its members in obtaining long-term electricity supply contracts.
Image source: © 2021 Kalkine Media New Zealand Ltd, Data source- Refinitiv
Mike Fuge, Contact’s CEO, stated that he recognised the role of MEUG and its members in its help to reduce carbon emissions of the country. He emphasised that Contact wanted to grow demand for its renewable electricity by replacing thermal generation, and these deals will help in the same.
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These deals will further help NZ in lowering carbon emissions while keeping electricity prices on a lower side.
Renewable electricity deal with Contact and Genesis
Contact also struck a deal with Genesis in August to build a 152-MW Tauhara geothermal power station near Taupo. Genesis will take nearly 62.5 MW of electricity from Contact’s geothermal power station, which is in progress at Tauhara.
The energy company will supply renewable electricity to Genesis for 15 years from 2025 as part of the long-term power purchase deal.
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The Tauhara power station is likely to substitute 1.3 terawatt hours of thermal generation from the electricity system of NZ. The project will likely be completed by mid-2023 and would displace 450K tonnes of carbon emissions per year.
On 7 October, at the time of writing, CEN was trading at NZ$8.15, down 0.97%.
Bottom Line
Contact Energy wants to form long-term power purchase agreements and increase its renewable electricity demand by displacing thermal generation. It wants to support new demand for electricity and pursue a number of prospects on this front.
