One of New Zealand’s big electricity companies, Mercury, has landed a power contract with US tech multinational Amazon, whose business interests include e-commerce, cloud computing, digital streaming, and artificial intelligence.
The long-term corporate Power Purchase Agreement with Amazon is for renewable energy for their Auckland data centres, planned for launch in 2024.
Amazon will purchase around half the real time output of Turitea South (the southern section of Mercury’s Turitea wind farm) for an agreed price. Turitea South is 103 megawatt (MW) and expected to produce 370 gigawatt hours (GWh) per annum. The financial terms of the deal are confidential.
The renewable energy from Turitea South, NZ’s biggest wind farm, will be used to support Amazon Web Services’s (AWS) data centres in Auckland, when they launch in 2024.
Mercury says it has a strong pipeline of renewable development, but now having a guaranteed consumer buying a significant amount of Turitea South’s generation means it is well placed to continue developing renewable projects at pace.
“In addition to shifting the dial on decarbonisation at home with the development of the Turitea wind farm, this agreement means we’re also supporting a major global company with their decarbonisation goals,” said Mercury CEO Vince Hawksworth.
“We’re committed to delivering on our strong pipeline of new renewable generation and arrangements like this will help us get there faster. It’s great to welcome AWS’s data centres to New Zealand”.
A power purchase agreement (PPA) is an electricity supply agreement, where a price is agreed for a period of supply. For the gennerator and the customer, the agreed price avoids the volatility risk of buying and selling on the wholesale energy market, where the price moves around depending on current and forecast supply and demand.
Mercury itself has been expanding its business . It has a significantly larger retail business, primarily due to completion of the Trustpower retail acquisition in May 2022.It also acquired the outstanding shares in the broadband company NOW NZ in December 2022.
It added 440,000 more connections from those two transactions alone.
Commissioning of the 103MW Turitea South wind farm is due to begin this month: the company said earlier this year completion was taking longer than expected due to construction and delivery challenges.
“Once complete, Turitea will be New Zealand’s largest wind farm and materially shifts the dial on decarbonisation ambitions. That’s a win not just for Mercury, but for the Manawatū region and New Zealand as a whole,” the company said then.
While operating earnings (EBITDAF) were up $223m to $451m for the 6 months ended December 31 net profit was down $197m to $230m with the previous period including the one-off net gain made from the sale of Mercury’s shareholding in Tilt Renewables when Mercury acquired Tilt’s NZ operations in August 2021. The early exit of a long-term hedge with Norske Skog in HY2022, which reduced revenue by $65m in that period, also contributed to to the lift in EBITDAF in HY2023.