Genesis Energy posts record $307 million profit, eyes $2 billion renewable shift amid LNG terminal debate
Monday, 23 February 2026
A Government-proposed liquified natural gas import facility in Taranaki presents a unique challenge to Genesis Energy, which this morning reported record results on the back of continued successful efforts to tilt its portfolio towards renewables and away from thermal energy production.
But chief executive Malcolm Johns said the LNG terminal would bolster rather than upset that plan, and denied any suggestion the company would be forced to use the new asset, even while critics say it is not necessary and others believe it should only be considered as an absolute last resort.
Genesis - along with Contact, Mercury and Meridian - was one that previously said it should be a last resort, according to an independent report commissioned from Boston Consulting Group (BCG) by the companies last year when the idea was raised.
But Johns tempered his comments about it when speaking to The Post this morning.
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“As you move into a more renewable grid, weather-driven volatility will increase and you have to think of it like a fast car - if you want to drive your car faster you need better brakes,” he said.
“And so energy security is the braking system of a high-renewables grid.”
Genesis has identified $1 billion of “progressed growth opportunities” and a further $1b of “discretionary growth opportunities” in renewable energy infrastructure development, and today said it would be seeking to raise $400 million to help pay for some of it.
The Government has already indicated it would buy up to $200m of new Genesis Energy shares as part of the capital raise. Finance Minister Nicola Willis said Genesis’ proposed investments would “directly contribute to enhancing energy security, including through enabling Genesis to bring more flexible capacity to the market which can be used to address dry-year risk”.
Johns said fossil fuels were still necessary to underpin generation at present, and the key thing regardless of the type of fuel was the ability to store them and access them when needed.
“So as we build more renewables, we’ll use thermal generation less and less, in fact we think it will fall by about three quarters through the next decade or so, but when we need it we’ll need a lot of it, because the wind does drop out throughout New Zealand, and we have dry periods.
“The more fuel security you have, the less risk there is in the system.”
He denied there would be any compulsion on Genesis to use the LNG terminal when conditions did not require it. The terminal, which will bypass even the fast-track process in order to be built in time for winter next year, is being funded by a tax on all gas and electricity users.
Result
Genesis is in a position to push further into renewables as a result of a bumper set of half year results, largely attributed to a surfeit of wet weather. For the six months to December 31, it generated a net profit of $95m, up 36% from $70m in the same period last year, and gross margins had gained 27%, to $521m from $409m.
The company’s preferred measure, earnings before tax, interest, amortisation and other one-offs, was a record $307m for the six-month period.
Revenue at Genesis Energy dropped by 13% to $1.53b however, as a result of lower wholesale prices and overall lower generation against the prior comparative period.
Mirroring fellow energy companies, Genesis’ $400m equity raise would accelerate the company’s ability to take on that $2b programme of work on projects across renewable generation and “dispatchable firming capacity” - which is power generation or storage that can be increased or decreased on demand, guaranteeing a consistent supply of electricity.
Johns said the business case for investors “100%” stacked up.
“It’s a $2b growth programme, it will drive our earnings to $650m-$750m a year, that’s a healthy return on investment. More importantly it will lower our average generation cost by about $25 a MW hour, and that’s hugely beneficial to New Zealanders and our customers as well.”
Despite record profits, the company was asking for more money to help fund these projects because it is “balancing adequate return on your loans and investors, with the speed you can go at to build New Zealand’s energy system of the future - the raises that have been announced are about going faster in balance with the capital markets we are part of.”
Every year, about 20% of shareholders reinvest their dividend with Genesis and the Government matches that to maintain its 51% shareholding, which is also the reason it is taking part in today’s announced $400m capital raise.
Renewables
In late 2023, Genesis made the decision to plough profits into renewable energy projects. The company now has 2500 MW of development options in its renewables pipeline - primarily solar and wind farms and grid-scale battery systems.
Within the six-month period, the company confirmed its investment in a 136 MW peak solar farm at Edgecumbe in the Bay of Plenty, and will shortly decide on investing in a site at Leeston in Canterbury generating around 110 GWh of renewable electricity annually, enough to power around 15,700 households.
This year Genesis will also progress a 220 MWp solar farm at Foxton through the fast-track process, with a capacity for 150,000 solar panels, and in October announced plans to acquire and develop a 271 MWp solar farm near Rangiriri, Waikato. The consented site there is close to its battery project at Huntly Power Station, currently under construction.
“Together, these assets will integrate solar generation with battery storage and reduce reliance on gas generation,” the company said.
Wind assets were also developed in the period, including an exclusivity agreement with global independent power producer Yinson Renewables, in which Yinson is developing around 1GW of wind generation throughout New Zealand. The first of these projects is an offtake agreement for its 94.6 MW wind farm at Mt Cass in Canterbury, with Genesis agreeing to purchase 70% of the electricity generated by the wind farm.
Genesis is also building a business case for its own consented wind site at Castle Hill in the Wairarapa, and advancing design and securing approvals for a new transmission line, which would connect the windfarm to the national grid. It also intends to be part of any project undertaken by Taranaki Offshore Partners.