INSIGHTS

In this 5 minute Q&A, we talk with Neal Barclay, CEO of Meridian Energy following his presentation at our Investor Day event. We discuss opportunities for more energy generation, the importance of renewable energy and how NZ's consumption of energy has changed. Questions covered include:

1. What does Meridian do?
2. What are your key generation assets?
3. What opportunities are there for Meridian to increase its generation?
4. What is your view on some of the potential policy and regulation changes?
5. Have you seen a change in demand, for the type of electricity we consume?
6. What advice would you give to first-time investors?

FULL TRANSCRIPT:

Craigs: What does Meridian do?

Neal: Meridian is a renewable only, electricity generator. And an electricity retailer. We are largely based in New Zealand. We make up about 30% of electricity generation in this country. We do that only with renewable sources. And then we’ve also got a retail customer base. The largest customer of ours is the Aluminium Smelter at Bluff. But we’ve got about another 300,000 customers that we support through our Powershop and Meridian brands.

Craigs: What are your key generation assets?

Neal: Our key generation assets are the Waitaki hydro chain and the Manapōuri power station. And between those two chains of power stations if you like, we also manage about 55 to 60% of New Zealand’s hydro catchments. They make up about 90% of our generation. The other 10%, in New Zealand at least, is through five wind farms. Two based in Wellington, one in Raglan, one in Palmerston North and one down in Southland. And then we’ve also got a generation and retail business in Australia.

Craigs: What opportunities are there for Meridian to increase its generation?

Neal: We’re the most significant developer of wind in this geography. We’ve build eight wind farms to date. We have got some really good options on the cards. One just north of Napier will be next to go. We’ve also got consented wind options around Waiouru and in the North Canterbury area. So we’ve got a range of good wind options that we expect to be able to develop in the not too distant future.

Craigs: What is your view on some of the potential policy and regulation changes?

Neal: I think the zero carbon bill is critical. I mean, it’s critical for the survival of the human species really. But it’s providing more emphasis, more support, and an enabler of new renewable generation in this country. Now we’ve always been successful at getting new renewables consented. Largely wind farms in our case. But with support from government and policy direction along that Zero Carbon Bill side, we think the ability to consent and get wind farms, solar farms, potentially some niche new hydro in this country built is probably going to be easier. It won’t take the onus off us to do the right thing by the communities. But it will take some expense and time out of the whole process.

Craigs: Have you seen a change in demand, for the type of electricity we consume?

Neal: Demand in this country has been relatively flat since about 2008. And underlying that there has been an energy efficiency story. But if we look forward to the future, and we know that we need to decarbonise big chunks of our economy, and particularly from an electricity perspective, the transport sector and the stationary energy sector. As we move to grow the electric vehicle fleet to get electro boilers out there, that will increase demand, there’s no doubt about it. How much, we don’t know. There’s plenty of forecasts and projections. But if you’re on the optimistic side, and we are successful in decarbonising our economy, then we could conceivably have to double the size of the electricity sector in the next thirty years. It took us 100 years to get to this size, so that’s an exciting prospect. And it’s an opportunity for our country we absolutely have to take.

Craigs: What advice would you give to first-time investors?

Neal: If I’m building, and the way I think about my portfolio, it’s largely about diversification. That’s the secret. We might all be successful at picking the odd winner from time to time. But we’ll be unsuccessful in that strategy approach more often. So I think a diversified portfolio is key. And I learnt a few lessons from that as a younger person. You want to be informed, you want to make sure you’re picking good, solid, sound organisations, just like Meridian. But diversification’s quite key.