Contact Energy is the only one of New Zealand’s four big generator-retailers with no government shareholder. It spent the early 2020s building geothermal stations around TaupΕ, led by the 174MW Tauhara plant, then bought Manawa Energy for about NZ$1.86bn in July 2025. The result: FY2026 EBITDAF of NZ$1,011m, up 31%, a 98% renewable generation mix, and a NZ$575m equity raise to fund batteries, solar, wind and more steam.
Contact Energy has turned itself from a gas-dependent generator into a renewable baseload business by betting on the one clean fuel that ignores the weather. This article explains where Contact came from, how it earns its money, why geothermal power suited its balance sheet, what the Manawa Energy acquisition added, what the FY2026 numbers show and where the risks lie. It is part of the New Zealand Company Stories hub.
Why geothermal?
Geothermal stations run at very high capacity factors regardless of rain or wind. For a company that once relied on increasingly scarce gas, steam offered firm, low-carbon output with predictable costs.
What did Manawa add?
About 2.4TWh a year of renewable output, including 26 small hydro schemes and contracted wind and geothermal purchases, plus NZ$28m of annual cost savings that Contact says it has fully achieved.
How is Contact different from its rivals?
Meridian, Mercury and Genesis are each 51% Crown-owned. Contact is fully listed, so it must fund growth from private investors and cannot rely on a state shareholder following its capital raisings.
How did Contact Energy begin?
Contact was carved out of the state-owned Electricity Corporation of New Zealand in 1996 to create a competitor for it, then fully privatised in 1999. It is the only major New Zealand generator that left state ownership completely.
The new company received a mixed portfolio: the Clyde and Roxburgh dams on the Clutha River in Otago, the Wairakei geothermal station near TaupΕ, which dates from 1958 and was among the first of its kind in the world, and gas-fired plant in Taranaki and Auckland. At privatisation the American utility Edison Mission Energy bought a 40% cornerstone stake and the rest was floated to the public.
Edison’s holding passed in 2004 to Australia’s Origin Energy, which built a majority position and held it for a decade before selling out entirely in 2015 to repair its own balance sheet. Since then Contact has had an open share register, dominated by New Zealand and Australian institutions and KiwiSaver funds. That independence has shaped its strategy: with no patient parent, management has had to make every large investment pay on listed-market terms.
How does Contact Energy make money?
Contact generates electricity from geothermal, hydro and a shrinking amount of gas, and sells it to its own retail customers, to large industrial buyers under contract and into the wholesale market. In FY2026 it earned EBITDAF of NZ$1,011m and net profit of NZ$423m.
The retail arm serves more than 690,000 connections across electricity, gas and broadband, up about 50,000 in a year, which makes it one of the country’s largest energy retailers. Roughly 165,000 households are on time-of-use plans that offer free or cheap power at off-peak hours, a way of shifting demand toward the times when geothermal output would otherwise be sold cheaply.
The wholesale side matters more to profit. Contact supplies 120MW to the Tiwai Point aluminium smelter under the 2024 agreements described in the article on Meridian Energy and Tiwai Point, and sells long-dated contracts to industrial customers. Its average realised electricity price in FY2026 was about NZ$140/MWh, down from NZ$157/MWh a year earlier as hydro lakes refilled, yet earnings rose because volumes grew and fuel costs fell.
Why did Contact bet on geothermal?
Contact bet on geothermal because it is the only renewable source in New Zealand that produces steadily around the clock, and because the company already held consents and steamfield knowledge around TaupΕ. Steam replaced gas as its baseload fuel.
The centrepiece is Tauhara, a 174MW station east of TaupΕ. Approved in 2021, it suffered delays and cost increases during commissioning, with the final bill exceeding NZ$900m, before reaching full output in 2024. It is one of the largest single-shaft geothermal turbines in the world. Te Huka 3, a 51MW binary plant costing about NZ$300m, followed in late 2024 and delivered its first full year of generation in FY2026.
The third project, Te Mihi Stage 2, is a 101MW station budgeted at around NZ$712m and due online in the third quarter of 2027. It will replace the elderly Wairakei plant, whose consents expire. Pre-investment drilling is under way for a further development, Tauhara 2. The logic throughout is the same: high upfront capital, almost no fuel cost, and output that does not vanish in a dry or calm year.
