Meridian Energy has announced that it has been successful in its bid for Australian hydroelectric business Southern Hydro.
Based in Victoria, Southern Hydro operates a collection of ten stations with a total generating capacity of 540MW with approximately 940GWh of output. The company has been sold by Alliant Energy of the US.
‘We are very pleased to succeed in this very important step for Meridian Energy. This is an excellent business and sits right in the core competencies of Meridian Energy,’ said Dr Francis Small, Meridian Energy’s chairman. ‘While our primary focus is on expanding our renewable generation capacity in New Zealand through Project Aqua and wind developments, Southern Hydro offers an important strategic opportunity to grow in Australia.’
Dr Keith Turner, Meridian Energy’s chief executive, said that Southern Hydro is a well-developed and well-performing business in the Victorian electricity market. ‘We undertook extensive due diligence on the assets and the business and have great respect for the skills of the Southern Hydro team of about 80 staff. We think we can support and improve the business with our substantial experience in hydro generation.
‘What’s more important, we think the Southern Hydro team will also be able to contribute to Meridian Energy’s New Zealand business as well,’ he added. ‘The complementary nature of the businesses will offer valuable opportunities to learn from each others’ asset management and electricity trading experience.’
Meridian Energy is strongly focussed on the renewables sector of the energy market which is growing in value and has premium attraction. Australia has a relatively small level of renewable electricity and Southern Hydro is one of the prime assets in this sector. It also performs a very valuable role in providing peaking power when demand spikes and prices are high.
Meridian Energy already owns and operates five small hydro stations in New South Wales and Victoria. It is also investigating wind farm development opportunities on both sides of the Tasmania, with the opportunity to significantly reduce unit costs through economies of scale.
Meridian Energy will fund the acquisition entirely from internal resources and borrowings without impacting its ability to fund its New Zealand development programme. The company’s advisers for the transaction were Deutsche Bank and Allens Arthur Robinson.