Mercury lowers forecast by $60m

Mercury has revised its FY2021 EBITDAF guidance from $520 million to $460 million.

It says this reflects a forecast 200GWh decrease in full year hydro generation to 3600GWh due to continued dry weather in the Taupo catchment, an unplanned outage of the Kawerau geothermal power station, elevated wholesale prices with spot prices for Q4-FY2021 to date averaging about $285/MWh in Auckland, and higher associate earnings from Tilt Renewables Limited.

“Investigations are ongoing, following an unplanned outage of the Kawerau geothermal power station as a result of a mechanical failure on June 7,” Mercury adds.

“At this time, it is unclear how long the station will be out of service although it is anticipated to be several months, which includes the remainder of FY2021.” 

Mercury plans a further update once it can determine the time required to bring the station back to full operation, and it has a business interruption insurance policy subject to a 30-day deductible and revenue caps to provide relief for events of this nature.

Guidance may change and remains subject to any material events, significant one-off expenses or other unforeseen circumstances including changes to hydrological conditions, the electricity generation and retailing company says.

Meanwhile, Eastland Group has announced its generation business has purchased the 26MW Kawerau TOPP1 geothermal power station from Ngati Tuwharetoa Geothermal Assets (NTGA) for $83 million, Eastland Generation taking over ownership of TOPP1 on June 30, 2021.

The sale sees both organisations furthering ambitions for expansion in the renewable energy space and decarbonising the New Zealand electricity market.

Eastland Generation already owns two plants on the Kawerau geothermal field – the 9MW Geothermal Developments Ltd (GDL) and the 25MW Te Ahi O Maui geothermal power stations.

“The purchase of TOPP1 is key in enabling us to deliver on our strategy of 100MW of renewable generation by 2025,” Eastland Group chief executive Matt Todd says.