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Elevate Magazine
August 29, 2024

Meridian Energy Reaps High Profits But Warns of Tougher Times Ahead

meridian energy reaps high profits but warns of tougher times ahead

New Zealand’s largest power generator, Meridian Energy, has reported a boost in its earnings for the year ending June. The partially state-owned company’s net profit soared to $429 million, compared to $95 million the previous year. 

The energy company also reported that its net profit for the said period included net gains from hedge instruments amounting to $249 million, in contrast to a net loss of $351 million from hedge instruments last year. 

However, the company has warned that the 2025 financial year is expected to be far more challenging due to record low hydro catchments from May through mid-August. 

“Record low inflows have combined with a shortage of gas and unseasonally low wind, causing wholesale prices to lift materially,” Meridian Energy chief executive officer Neal Barclay said. 

“As a result, Meridian called on hedge arrangements to ensure our hydro lakes were managed within consent conditions to maintain security of supply.

“The wider sector took several steps to address the situation, including exercising demand response options, buying gas from Methanex for electricity generation, and securing access to contingent hydro storage, should we need it.”

He stated that the subsequent rise in wholesale prices impacted fewer than 0.1 percent of its customers, since the majority were under fixed-price contracts.

“Meridian has also taken steps to look after our larger commercial and industrial customers rolling off their existing contracts by offering to extend their current pricing through to 1 November 2024,” Barclay added. 

Barclay also highlighted the company’s several key achievements throughout the year, which include securing 20-year agreements with New Zealand Aluminium Smelters, the commissioning of Harapaki wind farm, commencing construction on its first grid-scale battery, and formulating innovative strategies across its retail and generation sectors.

He also emphasised Meridian’s dedication to generating sufficient new renewable energy to facilitate the country’s shift towards a net-zero economy,  with a minimum of 30% share of the generation market.