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- Upgrading 92-year-old power station on South Island
- Investing between NZ$440 million and NZ$510 million over next ten years
- Currently generates enough electricity for about 51,000 homes
- Increasing station’s available capacity from 105MW
Meridian Energy (ASX: MEZ) has revealed it will invest between NZ$440 million and NZ$510 million over the next ten years upgrading its 92-year-old Waitaki Power Station on New Zealand’s South Island.
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The upgrade will boost hydro generation and set the asset up for another lifetime. Scheduled for completion by 2036, the project will increase the station’s available capacity from 105MW to 120MW, replacing all seven turbines, generators and supporting balance-of-plant systems, together with the station’s 21 headgates and associated equipment.
It will be added back into operating free cash flow calculations proportionately over the expected useful life of the repowered station, currently estimated at 50 years.
Meridian’s revised total capital expenditure guidance for the 2027 financial year is unchanged at NZ$370 million to NZ$410 million. Stay in business capital expenditure is expected to be between NZ$110 million and NZ$120 million, growth capital expenditure expected to be between NZ$220 million and NZ$250 million and repowering capital expenditure of NZ$40 million.
Waitaki Power Station currently generates enough electricity for about 51,000 average homes. It was constructed with manual labour as a ‘make-work’ project during the 1930s Depression. The station started generating electricity in 1935, with two 15MW generators able to meet almost half of the South Island’s electricity needs at the time. Three more generators were installed between 1940 and 1949, bringing generation capacity up to 75MW. The remaining two units were constructed between 1952 and 1954, with the powerhouse extended to accommodate them.
“Waitaki Power Station is an important part of our country’s social and energy history. This project will breathe new life into this iconic asset, powering on the legacy of those who built it for decades to come. As well as increasing generation output, this upgrade will improve seismic resilience, operational reliability and long-term station performance,” CEO, Mike Roan, said.
“Hydro generation has an even more vital role to play in our energy system as New Zealand transitions away from thermal fuels and increases intermittent wind and solar generation. More system firming is essential and, as part of the Waitaki Power Scheme, the station benefits from the reliability of New Zealand’s biggest battery, Lake Pūkaki.”
The hydro station will continue to operate during project works with unit outages carefully planned to minimise impact on generation.
Meridian has appointed two main contractors. International hydro generation expert Voith Hydro will supply the turbines and generators, with New Zealand-owned Gentec Solutions covering the headgates and associated works. The project complements a broader program of work to improve availability and flexible generation output of Meridian’s generation assets, including others on the Waitaki Power Scheme.
Meridian has increased the operating capacity of its existing hydro assets by 75MW in the last two years and it expects more in the coming years. These incremental improvements are important additions to an electricity system that is integrating increasing volumes of intermittent renewable generation.
MEZ was steady at $4.39 with a Mkt cap of $11.65Bm prior to markets opening.
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