Jeremy Hutton: Milford Asset Management Equities Analyst on Meridian Energy's Investor Day data

Meridian Energy's Investor Day data indicates more power companies are looking to embrace growth in a changing market.

New Zealand's electricity demand is expected to grow between 50 percent and 75 percent, meaning the sector needs new methods of generation.

Milford Asset Management's Jeremy Hutton unpacks the results and announcements.

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Episode Transcript

Speaker 1 (00:00):
Jeremy Hutton, Milford Acid Managements with us.

Speaker 2 (00:02):
Now, hey Jeremy, Evening, Heather.

Speaker 1 (00:04):
So Meridian Energy it hosted the old Invested Day today.
Looks like big growth is coming for the company, but
not just the company, the sector as well.

Speaker 2 (00:11):
Ah, yeah, that's right and an an interesting Investorday yesterday,
And yeah, you're right. These usually are a good opportunity
for companies to show the market how they're thinking about
things and display some of their plans and strategy for
the next few years. And unsurprisingly, the energy transition is
really checking up this electricity sector. A few quick numbers

(00:33):
that Meridian highlighted, so New Zealand electricity demand is expected
to grow between fifty and seventy five percent over the
next few decades, and Meridian's already seeing some of this
increased demand coming through in their monthly stats already. And
also the electricity sector has to invest over thirty billion
dollars in their estimates in new generation to meet this demand.

(00:56):
So a really big challenge for the sector coming up totally.

Speaker 1 (00:58):
And what's Meridian's plan, how's it going to develop this?

Speaker 2 (01:02):
Yeah, it will be a challenge to meet this growth.
And Meridian did highlight a few projects that they've got
on the go that they want to complete in the
next five years, no mean feed. It's three wind farms,
four solar projects and a battery project as well. And
the costs unknown yet for a lot of this, but
it will be in the billions for the company. But
Meridian was clear that this was or the cost was

(01:26):
an issue for the sector and itself to cover. It
has the capability and the balance sheet to meet this
and it won't need any government support at all, and
this is a big difference to other countries. Of course,
governments around the world are piling billions into renewable energy investments,
so this should keep the local New Zealand governments happy.

Speaker 1 (01:46):
Did they talk at all about gas and the problems
we're having with gas?

Speaker 2 (01:49):
Jeremy, Yeah. Gas has got a lot of attention this
year and they did discuss this. Supply is very tight
in the gas market and this does impact electricity as
gases used during our peak electricity demand periods, and Meridian
was really clear that gas was still going to be
required as a transition fuel until twenty thirty five. There's

(02:10):
no technology in their view that can replace this as
of yet, but it sounds like there's a bit of
a sector working group going on to try and allay
some of these concerns. The relevant ministers have been heavily
involved as well, and it looks like an energy import
terminal could be a solution. So this is quite interesting
and it could solve a lot of our security of

(02:31):
supplier shoes, especially during this near term transition phase. But
it is a bit early days. So what's the state.

Speaker 1 (02:38):
Yeah, and look, we've been talking about the fast FasTrak
proposal on the show just in the last twenty minutes
or so. Did that get any discussion at all?

Speaker 2 (02:45):
Yeah, Consenting and the consenting regime in New Zealand did
get a lot of discussion. Very typical as you say,
with our topical as you say, with the fast track
proposal by the government. Meridian was also very clear that
the regime is just far too complex at the moment
and it effectively requires unanimous approval, which lets face it

(03:06):
is really impossible in today's age. And these delays to
projects are really adding to the massive costs. You know,
it's extending these projects by a couple of years in
some instances, and with electricity as well, stopping developers trying
to build more generations to meet this electricity demand. And

(03:26):
quite simply, if it is an address, then electricity costs
will continue to increase in the interim period.

Speaker 1 (03:32):
Jeremy, thank you for talking us through to appreciate it. Mate.
That's Jeremy Harston more for Asset Management. For more from
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