At a glance
- Contact Energy and CDC will seek resource consent for a 250MW data centre at Stratford in Taranaki, on the site of the gas plant Contact retired this year.
- UBS puts the build at NZ$4.5 billion to NZ$5 billion, and Contact says it is prepared to take an equity interest of up to 50%.
- Infratil holds 49.72% of CDC and 9.08% of Contact, a stake in both the operator and the generator.
- Chief executive Mike Fuge points to about $2.5 billion of projects in view and long-dated futures down around 30% this year.
- Neither company has committed to build, and consent, an anchor tenant and financing all sit ahead of a decision.
Contact and CDC propose 250MW at a retired gas site
Contact Energy and CDC said on 10 August, alongside Contact's full-year result, that they will seek resource consent for a 250MW data centre at Stratford in Taranaki, on the site of the 377MW Taranaki Combined Cycle plant Contact retired earlier this year. Contact says it intends to supply the power under long-term contract from an 11 TWh pipeline of geothermal, wind and solar options it has yet to build. For scale, New Zealand's operating colocation market runs to about 208MW across 36 facilities on Arizton's June count.
Infratil holds 49.72% of CDC and 9.08% of Contact, and its chief executive Jason Boyes was quoted in a third release Infratil issued on the proposal the same morning. Infratil's CDC stake was independently revalued to A$9.21 billion at 30 June, on a CDC valuation of A$18.5 billion. Its Contact stake is the smaller and the more recently reduced: on 20 May 2026 Infratil sold 53,531,358 Contact shares at NZ$9.25, 5.0% of the issued capital, for about NZ$495 million.
This is the second New Zealand project this year in which a generator and a data centre developer are linked by equity. In July, Mercury paid US$30 million for 12.7% of Datagrid, the Southland developer over which it already held a 140MW power purchase option.
Fuge says long-dated futures are down around 30% this year
Contact chief executive Mike Fuge linked the demand case to Contact's own build programme. "Since 2021, Contact has maintained a continuous infrastructure build programme, with $2.4 billion committed to renewable projects in the last five years," he said in the result. "Our investment has helped to bring the market back into supply and demand balance. Long-dated futures prices have reduced by around 30% since the start of the year, currently at the lower end of our view of long-run wholesale prices." Winter 2026 pricing fell more than 60% through the second half of FY26, with national hydro inflows at 118% of mean and storage ending the year at 135% of mean.
Fuge told the results presentation that "this is not a 'build it, and they will come' strategy". Contact has about $1.3 billion of projects under construction and about $2.5 billion in view over the next few years, and how far prices could fall before new generation became uneconomic is, he told BusinessDesk, "what keeps us awake at night". He counts about 3 TWh of new demand as known and committed across dairy, metals, data centres and residential customers, with up to another 8 TWh of live potential.
The Southland Wind Farm shows the distance that argument has to travel. Consented in April, it is expected to deliver an average annual output above 1.2 TWh. The demand Contact has lined up against it is a letter of intent with Rio Tinto covering roughly 50MW, or about 400 GWh a year, to restart the idle Line 4 potline at NZAS, the Tiwai Point aluminium smelter, which Contact says would be backed by Southland Wind generation. Jarden's Grant Swanepoel put that mismatch to the company and asked how investors could be sure Contact would, in his words, "stick to your word". Fuge answered that the smelter is one part of a wider picture that also takes in Stratford, dairy electrification and NZ Steel's electric arc furnace, and said "we will stick to our word".
A 250MW compute load running flat out for a year draws about 2,190 GWh, roughly 5.5% of the 40,002 GWh New Zealand consumed in 2024.
Stratford has 500MW of consented batteries and a solar option
Contact disclosed in February 2026 that consent had been granted for 500MW of grid-scale batteries at Stratford, and its joint venture with Lightsource bp is progressing an option for a 150MWac solar farm with integrated storage near the site. None of that consented battery capacity is under construction. Contact's batteries are being built at Glenbrook near Auckland, where a first 100MW unit came online in March and a second 200MW unit started construction the same month for delivery in the first quarter of 2028.
Contact's results presentation puts about 350MW of transmission capacity within one to two years on minimal substation work, rising to about 600MW within two to three years once planned upgrades are done. The 377MW TCC unit was commissioned in 1998 and retired earlier this year, and Contact says its remaining 200MW of Stratford peaking generation is not affected by the proposal.
