Meridian Energy Ltd (NZX: MEL; ASX: MEZ) as New Zealand’s largest energy retailer, sees itself as a long-term competitor in the Australian market.
The company said in an investor presentation this month that there were acquisition and new renewable generation and offtake agreements in Australia.
As NZ’s largest generator Meridian holds seven big hydro stations with low operating costs and capital needs and five NZ wind farms and two also in Australia.
The company, which listed in 2013 with the Government retaining a 51% stake, has a market capitalisation of $8.5 billion and has 420,000 customers in three countries. About 40% of its generation covers the Tiwai Point aluminium smelter contract.
Tiwai Point consumes about 12% of NZ’s total annual energy demand, with aluminium remaining a commodity exposed to cycles and Chinese supply decisions.
Meridian does not expect the smelter will close but there was a possibility of ownership changing. (Key owner Rio Tinto has in recent years looked at selling some of its Pacific Aluminium operations, that includes Tiwai Point).
However, should the smelter close, Meridian said it would trigger further South Island grid investment.
Meridian sees solar as a key new technology in NZ, with solar update increasing as the country’s economics improve. However, grid-scale solar was unlikely in NZ with competing land uses and winter peak demand. Solar update was much higher in Australia, with subsidy support.
Grid-scale demand for batteries in NZ was unlikely, due to existing hydro storage but it was possible in Australia with subsidy support.