Meridian Energy's January 2026 report reveals robust hydro and wind generation fueled by above-average water and snow storage, alongside rising retail sales, despite wholesale electricity prices plummeting to historic lows.
- Hydro and wind generation 14.5% higher than January 2025
- National hydro storage remains well above historical averages
- Wholesale electricity prices averaged just over $1/MWh in January
- Retail sales volumes up 2.9% year-on-year with strong residential growth
- National electricity demand increased 3.1% compared to last year
Robust Water Storage Sets the Stage
Meridian Energy’s latest monthly operating report for January 2026 paints a picture of a company benefiting from unusually favourable natural conditions. Above-average rainfall and snow storage in key catchments have bolstered hydroelectric generation capacity. 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 figures place Meridian in a strong position heading into the colder months, with the North Island’s hydro storage at 162% and the South Island’s at 110% of average.
Generation and Demand Dynamics
January’s generation volumes were 14.5% higher than the same month last year, driven by both hydro and wind power. This increase coincided with a 3.1% rise in national electricity demand compared to January 2025, reflecting broader economic activity and consumer usage patterns. Notably, the New Zealand Aluminium Smelters ramped up its average load to 576MW, up from 513MW a year prior, contributing to the heightened demand.
Retail Sales Growth Amidst Price Pressures
Meridian’s retail sales volumes rose 2.9% year-on-year, with residential sales surging by 27.4%, partly due to the inclusion of former Flick customers. Small and medium businesses and large businesses also saw double-digit growth, while agriculture and corporate segments experienced slight declines. Despite this demand growth, wholesale electricity prices plummeted to an average of just over $1 per megawatt hour in January, a dramatic drop attributed to extended periods of water spilling in key catchments that flooded the market with supply.
Financial and Market Implications
The report highlights a stark contrast between operational success and market pricing challenges. While generation volumes and retail sales climbed, the average price Meridian received for its generation was 98.9% lower than January 2025, and the price paid to supply customers dropped by 94.3%. This divergence underscores the pressure on margins in a market flooded with hydroelectric supply. Capital expenditure remained steady, supporting ongoing operations and investments.
Looking Ahead
Meridian’s strong natural resource position and growing customer base provide a solid foundation, but the company faces the challenge of navigating a market environment characterised by historically low wholesale prices. How Meridian balances these factors will be critical as it moves into the autumn and winter seasons, where demand patterns and water inflows will continue to evolve.
Bottom Line?
Meridian’s operational strength contrasts with market price pressures, setting the stage for a pivotal winter season.
Questions in the middle?
- Will low wholesale prices persist despite strong hydro storage?
- How will Meridian’s profitability be affected by the price collapse?
- Can retail sales growth offset the financial impact of depressed generation prices?