Meridian Energy generates electricity through renewable sources including wind, water and sun. (File photo) Photo: RNZ / Nate McKinnon
Renewable energy company Meridian, has slumped to a large loss as a lack of water and wind slashed its margins.
Chief Executive Mike Roan said the company had endured a "perfect storm".
"The combination of historically low hydro inflows, extended periods of low wind, two major droughts and a dramatic decline in gas availability combined to make this a very challenging financial year."
Key numbers for the 12 months ended June compared with a year ago:
- Net loss $452m vs net profit $429m
- Revenue $4.84b vs $4.86b
- EBITDAF $611m profit vs $905m* profit
- Final dividend 14.85 cents per share
*Earnings before interest, tax, depreciation, amortisation, fair value instruments - a measure of operating earnings.
The company was forced to spend $300 million on expensive price hedges, including clawing back power supply from its biggest customer, the Tiwai Point aluminium smelter.
Energy margins decreased by 23 percent as a result, down from $1.276 billion to $982 million.
Roan said its strong balance sheet allowed it to absorb the losses and Meridian put security of supply over profits.
"For us, FY25 will be defined by Meridian putting New Zealand's security of supply first, keeping power flowing for homes and businesses, and the financial hit we took because of that."
Securing the future
The company said rapidly falling gas reserves might require firmer government action to secure supplies for industrial and domestic users.
But the company was taking steps to avoid a repeat of last year's supply crunch.
It had applied for fast-track approval from the government to take more water from Lake Pūkaki, which holds 40 percent of the country's hydro storage capacity.
Lake Pūkaki holds 40 percent of New Zealand's hydro storage capacity. (File photo) Photo:
With the other three "gentailers" - Contact, Mercury and Genesis - it had agreed to create a strategic energy reserve at the Genesis-own Huntly Power Station.
Outlook and dividends
Despite the loss, the board declared a 14.85 cents per share dividend, but signalled it may review the level of future dividends in the event of a severe drought in future years, so the company can prudently manage cash flows.
The company planned to invest $3 billion over the next five years in renewable power assets.
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