Genesis Chief Executive Marc England gives a summary of the company’s financial results for the 2020-21 financial year and looks ahead to priorities for the next 12 months. Video / Supplied
Genesis Energy is forecasting a sharp drop in how much coal it will burn to produce electricity in the coming years, after low hydro lakes and gas shortages saw it burn around 1.5 million tonnes in the year to June 30.
The owner of the Huntly Power Station, which is embarking on a major strategy to cut the amount of electricity it produces from thermal generation, said its earnings before interest, tax, depreciation, amortisation and fair value adjustments was $358 million for the year to June 30, up $2m on a year earlier.
Net profit was down $12m to $34m for the period.
The results came despite a huge surge in Genesis' generation, with thermal generation up 23 per cent to 5,501 gigawatt hours.
Huntly, which has generation turbines which can run on both gas and coal, typically provides back up for the electricity market when hydro generation is low or demand is particularly high.
With low rainfall in hydro catchments over summer, as well as shortages of gas, Huntly was for several months burning thousands of tonnes of coal a day.
Documents released by Genesis alongside its results showed the amount of coal used for generation jumped from around 700,000 tonnes in 2020 to around 1.5 million tonnes in 2021.
Genesis is currently forecasting the amount of coal that will be burnt for electricity generation in 2022 will fall to below 600,000 tonnes, however warned that under a "dry year" scenario, where rainfall is below average, it could be required to burn around 1 million tonnes.
"The value of our generation portfolio was demonstrated by our ability to temporarily reinstate a generator at Huntly Power Station to compensate for the shortfall in renewable generation and ensure hydro levels could be conserved ahead of winter," Genesis chief executive Marc England said.
While Genesis wants to increase renewable electricity generation, its coal and gas powered Huntly Power Station was relied on to keep New Zealand's lights on this year. Photo / file
Genesis' plan to increase renewables generation to replace base load thermal continues at pace, with the company committed to three deals to purchase generation for wind and geothermal electricity as well as announcing a plan to co-develop up to 500 megawatts of solar capacity.
Two international solar developers had been shortlisted, the company said today.
"Collectively, these announcements put Genesis on track to displace 1,800 gigawatt hours of thermal base load generation and remove 1.2 million tonnes of annual carbon emissions by 2025."
Genesis declared a final dividend of 8.8 cents per share, up from 8.6c in 2020, giving a total dividend of 17.4 cents per share.
The company, which suspended its dividend reinvestment plan earlier this year, also announced a change to its dividend policy to pay out 70-90 per cent of its free cash flow.
"The change in policy introduces the flexibility to retain capital to invest in our Future-gen strategy. However, the change in policy does not represent a departure from our aim to grow dividends over time and we recognise the importance of dividends to our investors."
