Hydro boosts Meridian first half net profit by 39pc, raises dividend

Power generator and retailer MerIdian has reported its first half result. Photo / File

Beneficial hydro conditions helped Meridian Energy boost its first half net profit by 39 per cent to $201 million.

The company also lifted its interim dividend by 2.6 per cent to 6 cents (80 per cent imputed).

Included in the result was an unrealised gain in the value of hedge instruments amounting to $27m - compared with a loss last year of $10m - and a $16m reduction in finance costs due to the retirement of debt following an asset sale.

Meridian’s operating earnings from continuing operations (ebitdaf) increased by $31m or 8 per cent to $425m.

Chief executive Neal Barclay said the first half’s operating performance reflected favourable hydrology, with better than average inflows into the hydro catchments that the company manages.

There was also continued growth in the amount of energy sold to Meridian’s retail customers.

Operating earnings benefited from $51m of electricity hedge close-outs.

Meridian started the financial year with below average storage in Lake Pukaki in the South Island.

However, this situation changed during July and August 2022 when a series of large storms lifted storage significantly.

Meridian said winter 2022 inflows into its Waitaki catchment were the highest winter inflows on record.

In the six months, Meridian more than doubled the size of its renewable development pipeline of “buildable” options to 11,100 gigawatt hours.

“We have a bold vision for our renewable pipeline, and we intend to continue to push hard and grow our renewable generation assets at pace,” Barclay said.

In December, Meridian announced it will begin construction of the $186m Ruakākā Battery Energy Storage System, New Zealand’s first large-scale grid battery storage system, south of Whangārei.

“The battery has a 200 megawatt capacity and will make a significant contribution to the reliability of the overall electricity grid allowing more intermittent wind and solar renewable electricity generation to be efficiently accommodated within the system,” he said.

Meridian is preparing to lodge consent applications for a new wind farm at Mount Munro in the Wairarapa and a 130MW solar farm, also at Ruakākā, both in the middle of 2023.

The company’s Harapaki wind farm, currently under construction in Hawke’s Bay, largely escaped direct impacts from Cyclone Gabrielle.

Just before Christmas, Meridian announced it had selected Australia’s Woodside Energy as the preferred partner to move forward to the development stage of the proposed Southern Green Hydrogen (SGH) project in Southland.

Japan’s Mitsui & Co was is also in discussions to join the project and develop the potential export markets for SGH’s Green hydrogen-based products.

The company - 51 per cent owned by the Government - generates its power solely from renewable sources – wind, hydro and solar.

Meridian’s shares last traded at $5.32, up 1.5c from Tuesday’s close, having gained 1 per cent over the last 12 months.