Mercury NZ announced on Wednesday that it has revised its FY21 EBITDAF guidance from $520 million to $460 million.
The downgrade the result of several impacts including:
a forecast 200 GWh decrease in the full-year hydro generation to 3,600 GWh due to continued dry weather in the Taupo catchment;
an unplanned outage of the Kawerau geothermal power station;
elevated wholesale prices with spot prices for Q4-FY2021 to date averaging approximately $285/MWh in Auckland; and
higher associate earnings from Tilt Renewables
Investigations are ongoing, following an unplanned outage of the Kawerau geothermal power station as a result of a mechanical failure on 7 June. Mercury noted that at this time, it is unclear how long the station will be out of service although it is anticipated to be several months, which includes the remainder of FY21.
Mercury expects to provide a further update once they are able to estimate with greater certainty the time required to bring the station back to full operation.
Mercury has a business interruption insurance policy subject to a 30-day deductible and revenue caps to provide relief for events of this nature. As a result future guidance may change and remains subject to any further material events.
Mercury is adding to its generating assets by buying the New Zealand wind farms and development sites of Tilt Renewables for about $800m as part of a broader takeover and division of assets of the company.