Electricity generator Mercury NZ planning to invest $550m in historic hydro stations

Power generator Mercury is investing $550 million into three of its historic hydro stations, aged between 64 to 75 years old.

The commitment marks the largest reinvestment in the renewable energy source in New Zealand’s history and is expected to increase the efficiency of the Maraetai, Ohakuri and Atiamuri sites and boost output by up to 58 megawatts.

“That will combine three stations, 13 units and a half-a-billion-dollar investment,” Mercury chief executive Stew Hamilton told Markets with Madison at its Maraetai 1 station on the Waikato River.

“And that becomes pretty exciting. One, because it lets us manage the risk across the stations better, it lets us manage the cashflow better, but equally it means we can attract some of the large global technology suppliers where ordinarily they wouldn’t look at New Zealand.”

On a tour of the station near Taupō, the age of the infrastructure was evident – old landline phones lined the hallways, and sage-green paint covered the switch room cabinets.

“Through the 1920s up to about the 1980s, hydro definitely dominated the production of power for Mercury, but also for New Zealand really,” Hamilton explained.

It was not the only investment Mercury was making – it also had plans for geothermal and was building wind farms.

In fact, the entire electricity industry had announced $10 billion worth of investment in new generation through to 2030, including wind and solar.

“The issue with New Zealand’s grid is because it’s so dominated by hydropower, when we have a drought year or drought periods like we have experienced ... how do we continue to provide electricity during those times of drought?”

Go inside the historic Maraetai hydro power station in today’s episode of Markets with Madison above, and hear about Mercury’s plans to invest in existing and new forms of renewable energy to increase supply and resilience.

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Disclaimer: The information provided in this programme is of a general nature and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.

Madison Malone (nee Reidy) is host and executive producer of the investment show Markets with Madison. She joined the Herald in 2022 after working in investment and has covered business and economics for television and radio broadcasters.