Contact Energy profit jumps 62% as it eyes 250MW Stratford data centre

Contact Energy posts NZ$423 million profit, eyes 250 MW Stratford data centre

Contact Energy’s full‑year results for the period ended 30 June 2026 show a surge in net profit that lifts the New Zealand utility into a new growth phase. The company announced a net profit of NZ$423 million – an increase of 62% on an underlying figure from the previous year – and said it will pursue a 250‑MW data‑centre project on the former Taranaki Combined Cycle gas‑plant site in Stratford.

Why it matters now is simple: the profit jump fuels a renewable‑generation expansion that underpins Contact’s strategy to pair large, long‑duration electricity customers with new green power. The data‑centre plan, still at an early consent stage, could become one of the country’s biggest electricity‑intense users, shaping demand patterns for the coming decade.

Financial performance – two lenses

Yahoo Finance reports the net‑profit rise as “up 62% from an underlying NZ$261 million in the previous year”. It adds that EBITDAF climbed 31% to NZ$1.01 billion and operating free cash flow jumped 49% to NZ$648 million, even as revenue slipped 3% to NZ$3.21 billion.

Interest, however, frames the same profit increase as a 27.8% rise – “up $92 million from a year earlier” – and records EBITDAF growth of 15.9% to the same NZ$1.01 billion level. Both outlets agree the Manawa Energy acquisition and higher renewable output drove the earnings lift.

Both sources note that the comparison excludes a NZ$98 million release of an onerous gas‑storage contract provision that had boosted FY 2025 EBITDAF, making the underlying figure a more “representative” baseline.

Renewables and generation mix

Contact’s own generation was 98% renewable in FY 2026, up from 88% a year earlier, according to Yahoo Finance. The shift reflects a 79% drop in thermal generation and the full‑year output of the Te Huka 3 geothermal plant.

Interest adds that the Manawa purchase contributed about 2.4 TWh of hydro generation and that total renewable output rose by 2.9 TWh, bringing the company’s contracted renewable supply to a new high.

Nationally, the New Zealand electricity market ran at 93% renewable during the year, helped by high hydro inflows and new wind and solar capacity.

Dividend outlook

Yahoo Finance says Contact plans to lift its annual dividend to 42 cents per share from 40 cents in FY 2026. Interest reports a final dividend of 24 cents per share, confirming the full‑year payout of 40 cents.

Data‑centre ambition in Stratford

Contact and Infratil‑backed CDC Data Centres intend to seek resource consent for a data centre capable of 250 MW of IT and compute load – roughly 350 MW of total peak demand when ancillary services are included. The project would sit on the former gas‑plant site in Stratford, Taranaki, where the Taranaki Combined Cycle plant was retired in 2026 after reaching the end of its operating life.

The location already hosts 500 MW of grid‑scale battery capacity, and Contact is advancing a 150‑MW ac solar project nearby with Lightsource bp. Existing 200‑MW fast‑start gas peaking units at Stratford would stay operational.

Contact says the data‑centre’s electricity demand would be met under long‑term contracts backed by new generation from its 11‑TWh pipeline of geothermal, wind and solar projects, with co‑located battery storage as part of the concept.

"Stratford provided an “attractive option” for data centre development, with 500 MW of grid‑scale batteries already consented and an existing grid connection."

Mike Fuge, chief executive, via Interest

Finance Minister Nicola Willis has been briefed that the Ministry of Business, Innovation and Employment does not expect data centres rolling out over the next 12 months to pressure electricity prices, given the arrangements in place.

Operational resilience heading into winter

Contact ends the financial year with hydro lakes at 135% of capacity, gas storage close to full, and a coal stockpile of 1,189 kilotonnes – up 70% on the prior year – according to Interest. These buffers lower fueling risk for the winter of 2026.

The average price of sold electricity fell to $140 per megawatt‑hour, 11% lower than $157/MWh the year before, reflecting a “normalisation of market conditions” after a challenging FY 25, as reported by Interest.

What’s next – a timeline

• July 2025 – Manawa Energy acquisition completed, adding 2.4 TWh hydro capacity.
• 30 June 2026 – FY 2026 results released; net profit NZ$423 million.
• July 2026–December 2026 – Contact and CDC submit resource‑consent application for the Stratford data centre.
• Early 2027 – Expected FY 2027 EBITDAF guidance of about NZ$1.05 billion, assuming average hydro and wind conditions.
• Mid 2027 – Decision on consent, anchor tenants and financing could lock in the data‑centre’s electricity supply contracts.

Strategic context

Contact’s “Contact31+” renewable‑energy strategy aims to grow geothermal capacity while building wind and solar assets to meet rising industrial electrification demand, especially from dairy, metals and large data‑centre customers. The company estimates that existing and proposed New Zealand data‑centre sites could eventually draw 4–6 TWh of electricity annually.

By pairing such demand with its own pipeline of new generation, Contact hopes to create a stable, long‑term revenue stream that smooths market volatility – a point underscored by the markedly higher dividend payout and the sizable free‑cash‑flow increase.

Analyst view

Industry observers note that the data‑centre plan aligns with global trends where utilities secure large, firm‑load customers to justify new renewable investment. The co‑location with battery storage and a partially retained fast‑start gas fleet provides a flexible mix that can respond to peak loads and ancillary service requirements.

Should consent be granted and an anchor tenant sign, the Stratford project could become a flagship example of New Zealand’s transition from fossil‑fuel‑based baseload generation to a renewable‑plus‑storage model.

For now, Contact’s profitability surge, renewable‑generation expansion and data‑centre ambition set the stage for a potentially transformative period in the country’s energy sector.