AUCKLAND: Genesis Energy and three other major electricity providers have signed a detailed non-binding term sheet to establish a strategic energy reserve centered on Huntly Power Station, aiming to bolster New Zealand’s security of supply.
The agreement—between Genesis (NZX: GNE, ASX: GNE), Mercury, Meridian, and Contact—follows challenges during the winter of 2024, when energy supplies tightened due to a faster-than-expected decline in natural gas availability, low hydro lake levels, and weak wind generation.
The term sheet builds upon a heads of agreement signed in February and sets out a framework for keeping Huntly’s Rankine Units operational beyond their scheduled retirements. One unit was set to close in early 2026, with the remaining two expected to phase out in the 2030s. The agreement aims to extend their availability until at least 2035.
The Rankine Units provide backup generation as the country moves toward greater reliance on wind and solar, which can fluctuate. A recent review by KPMG found that these units will likely be needed even more in the 2030s as the nation expands its renewable energy portfolio.
Genesis expects the final proposal to cover up to 10 years and include a strategic fuel reserve to support grid reliability. The company is also exploring biomass as a substitute for coal.
While the term sheet is non-binding, the parties signaled strong commitment to finalizing formal agreements. Genesis has engaged with the Commerce Commission regarding the proposal.
The firms intend to have the plan in place by Jan. 1, 2026, but Genesis requires confirmation by early November to carry out essential compliance and maintenance work to ensure the Rankine Units are available for the winter season.