Meridian Energy’s January 2026 report reveals robust hydro and wind generation amid record rainfall and soaring electricity demand, despite wholesale prices plunging to historic lows.
- Hydro storage remains well above historical averages, with Waitaki catchment at 119%
- Generation volumes up 14.5% year-on-year, driven by hydro and wind
- Wholesale electricity prices collapsed to just over $1/MWh in January
- Retail sales volumes increased 2.9%, led by a 27.4% rise in residential segment
- National electricity demand rose 3.1% compared to January 2025
Strong Hydrological Conditions Bolster Generation
Meridian Energy’s latest monthly operating report for January 2026 paints a picture of abundant water and snow resources feeding its hydroelectric assets. The Waitaki catchment’s water storage stood at 119% of its historical average, while snow storage was an impressive 177% of average in early February. These conditions have enabled Meridian to generate 14.5% more electricity than in January 2025, combining both hydro and wind outputs.
Despite a decrease in national hydro storage from 115% to 92% of average by early February, the levels remain healthy, particularly in the North Island at 117% of average. The South Island’s storage dipped to 88% but still supports strong generation capacity heading into autumn and winter.
Demand Climbs as Wholesale Prices Plummet
National electricity demand rose 3.1% year-on-year, reflecting a growing economy and increased consumption. Notably, the New Zealand Aluminium Smelters ramped up its average load to 576MW, up from 513MW a year earlier, contributing to this demand surge.
However, the report highlights a striking anomaly – wholesale electricity prices collapsed to just over $1 per megawatt hour in January, driven by extended periods of spilling in key catchments. This price level is remarkably low compared to historical norms and has significant implications for market revenues and profitability.
Retail Growth Offsets Wholesale Price Pressure
Meridian’s retail business showed resilience, with sales volumes increasing 2.9% compared to January 2025. Residential sales surged by 27.4%, partly due to incorporating former customers of Flick, while small and large business segments also posted double-digit growth. Conversely, agriculture and corporate segments saw declines of 4.5% and 8.5%, respectively.
Customer connections grew 18% year-on-year, indicating expanding market penetration. The company’s ability to grow retail volumes amid low wholesale prices suggests effective hedging and customer engagement strategies.
Financial and Operational Metrics Signal Solid Position
While generation volumes and retail sales are up, Meridian’s average generation price received in January was 98.9% lower than the previous year, reflecting the depressed wholesale market. Similarly, the average price paid to supply customers dropped by 94.3%. These dynamics underscore the challenges of balancing volume growth with margin compression.
Capital expenditure remains steady, supporting ongoing operations and investment. The company continues to monitor inflows and storage levels closely, with weekly updates available to stakeholders.
Overall, Meridian Energy enters the cooler months in a strong operational position, backed by robust water and snow reserves, rising demand, and expanding retail footprint, even as market prices remain subdued.
Bottom Line?
Meridian’s strong resource base and retail growth cushion it against low wholesale prices, but winter demand and price volatility remain key watchpoints.
Questions in the middle?
- How will sustained low wholesale prices impact Meridian’s profitability in coming quarters?
- Can Meridian maintain retail sales momentum, especially in the residential segment?
- What risks do fluctuating hydro storage levels pose for winter generation capacity?