Meridian Energy navigated a record July electricity demand with robust renewable generation and high hydro inflows, while retail sales volumes grew and wholesale prices fell sharply.
- Record national electricity demand in July 2026
- Hydro inflows at 162% of historical average
- Retail sales volumes up 2.3% year-on-year
- Generation volumes rose 18% versus July 2025
- Wholesale prices and retail supply costs dropped significantly
Record July Demand Challenges Supply
New Zealand’s electricity system faced unprecedented demand in July 2026, with national consumption hitting record July levels and rising 1.9% compared to the same month last year. Meridian Energy (ASX:MEZ) was at the forefront of meeting this surge, supported by strong renewable generation and carefully managed hydro storage.
Despite the pressure, Meridian’s hydro storage remained comfortably above historical averages, with national storage at 128% of average by 10 August, down slightly from 136% in mid-July. The South Island’s storage was robust at 138% of average, while the North Island lagged at 88%. These levels underpinned a generation boost, with total output 18% higher than July 2025, driven by both hydro and wind assets.
Hydro Inflows and Water Storage Strengthen Position
Meridian’s inflows for July were exceptional, registering 162% of the historical average. The Waiau catchment outperformed with inflows at 164% of average, while the Waitaki catchment held water storage at 145% of its historical norm. Snow storage in the Waitaki catchment was also slightly above average at 105% in early August.
These inflows and storage levels are critical for Meridian’s hydro generation, which reached 1,202 GWh in July, up from 1,022 GWh a year earlier. Wind generation also contributed an additional 164 GWh, marking a 21% year-on-year increase. The overall generation volume of 1,371 GWh reflects the company’s ability to leverage its renewable portfolio amid fluctuating weather patterns.
Retail Sales Growth Amid Shifting Demand Patterns
Meridian’s retail sales volumes climbed 2.3% over July 2025, with residential sales surging 13.6% and large business segments up 7.4%. Small-medium business and agricultural segments also saw modest increases, while corporate sales declined 7.6%. Customer connections grew 10.5% over the past year, signalling steady expansion in Meridian’s retail footprint.
Interestingly, the New Zealand Aluminium Smelters Ltd (NZAS) increased its average load to 581 MW in July 2026, up from 552 MW a year earlier, following the expiry of a demand response reduction agreement. Excluding NZAS, national demand still rose 1.5%, highlighting broader consumption growth.
Price Declines Reflect Market Dynamics
While generation volumes were strong, the average price Meridian received for its electricity fell dramatically by 55.9% compared to July 2025, landing at $47.7/MWh. Correspondingly, the cost to supply retail customers dropped 47.3% year-on-year to $59.7/MWh. Wholesale electricity futures prices on the ASX declined over 20% since February 2026, driven by committed new generation projects entering the market.
Meridian’s hedging volumes increased slightly to 497 GWh, with hedging costs averaging $196.3/MWh, down from $215.9/MWh the previous year. The company reported a $2.1 million loss on future contract closeouts in July, indicating some volatility in risk management outcomes.
Operational Costs and Capital Investment
Operating costs edged higher to $27 million for July, compared to $24 million in the prior year. Capital expenditure also increased, with $25 million spent during the month, split between $4 million on stay-in-business projects and $21 million on investment capital. These levels reflect ongoing commitments to maintain and expand Meridian’s renewable infrastructure.
Meridian’s ability to combine strong generation and retail growth with declining prices and evolving market conditions will be a key focus for stakeholders as the company navigates 2026’s energy landscape.
Bottom Line?
Meridian’s strong hydro inflows and record demand highlight operational resilience, but falling prices and rising costs underscore ongoing market challenges.
Questions in the middle?
- How will sustained lower wholesale prices affect Meridian’s profitability and hedging strategy?
- Can Meridian maintain retail sales growth amid shifting demand patterns and corporate segment declines?
- What impact will continued high hydro storage have on generation and future price dynamics?