Meridian stands to double Australian return

Hype is building around Meridian Energy's plans to sell its Australian business, with a potential price of $A1.5 billion ($1.63 billion) being circulated.

This would mean the state-owned enterprise could more than double its original 2003 investment of $630 million, should it find a buyer for its Southern Hydro subsidiary.

While Meridian has the company up for sale, it says it will not sell unless it gets top dollar.

A recent bidding war over the Australian-listed Pacific Hydro has shown big international interest in renewable energy companies. Potential buyers now thought to be after Southern Hydro include Spain's Acciona, which lost the war to buy Pacific Hydro, along with other Australian energy companies such as AGL and Origin Energy.

Last year, AGL sold its 66 per cent stake in NGC and Origin bought 51 per cent of Contact Energy.

Meridian's 10-station Southern Hydro system in Victoria can generate 500MW of power, or 6 per cent of the state's capacity. It was bought from the US energy giant Alliant, which also owns 19.1 per cent of local generator and retailer TrustPower.

The 10 Southern Hydro stations are peaking stations, selling power only when the wholesale price is high.