Water spills from Meridian Energy's Benmore Dam. Photo / Supplied
Meridian Energy returned to the black in the first half with a $227 million net profit, driven by favourable wind and hydro power generation conditions.
The result compared with a $121m loss in the first half of 2025, which was affected by a gas shortage and poor hydro conditions.
Meridian’s earnings before interest, tax, depreciation, amortisation and fair value adjustments (ebitdaf) came to $506m, up from $257m.
The underlying net result from Meridian – 51% owned by the Government – went from a $5m loss to a $143m profit.
Operating cash flows in the first half to December 31 were $336m.
This compared with $50m in the same period last year, when the company’s performance was hit by the cost of hedge and demand response contracts required to support customers and electricity security through the winter of 2024.
Meridian’s results for the half were fuelled by a $264m (59%) year-on-year increase in energy margin – the result of record wind generation and the second-best lake inflows on record.
These conditions put downward pressure on wholesale electricity prices, with daily spot prices averaging $84 per megawatt hour over the six months to December 31 and falling to an average of $12/MWh in December.
The company also achieved record retail sales volumes, up 12% on last year.
Chief executive Mike Roan said it was a strong result and a welcome change from the hit the company took last year after committing significant funds to help support security of supply through winter 2024.
“A core part of our business is to manage weather variability, so we were pleased Mother Nature came to the party in the first half of the year,” he said.
“These conditions helped deliver a strong financial result and a period of extremely low wholesale prices. This is a sign of a market that continues to function well.”
The company has a goal of having seven projects in construction ready between 2023 and 2030.
While Contact Energy and Genesis Energy have raised funds from the market, Mercury and Meridian have no plans to follow suit.
“We’ve been preparing the business and the balance sheet since 2020 for what we are doing today,” Roan told the Herald.
“The strength of our cash flows and the scale of the balance sheet is such that we can’t see the need for a capital raise, given the forecast developments that we’ve got in front of us.”
Meridian is exploring long-term development of its hydro assets.
“If we found that it was economic to do something with our hydro catchments, let’s say to rebuild the Pukaki dam structure to hold more water, then that might be different,” he said.
The big power generators are in favour of the Government’s plan to build a liquefied natural gas (LNG) terminal at Port Taranaki to help offset the impact of rapidly declining domestic gas reserves.
Gas-powered electricity generation has formed an important part of the grid, supplying about 8% of production and providing cover for dry year risk in a hydro-dominated system.
There was unlikely to be a silver bullet for the country’s energy problems, but the combination of the Huntly Strategic Reserve deal, demand response deals with power users, combined with LNG, would solve the issue of dry year risk, Roan said.
“We are supportive of anything that will reduce dry year risk,” he said.
Roan said New Zealand has gone from 85% renewable energy to 97% renewable over the past two or three years because of what has been heavy investment in new projects.
With Harapaki Wind Farm and the Ruakākā BESS (Battery Energy Storage System) completed and operational, construction is progressing on the Ruakākā and Te Rahui solar farms.
Ruakākā is on schedule for first power in November and the first stage of Te Rahui – a 50/50 joint venture with Nova, which is leading construction – is scheduled for final power by mid-2027, the company said.
Meridian declared a 6.15c per share dividend. The company’s dividend reinvestment plan will apply to this interim dividend at a 2% discount.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.