Meridian Energy Ltd (ASX:MEZ) is one of New Zealand’s leading electricity generators and retailers, operating across hydro and wind energy platforms. The company primarily serves residential and commercial sectors in New Zealand and Australia through its subsidiaries Powershop and Meridian Retail. With a strong focus on renewable energy, Meridian has positioned itself as a sustainability-driven utility. On the ASX, MEZ holds a market capitalisation of $13.84 billion, a dividend yield of 3.54%, and a PE ratio of 31.87. Despite a modest one-year return of -4.17%, the company maintains a high ASX rank of 88 out of 2,322, suggesting continued investor interest and market relevance.

Hydro Storage Improves, but Generation Dips Slightly

In its April 2025 operational update, Meridian Energy Ltd reported a modest improvement in its hydro storage levels, an important development for a company whose generation is predominantly hydro-based. By the end of April, New Zealand-controlled hydro storage was at 88% of the historical average, representing a slight rebound from earlier months impacted by drier conditions. This improvement, while incremental, provides a degree of buffer for the winter months when energy demand typically rises and hydro reliability becomes crucial.

However, despite the improved storage position, total electricity generation for the month fell 1.4% year-on-year. The decline was primarily driven by hydro output, which remained sensitive to rainfall patterns and inflows that were reported at 98% of historical averages. Although close to normal, this figure reflects the ongoing variability that can influence hydro system performance, particularly as the country transitions from autumn into winter. Wind generation, which supplements hydro in Meridian’s renewable energy mix, remained relatively stable and consistent with seasonal expectations.

The drop in generation mirrors a broader trend seen across the energy sector, where variable weather and shifting demand dynamics are increasingly affecting month-to-month production levels. Additionally, energy markets across New Zealand and Australia are currently navigating the transition towards more dynamic load management and renewable variability, which can create short-term fluctuations even for established producers.

While the overall decrease in generation is not alarming, it does highlight the need for Meridian to continue optimising its asset utilisation and managing supply reliability. With winter approaching, hydro storage performance and rainfall outlooks will remain closely monitored by the market, particularly as Meridian’s ability to balance supply and demand efficiently is a critical factor in maintaining revenue stability and meeting contractual obligations.

Retail Sales Rise Amid Lower National Demand

Meridian Energy’s April 2025 retail performance revealed a noteworthy divergence from national electricity consumption trends. While total New Zealand electricity demand dropped 2.1% year-on-year, Meridian’s retail sales volumes rose by 1.7% over the same period. This outcome suggests the company is outperforming its peers in customer engagement and acquisition, potentially gaining market share in a competitive and regulated retail landscape.

Breaking down the retail data, the mass market segment — which includes residential households and small to medium-sized enterprises — saw a 1.3% increase in electricity sales. This growth is significant considering broader economic indicators pointed to moderate consumer spending and mild weather in April, which typically dampen residential electricity usage. Meanwhile, the corporate segment delivered an even stronger result, with sales growing by 2.4%, underscoring increased demand from larger commercial and industrial clients.

Meridian’s positive retail sales performance can be attributed to several operational factors. The company has continued to invest in customer-focused services through its Powershop brand and other digital platforms, enhancing customer experience and retention. In addition, its competitive pricing, renewable energy credentials, and transparent billing have helped attract environmentally conscious consumers — a growing demographic in both the residential and business markets.

Despite the overall decline in national demand — which may have been influenced by unseasonably warm weather, improved energy efficiency, or subdued industrial output — Meridian’s retail business demonstrated resilience and effective strategic positioning. This trend is encouraging as it points to the company’s ability to generate stable revenue streams regardless of external demand shifts.

Looking ahead, if colder winter temperatures emerge and business activity continues to recover, Meridian could see further retail volume growth. Coupled with the recent improvement in hydro storage, the company appears well-positioned to manage seasonal fluctuations while maintaining its leadership in the New Zealand electricity market.