Meridian Energy’s Hydro Storage Falls to 79% as Retail Sales Jump 12.8%

Hydro Storage Declines Amid Dry Conditions

Meridian Energy’s latest monthly operating report for August 2025 paints a picture of tightening water resources, with national hydro storage levels dropping from 87% to 79% of the historical average by early September. The South Island’s storage was particularly affected, falling to 73% of average, while the North Island remained relatively stable at 98%. These declines reflect a dry and cool month across New Zealand, with rainfall and temperatures below average, impacting inflows into key catchments such as Waiau and Waitaki.

Demand and Retail Sales Surge Despite Weather Challenges

Contrasting the lower water storage, national electricity demand increased by 5.9% compared to August 2024, driven by broader economic activity and possibly colder weather increasing heating needs. Meridian’s retail sales volumes rose 12.8%, with residential sales surging 35.3%, boosted in part by the inclusion of Flick customers. Other segments such as large business and small-medium business also saw healthy growth, underscoring robust consumer and commercial uptake despite supply-side constraints.

Generation Mix and Pricing Dynamics

Hydro generation was up 22.1% year-over-year, reflecting Meridian’s operational response to water availability and demand, while wind generation declined. However, the average price Meridian received for its generation fell sharply by 63.6%, and the cost to supply customers dropped by 62.9%, signaling a significant shift in market pricing. This price compression may reflect broader market conditions, including lower electricity futures prices observed across the curve during August, and could pressure margins despite volume growth.

Customer Connections and Market Position

Meridian’s customer connections grew by 9.6% in August alone and have increased 21.2% since August 2024, indicating successful retail expansion. This growth, combined with rising demand and sales volumes, positions Meridian strongly in the retail market. Yet, the company faces the challenge of balancing supply constraints from reduced hydro inflows with the need to meet growing customer consumption.

Looking Ahead

While Meridian’s operational performance shows resilience amid environmental and market pressures, the declining hydro storage levels and falling generation prices raise questions about future earnings stability. The company’s ability to manage water resources, optimize generation mix, and navigate market pricing will be critical in the coming months.