Meridian Energy has hired financial advisory firm Lazard to review its Australian strategy amid energy margin pressure and a drop in earnings across the Tasman.
However, chief executive Neal Barclay was quick to point out that should not be read as a strategic review or the start of a sales process.
Meridian's rationale for taking a position in Australia remained strategically sound, he said, and the company's target was to triple customers by 2025.
Barclay revealed the move at the end of an investor presentation on Tuesday, which largely focused on Meridian's response to decarbonisation, future dry years and Rio Tinto's Tiwai exit.
Meridian owns and operates two windfarms and three hydro stations in Australia to support its Powershop retail arm.
The company's interim result in February highlighted headwinds in Australia, not helped by state lockdowns and political intervention at both federal and state government level.
Meridian's Australian operations delivered a 26 per cent drop in earnings before interest, depreciation, amortisation and financial instruments (ebitdaf) to $29 million in the six months to December 31.
Australian energy margin was $59m in the first half, $6m or 9 per cent lower than in the previous corresponding period.
While customer gains drove Powershop Australia's retail electricity sales volumes 23 per cent higher, lower average prices contracted sales by 5 per cent. Meanwhile, lower wholesale prices drove a 39 per cent decrease in generation spot revenue and a 32 per cent decrease in the cost to supply customers.
This week, Barclay told investors Australia still has a lot of heavy lifting to do in terms of decarbonising its energy sector. "There's got to be strong growth potential there.
"But we are running into some reasonably strong headwinds in terms of our progress.
"So we are doing a review of our strategy in Australia but that does not mean I'm saying we are doing a strategic review, which has connotations. And the board certainly hasn't been presented with any decisions to make or any analysis around what the outcomes of that work at this stage, so we've got to get through that work and won't have too much to add until we have completed it."
Meridian's Australian assets include the Mt Millar wind farm in South Australia and the Mt Mercer wind farm in Victoria, which between them produce enough energy to power around 116,000 households.
Hydro assets include the Hume and Keepit power stations in New South Wales, and Burrinjuck in Canberra, between them producing enough energy to power about 58,000 households.
Meanwhile, Meridian's investor day highlighted a five-year strategy for generation and load aspirations with and without Tiwai.
Analysts at Jarden noted that to mitigate the risk of a poor outcome, Meridian's number one medium-term priority is to originate 1.5 Terawatt hours of new South Island demand ahead of 2025.
"This mitigates a Tiwai exit generation risk and should give Meridian more power on potential Tiwai re-contracting negotiations."
In the wider context of New Zealand moving to 100 per cent renewable energy supply, Meridian estimates 12TWh of new grid generation will be needed by 2030 at a cost of $7 billion.