The Contact Energy Limited (ASX: CEN) share price is gaining in morning trade, up 3%.
Below we take a look at the ASX energy company's latest contract announcement.
What did Contact announce?
Contact Energy's share price is gaining after the company reported on a 15-year, renewable energy power purchase agreement with Genesis Energy Ltd (ASX: GNE).
Key terms of the agreement, signed today, stipulate that commencing in 2025 Contact will supply Genesis with up to 62.5 megawatts of electricity.
That's equivalent to 41% of the the152-megawatt capacity from the company's geothermal power station. Contact expects that the power station, currently under development at Tauhara, New Zealand, will be complete in mid-2023.
Commenting on the agreement, Contact Energy's CEO, Mike Fuge said:
It's fantastic to see customer support for the country's leading renewable development. These sort of long-term commitments, backed by the lowest cost projects, are good for New Zealand as they keep electricity prices as low as possible and encourage the development of new renewable generation.
It also demonstrates the importance of the Tauhara development's role in helping reduce New Zealand's emissions. The power station will operate 24/7, have low emissions and will not be reliant on the weather.
Genesis' CEO, Marc England added, "This arrangement with Contact will help us deliver on both our Future-gen strategic targets and our commitment to remove at least 1.2 million tonnes of annual carbon emissions by 2025."
England said Genesis will have more renewable prospects it will announce to the market in the near-term.
Contact expects Tauhara will replace 1.3 terawatt hours of thermal generation from New Zealand's electricity system. That should cut some 450,000 tonnes of carbon emissions annually.
The agreement commences on 1 January 2025. The financial details remain confidential at this time.
Contact Energy share price snapshot
Contact Energy's share price is up 38% over the past 12 months. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 24% over that same time.
The Contact Energy share price has struggled in 2021, down 9% year-to-date.