CDC points to diverse high-capacity fibre, terrestrial and subsea, running to Auckland where New Zealand's international cables land. CDC founder and chief executive Greg Boorer says Stratford brings renewable generation, a grid connection, fibre and a skilled technical workforce together in a way very few places can. Contact puts construction at a peak comparable to its Tauhara geothermal station, more than 600 jobs, with an operating workforce about four times what TCC carried.
Infratil holds 49.72% of CDC and 9.08% of Contact
Chief financial officer Matt Forbes told analysts Contact is prepared to take an equity interest of up to 50% in the development, with project-level financing also expected. Forbes said stable long-term data centre revenue could receive more favourable treatment in Contact's leverage calculations, potentially supporting a net-debt-to-EBITDAF ratio of about five times for that portion of earnings, against the roughly three-times ceiling attached to Contact's investment-grade rating. Neither company has disclosed pricing, term or volume for the supply, and no consent application has been lodged.
UBS analyst Vignesh Nair put the potential cost of the 250MW proposal at NZ$4.5 billion to NZ$5 billion, working from cost benchmarks of about A$15 million (NZ$17.9 million) per megawatt for CDC's Australian data centres and suggesting New Zealand could carry a seismic-related premium. Fuge said those benchmarks sound about right, with a slight premium likely here, partly offset by lower cooling and renewable energy costs. Contact has put no figure of its own on the project.
Stratford would be a change of footing for CDC. Its three New Zealand data centres sit on two Auckland campuses, at Silverdale and Hobsonville, running 98MW of operating capacity against planned Auckland capacity above 220MW. The wider set of New Zealand data centre operators has nothing of Stratford's scale in operation.
The growth rates depend on which FY25 is the base
Contact reported net profit of $423 million and EBITDAF of $1,011 million. Its own summary table sets those reported FY26 figures against FY25 on an underlying basis, stripping the Ahuroa Gas Storage provision release that had lifted FY25 reported EBITDAF by $98 million and FY25 reported profit by $71 million. The table also notes that FY26 includes Manawa Energy from 11 July 2025 while the prior period does not.
| Selected measures | FY26 reported | Against FY25 underlying |
|---|---|---|
| EBITDAF | $1,011m | up 31% from $774m |
| Profit | $423m | up 62% from $261m |
| Profit per share | 41.5 cps | up 27% from 32.7 cps |
| Operating free cash flow | $648m | up 49% from $434m |
| Average ROIC | 5.9% | up 100bp from 4.9% |
Source: Contact Energy FY26 result, 10 August 2026.
Add the provision release back and FY25 reported EBITDAF was $872 million, which makes the same $1,011 million a 15.9% increase on a reported-to-reported basis, and the NZ Herald measured the same $423 million profit against FY25 reported and got 27.8%. Contact's table carries no reported-to-reported column, and the comparison is not like-for-like in either direction, because FY26 consolidates Manawa and FY25 does not. EBITDAF came in under the $1,038 million median of market consensus.
Average pricing on electricity sold fell 11% to $140 per megawatt hour. Forbes said the FY31 targets set at November's strategy day hold on a long-run wholesale price assumption of $120 to $130 per megawatt hour in real terms, and Contact guided to normalised EBITDAF of $1,045 million and a 42-cent dividend in FY27.
What to watch
Consent lodgement. Contact and CDC will seek resource consent under standard process, and no Stratford data centre appears on the fast-track register. The application would be the first document to disclose water, noise and load detail.
An anchor tenant. CDC describes the target customers as delivering essential digital services across government, research, education, disaster recovery, cloud, enterprise and critical infrastructure. No tenant has been named, and both companies describe the proposal as early stage with no commitment to build.
Contact's equity decision. Forbes has put the ceiling at 50% alongside project-level financing. The size Contact settles on determines whether it is the facility's supplier, its part-owner, or both.
The power contract. Term, volume and whether supply is tied to specific new-build generation are undisclosed, and they determine whether 250MW of new load arrives with new electricity behind it. Contact has described its development pipeline as about 15 TWh at November's capital markets day, about 12 TWh in the February equity raise deck and 11 TWh now, a set of development options in each version, none of them committed.
The consent politics. The Greens have sought a one-year freeze on new AI data centre consents, which Prime Minister Christopher Luxon rejected in July while directing work on investment rules. Those rules are still being written.