New generation capacity may be needed in New Zealand after 2021, according to an investor presentation by Meridian Energy Ltd (NZX: MEL; ASX: MEZ).
The company told a New Zealand Stock Exchange retail investor evening this week that future energy demand in the country was likely to be modest in the short term – possibly a growth of between 0.5% and 1% per annum.
Older plant retirement would add to the need for new generation.
The company said that the Tiwai Point smelter represented 12% of NZ’s total annual demand. While international aluminium was recovering, with the LME prices up 13 in the past year, the commodity remained exposed to cycles and Chinese supply decisions.
The smelter has signed contracts for an additional 50 MW.
Meridian was not expecting Tiwai Point to close but there may be a change in ownership.
Meridian said it was NZ’s largest generator with all production from renewable sources.
In new technologies the company saw an increasing uptake of solar in NZ, though NZ residential capacity factors were low, at between 13% to 15%, and payback was high at an estimated 13 years.
Commercial solar opportunities were being developed.
On climate change, Meridian has not seen significant catchment inflows over the last 100 years, though there had been some seasonal shift in inflows – drier autumns and wetter summers.
It was projected to get wetter in catchments, bigger individual rain storms and warmer everywhere. It was also projected to be windier at the company’s wind farms, especially in winter.
The political push by the Government to be carbon neutral by 2050 will need increased electrification.
Meridian said energy affordability in political terms could be an issue.