Meridian Energy is still in negotiations with the owners of the aluminium smelter in Southland. Photo:
Power company Meridian Energy says negotiations with the owners of the Tiwai smelter is ongoing, but by no means certain the supply agreement will be renewed when it expires next year.
The company has made the statement as part of its first-half result, with net profit up 51 percent to $201 million, while revenue fell 9 percent
Meridian Energy's first-half has been boosted by better than average hydro inflows and an increase in the amount of energy sold to retail customers.
Key numbers for the six months ended December compared with a year ago:
- Net profit $201m versus $133m
- Revenue $1.53b versus $1.67b
- Underlying profit $425m versus $394m
- Unrealised gain on the value of hedge instruments $27m versus $10m loss
- Interim dividend 6.00 cents a share vs 5.85 cents per share
Chief executive Neal Barclay said sales rose on higher mass-market, net average sales prices, with 13 percent growth in the volume of sales to small and medium-sized businesses, 8 percent more to the agricultural sector, and a 17 percent increase in sales to large business.
Hydro lake inflows were 114 percent of average, with the highest winter inflows on record.
Operating costs rose 26 percent on the year earlier and were expected to finish the year between $242m and $247m.
Capital expenses of $171m in the first half were expected to round out the year at between $401m and $435m.
Meridian said it more than doubled the size of its pipeline for renewable developments to 11,100 gigawatt hours (GWh) over the first half.
"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.
Meridian's Harapaki wind farm, currently under construction in Hawke's Bay, largely escaped direct impacts from Cyclone Gabrielle, and the company was working through access and resourcing challenges at site, he said.
"Our thoughts go out to those suffering in the devastation Cyclone Gabrielle has wrecked.
"We've copped two extremely wet summer construction seasons in a row and our team have done a remarkable job keeping the project on schedule."
Contract for smelter due to expire next year
The company was also still in negotiations with the owners of the aluminium smelter in Southland, with the current supply contract due to expire in 2024, Barclay said.
While Rio Tinto had indicated a willingness to keep the smelter open beyond next year's scheduled closure date, Barclay said the parties were yet to reach an agreement on price.
"The discussions are complex and I expect they will continue for some time and despite the best intention of all parties involved, the continuation of smelter beyond [2024] is still far from certain," he said, adding Meridian would update the market as soon as there was progress to report.
Japanese firm may join Southern Green Hydrogen project
In the meantime, Barclay said Meridian, with the support of Ngāi Tahu, was working with Woodside Energy on the development of the proposed Southern Green Hydrogen (SGH) project in Southland.
Japan's Mitsui & Co was also in discussions to join the project and develop potential export markets for SGH's Green hydrogen-based products.
"We believe a large-scale green hydrogen facility, focusing initially on the export market, will help accelerate the development of a new hydrogen economy at home and strengthen New Zealand's ability to decarbonise our transport and industrial sectors," Barclay said.
"Our aim is to create a world-class collaboration that covers the full green hydrogen and ammonia supply chain and add jobs and a new industry to Aotearoa's domestic economy."