What did the Manawa Energy takeover change?
The acquisition of Manawa Energy, completed on 11 July 2025 for about NZ$1.86bn in shares and cash, added roughly 2.4TWh of annual renewable supply and spread Contact’s hydro across the whole country.
Manawa was the generation business left after Trustpower sold its retail customers to Mercury in 2022. It owned 26 small and medium hydro schemes from Northland to Otago and held power-purchase agreements for wind and geothermal output, about 0.8TWh of the total. Its two main shareholders were Infratil, with 51%, and the Tauranga-based consumer trust TECT, with about 27%. For Infratil the sale was part of a rotation out of generation and into digital assets, covered in the article on Infratil, CDC data centres and One NZ.
The Commerce Commission cleared the deal in May 2025 after examining whether removing a mid-sized seller of hedge contracts would reduce competition. Contact has since reported that it has reached the full NZ$28m run-rate of cost synergies, NZ$22m of which were recognised in FY2026. Strategically, the scattered Manawa schemes do something a single big river cannot: they diversify rainfall risk across many catchments.
Who owns and governs Contact Energy?
Contact is fully listed on the NZX and ASX with no controlling shareholder and no government stake. Its register is led by institutional investors, index funds and retirement-savings managers, and the board is independent.
Mike Fuge, a former oil and gas executive, has been chief executive since 2020 and has overseen the whole geothermal build and the Manawa transaction. Under him the company adopted a strategy it calls Contact26, built on growing renewable demand, building renewable supply and running down thermal plant. The absence of a state shareholder cuts both ways. Contact avoids the political scrutiny attached to the 51% Crown-owned generators, but it also lacks their implicit backing.
That difference became visible in February 2026, when Contact raised NZ$575m of new equity from the market to fund its pipeline. In the same month Genesis raised NZ$400m with the Crown subscribing for about NZ$198m to keep its 51%. Contact’s shareholders, by contrast, are heavily the pooled savings of ordinary New Zealanders: the default and growth funds described in the article on KiwiSaver and its fund managers hold utilities as core positions.
What do the latest numbers show?
FY2026, the first full year with Manawa, was a record: EBITDAF rose 31% to NZ$1,011m, net profit rose 62% to NZ$423m and operating free cash flow rose 49% to NZ$648m. The dividend was 40 cents a share.
| Measure (NZ$) | FY2025 | FY2026 |
|---|---|---|
| EBITDAF | 774m | 1,011m |
| Net profit | 261m | 423m |
| Average electricity price | 157/MWh | 140/MWh |
Two features stand out. First, 98% of generation was renewable, a figure that would have been unthinkable a decade ago when Contact ran large gas-fired stations for baseload. Second, the profit growth came despite lower prices, which shows how much of the improvement is structural, from new plant and acquired volume, and how much less depends on a tight market.
The company says it has committed about NZ$2.4bn to renewable investment over five years. A final dividend of 24 cents took the full-year payout to 40 cents a share.
What is Contact building beyond geothermal?
Contact is adding grid batteries, solar farms and a large wind farm, and is courting data centres as new customers. The aim is to pair steady geothermal output with flexible capacity and with demand that wants round-the-clock clean power.
A 100MW battery at Glenbrook, south of Auckland, began operating in March 2026, and construction of a 200MW second stage started the same month, due in early 2028. The KΕwhai Park solar farm at Christchurch Airport, a joint venture with Lightsource bp, is being commissioned, and the Glorit solar farm north of Auckland reached financial close in June 2026; together they are expected to supply about 0.5TWh a year, much of it contracted to electrify dairy processing.
The Southland wind farm, consented in April 2026 after a contested process, would produce more than 1.2TWh a year. And at Stratford in Taranaki, on the site of its old gas plant, Contact is working with CDC Data Centres on a proposed 250MW campus, with 500MW of batteries consented nearby. The plan reuses a grid connection built for thermal generation that is now being retired.
Who are Contact’s competitors?
Contact competes with Meridian, Mercury and Genesis in both generation and retail, and with a fringe of independent retailers and solar developers. All four big firms reported strong FY2026 results as hydro lakes recovered.
