LGI (ASX:LGI) executives highlighted higher first-half FY2026 earnings, improved operating volumes and progress on a pipeline of battery and hybrid generation projects during the company’s results briefing. CEO Jarryd Doran and CFO Dean Wilkinson said the first-half performance supported a modestly higher dividend and allowed the company to reaffirm full-year EBITDA growth guidance.
First-half earnings rise and dividend increase
Doran said the company delivered a 33% increase in EBITDA compared with the same period last year, with the improvement also flowing through to higher net profit after tax (NPAT). Wilkinson added that revenue increased by more than 20% during the half, reflecting higher volumes and pricing outcomes that management said were at or above spot market rates across its main commodities.
Operational output lifts across biogas, power and ACCUs
Management attributed the earnings growth to higher operational performance, including expanded biogas recovery and increased renewable electricity output. Doran said there were no lost time injuries during the period, alongside a 37% increase in biogas recovery to 82 million cubic meters for the half.
LGI also reported:
- ACCU creation up 19% compared with the prior corresponding period
- Renewable electricity production up 41% (in megawatt hours)
- Generation plant availability of 98%, above a 95% target
Doran noted that commissioning of the Eastern Creek facility contributed to the step-up in volumes, and that additional sites and equipment brought online during the half included flaring facilities at Warwick, Jandowae and Lithgow. He added that even excluding Eastern Creek, existing sites delivered an 8% year-on-year increase in biogas recovery, which management described as a reflection of efforts to “chase the gas” by expanding collection systems.
Commodity pricing and hedging: outperforming averages amid softer markets
Doran said LGI generated AUD 97 of revenue per megawatt hour exported across its Queensland and New South Wales generation assets during the half, compared with an average wholesale electricity price of about AUD 77 over the same period. He attributed the outperformance to the company’s trading and optimization approach, including its DAX system, hedging activities, and contributions from the Bunya battery via FCAS revenue.
Wilkinson said the company’s electricity segment benefited from higher volumes and cost control, adding that the increase in EBITDA margin outpaced revenue growth in that division. Overall, he reported EBITDA margin improved to 51% from 47% in the prior period, with EBIT margin also higher despite a 43% increase in depreciation and amortization due to the commissioning of Eastern Creek and additional Canberra units.
On hedging, management said its electricity hedge position remained broadly similar into the second half at around 75%, with some deliberate reduction in New South Wales hedging in April to June to allow for exposure as Mugga Lane batteries enter commissioning. Doran also said LGI actively adjusted its hedging program during the first half after being surprised by how low prices moved, rather than taking a “set and forget” approach.
Asked about LGC pricing and revenue, Doran said hedge pricing would remain in place through the end of the financial year. He also suggested that incremental revenues enabled by the commissioning of Canberra batteries—such as energy uplift and FCAS—could help offset the impact as LGC hedges begin to roll off into the new financial year.
Policy updates: new ACCU method, exit arrangements, and post-2030 certificates
Management addressed several regulatory developments, including the federal government’s passage of a new ACCU method for landfill gas projects in late November. Doran said the method aligns with integrity improvements LGI expected, including standardized and upward-sloping baselines, and that it provides greater policy certainty for investment in new projects and reinvestment in older projects to increase ACCU creation.
He acknowledged that some legacy projects would see a contraction in ACCU creation under the new baselines, but said LGI’s strategy of increasing gas capture and adding new sites is intended to keep net ACCU volumes steady year over year. Doran said LGI expects a modest increase in ACCU volume in FY2027 relative to the current year, which is the first year the new method will take effect across its portfolio.
The company also discussed the government’s “permanent exit arrangement” for carbon abatement contracts, allowing partial delivery (25%) with the remainder paid out to exit. Wilkinson said some ACCUs previously committed under contracts priced below the current spot market could be sold at higher spot or forward prices if released from those arrangements, which he described as a slight cash flow improvement.
Separately, Doran said the government has passed a policy framework for a replacement to LGCs beyond the current scheme’s 2030 end date. He said LGI had not yet seen pricing for the new certificates (referred to as REGOs) and would monitor the market before engaging in transactions.
Project pipeline: Mugga Lane batteries, Belrose and Nowra
Management provided updates on major growth projects intended to lift LGI’s trading capacity. Doran said Mugga Lane battery commissioning has dates provided by the network authority and AEMO, and the company still expects the batteries to add value through commissioning by the end of the financial year. He said LGI has intentionally modeled the financial contribution to the “very back” end of the year given the process is new at this scale for the company.
Doran outlined a path to capacity increases across three highlighted projects:
- Canberra (Mugga Lane) batteries: targeted commissioning late in the second half of FY2026, with a full run-rate contribution into FY2027; expected to lift trading capacity from 21 MW to 33 MW.
- Belrose battery project: described as LGI’s first standalone battery project (no generation on site); final regulatory approvals underway, with site works targeted later in the year and commissioning expected very late in the calendar year, contributing in the second half of FY2027; expected to lift capacity from 33 MW to 45 MW.
- Nowra Renewable Highway: planned as a 3 MW generation site with 8 MW / 16 MWh of batteries; progressing through development application, network and regulatory approvals; expected to contribute late in the second half of FY2027.
In response to questions about longer-dated development options beyond these nearer-term projects, Doran said LGI had secured some land options and agreements and was advancing early work such as network capacity and planning assessments, but would provide more detail when projects mature further. Wilkinson added that some capital expenditure in the half related to these projects, although the company did not disclose specific project-level spending.
Wilkinson said capital expenditure in the half exceeded annual spending levels from several years ago, driven primarily by construction of “high conviction” projects, the purchase of six batteries for the Canberra site, and increased pipework investment to expand gas collection.
Management reaffirmed guidance for FY2026 EBITDA growth of 25% to 30% versus FY2025, subject to market dynamics and other factors outside the company’s control. Doran also emphasized typical seasonality, with LGI often delivering a stronger second half driven by electricity market activity, carbon credit buying cycles, and project commissioning timing.
About LGI (ASX:LGI)
LGI Limited provides carbon abatement and renewable energy solutions with biogas from landfill. The company operates through Renewable Energy, Carbon Abatement, and Infrastructure Construction and Management segments. It offers greenhouse gas abatement solutions. In addition, the company operates and maintains biogas extraction infrastructure and flaring systems. Further, it provides renewable energy related services. Additionally, the company is involved in wells, well head manifolds, surface pipework, and mainline pipes related activities.
