Dry weather and a mechanical outage at its Kawerau geothermal power station on Monday has forced Mercury to downgrade its annual operating earnings for the second time this year.
Mercury said it now expects its 2021 earnings before interest, tax, depreciation, amortisation and financial instruments (EBITDAF) for the June 30 year of $460 million, down from an earlier forecast of $520m.
The downgrade reflected:
-a forecast 200 gigawatthour (GWh) decrease in 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;
-higher associated earnings from Tilt Renewables.
Mercury said investigations are ongoing following an unplanned outage of the Kawerau geothermal power station.
“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 2021,” Mercury said.
“We expect to provide a further update once we are able to estimate with greater certainty the time required to bring the station back to full operation,” the company said.
Mercury has a business interruption insurance policy subject to a 30-day deductible and revenue caps to provide relief for events of this nature the company said.
Today’s announcement is the second earnings downgrade this year.
In February, Mercury revised its 2021 EBITDAF guidance from $535m to $520m.
At the time, Mercury said the downgrade reflected an expected decrease in full-year hydro generation to 3,800 GWh due to dry weather in the Taupo catchment since mid-January.
Separately, Mercury and Australia’s PowAR are in the throes of buying Tilt Renewables, an Australasian wind farm developer, for almost $3 billion.
Under the deal, PowAR will acquire its Australian business and Mercury will take the New Zealand business.
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