Monday 29th July 2019
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NZ Windfarms has signed a 15-month hedge on all the production from its Te Rere Hau wind farm near Palmerston North.
The firm says the deal with a “major” New Zealand-based counter-party, takes effect from Oct. 1 and provides a quarterly fixed price on the variable production from the project. The company wouldn’t disclose the price or counter-party.
Chairman John Southworth said the agreement reflects the changing dynamics of the wholesale electricity market and the move to de-carbonise energy production and usage.
“These types of agreements will become commonplace in the future as the market moves to reflect changes in central and local government energy policy and initiatives,” he said in a statement to NZX.
The firm’s shares rose 4 percent to 14.8 cents, now marginally ahead from the start of the year.
NZ Windfarms struggled historically as a stand-alone wind operator. Its production was highly variable and ample hydro storage in recent years depressed the wholesale electricity prices it was solely reliant on.
It previously investigated retail partnerships and purchasing thermal back-up generation, and in 2017 opted to hedge part of its output through the ASX futures market in order to secure greater revenue certainty. It lost money on those contracts when wholesale prices surged late last year and earlier this year amid reduced gas supplies.
Last week it said it had canned efforts to sell the 97-turbine, 48 MW wind farm saying the prices offered weren’t high enough.
Southworth today reiterated the firm’s earnings guidance. The company expects to report operating earnings - earnings before interest, tax depreciation and amortisation - of about $4.7 million for the June year just ended, up about 19 percent from the year before. Ebitda for the year to June 30, 2020 is also expected to be in a range of $6.5 million to $7.5 million.
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