Highlights:

  • Macquarie Research issued a Neutral rating on Mercury NZ with a target price of NZD 6.90.
  • High national hydro inflows pushed Auckland wholesale electricity prices down to NZD 40/MWh during the quarter.
  • Commissioning of the Ngā Tamariki OEC5 geothermal expansion began in January, with expected annual generation of 390 GWh.

Mercury NZ Ltd (NZE:MCY) is in focus after Macquarie Research issued a Neutral rating on the energy generator and retailer, setting a target price of NZD 6.90. In January, the company released quarterly operational update covering the three months ended 31 December 2025. Shares of Mercury NZ closed at NZD 6.45 on 11 February, up 1.74% for the day, 3.53% over six months, and 0.94% over the past year.

Macquarie Sets NZD 6.90 Target

Macquarie’s Neutral rating places Mercury’s valuation near current trading levels, with the target price of NZD 6.90 compared to the latest close of NZD 6.45.

The rating comes after Mercury detailed operational conditions shaped by elevated hydro inflows and shifting wholesale electricity prices.

High Hydro Inflows Impact Market Pricing

In its quarterly update released on 21 January 2026, Mercury reported national hydrological inflows at the 98th percentile. As a result, wholesale spot electricity prices in Auckland averaged NZD 40/MWh for the quarter.

Forward electricity prices in Auckland for FY26 eased to NZD 135/MWh, influenced by high inflows and above-average hydro storage levels.

National electricity demand rose 3.1% compared with the prior corresponding period, primarily due to the New Zealand Aluminium Smelter resuming standard operations after earlier curtailments.

Hydro and Generation Performance

Waikato catchment inflows were at the 88th percentile, contributing to hydro generation of 1,072 GWh, up 23% year-on-year. Hydro spill during the quarter reached approximately 345 GWh to maintain lake operating levels. Taupō storage ended the period above average.

Wind generation increased 6% year-on-year to deliver an additional 32 GWh. Geothermal generation declined by 9% to 539 GWh due to a planned maintenance outage at Ngā Awa Pūrua, completed on time and within budget.

Commercial and Industrial yields declined by NZD 3.2/MWh compared with the prior period, influenced by contract repricing to the 2026 forward curve and new long-term agreements.

Geothermal Expansion Nears Completion

Mercury confirmed that commissioning of the Ngā Tamariki OEC5 geothermal expansion began in January. Once fully operational, the unit is expected to add 390 GWh per annum and increase net output by 46 MW.

Full commissioning is targeted by the end of Q3. The project forms part of Mercury’s renewable generation development programme.

The company also reported growth in bundled customer products, with connections holding two or more services rising 10% to 223,000.

Macquarie’s Neutral rating with a NZD 6.90 target places Mercury NZ under close watch following its December quarter update. Elevated hydro inflows, lower wholesale prices, and progress on geothermal expansion have shaped recent operational performance. Investors are monitoring commissioning milestones and electricity price movements in the coming months.

Frequently Asked Questions (F&Q)

  1. What rating did Macquarie give Mercury NZ?
    Macquarie Research assigned a Neutral rating with a target price of NZD 6.90.
  2. What were the average wholesale electricity prices in Auckland during the quarter?
    Wholesale spot prices averaged NZD 40/MWh due to high hydro inflows.
  3. What is the expected output from the Ngā Tamariki OEC5 expansion?
    The new geothermal unit is expected to add 390 GWh annually and increase net output by 46 MW.