Mercury is the closest strategic rival because it too is a geothermal operator: its expanded NgΔ Tamariki station near TaupΕ came online in FY2026, and its EBITDAF of NZ$1,068m was slightly above Contact’s. Meridian reported NZ$1,051m and Genesis a normalised NZ$522m. The four are also collaborators. Contact holds a 50MW, ten-year option on output from Genesis’s Huntly station, part of the reserve arrangement set out in the article on the gentailers and the 2024 dry-year crisis.
In retail, Contact’s bundling of broadband with energy brings it up against telecommunications firms as well as power companies. Customer numbers are growing, but retail margins across the sector are thin, and the firm’s real competitive advantage lies upstream, in consented steamfields that rivals cannot easily replicate.
What are the main risks for Contact?
The main risks are project execution, gas supply for its remaining thermal plant, integration and debt after a large acquisition, and regulation of the wholesale market. Geothermal projects in particular can overrun, as Tauhara showed.
Thermal exposure has shrunk but not gone. Contact still owns gas-fired peaking plant at Stratford and a diesel peaker at Whirinaki, which earn their keep on a few tight days a year. The country’s dwindling gas reserves, and the September 2026 decision by Methanex to cease production, change the economics of that plant; the background is in the article on New Zealand’s gas shortage.
Finally there is an oversupply risk. Every large generator is building. If demand from data centres and electrification arrives slowly, wholesale prices could settle well below the NZ$140/MWh Contact realised in FY2026, and new plant would earn less than its business case assumed.
What can founders and CFOs learn from Contact Energy?
Contact shows how a mature company can change its cost structure by swapping a variable input it does not control, gas, for a fixed asset it does, and then use acquisition to buy the diversification that organic projects cannot deliver quickly.
- Replace exposure to a scarce input before it becomes a crisis. Contact committed to Tauhara in 2021, three years before the gas shortage of 2024 made thermal baseload untenable.
- Accept overruns on strategic assets, but learn from them. Tauhara’s delays were painful; the plant will run for decades. The test is whether Te Mihi Stage 2 lands on budget.
- Buy what you cannot build. Twenty-six consented hydro schemes could not be created from scratch. Paying for Manawa partly in shares preserved cash for construction.
- Report synergies in numbers and dates. Stating a NZ$28m target and confirming it within a year builds credibility for the next deal.
- Raise equity when results are strong. The NZ$575m raise came after a record half, not during a squeeze.
What happens next for Contact Energy?
The next two years are about delivery: Te Mihi Stage 2 in 2027, the second Glenbrook battery in early 2028, an investment decision on Southland wind, and proof that data-centre demand at Stratford is more than a memorandum.
The retirement of Wairakei after nearly seventy years will be a symbolic moment, but the commercial question is whether Tauhara 2 proceeds. Geothermal resource around TaupΕ is finite and shared with Mercury and with MΔori land trusts, whose role as resource owners and partners is growing.
Policy will matter too. A general election is due in late 2026, and the future of the proposed LNG import terminal, of the gentailers’ vertical integration and of market rules is contested. Contact’s bet is that whichever way those arguments go, plant that runs every hour of the year without imported fuel will be worth owning. On the evidence of FY2026 the bet is paying, though the company must now show it can build several large projects at once without repeating Tauhara’s overruns.
Frequently Asked Questions
Is Contact Energy owned by the government?
No. Contact was fully privatised in 1999 and is the only one of New Zealand’s four large generator-retailers with no Crown shareholding. Its shares trade on the NZX and ASX and are widely held by institutions, index funds and KiwiSaver providers. Meridian, Mercury and Genesis are each 51% government-owned.
What is the Tauhara power station?
Tauhara is a 174MW geothermal station near TaupΕ, approved in 2021 and fully operational in 2024 after delays and cost increases that took the final bill above NZ$900m. It runs almost continuously, giving Contact firm renewable output that does not depend on rainfall or wind.
How much did Contact pay for Manawa Energy?
The deal valued Manawa at about NZ$1.86bn, paid in a mix of new Contact shares and cash. It was announced in September 2024, cleared by the Commerce Commission in May 2025 and completed on 11 July 2025. Manawa’s main sellers were Infratil and the consumer trust TECT.
Does Contact Energy still burn gas?
Only a little. In FY2026 about 98% of Contact’s generation was renewable. It retains gas-fired peaking units at Stratford and a diesel peaker at Whirinaki for periods of very high demand or low hydro, and holds an option on output from Genesis’s Huntly station as dry-year cover.
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