'Another lifetime': Meridian to replace all seven Waitaki turbines

New Zealand’s biggest power generator, Meridian Energy, says it will invest $440-$510 million over the next 10 years on upgrading the historic, Great Depression-era Waitaki Power Station.

NZX-listed Meridian said the revamp of the 92-year-old station would boost hydro generation and “set the asset up for another lifetime”.

The project will increase the station’s available capacity from 105 megawatts (MW) to 120MW, replacing all seven turbines, generators and supporting balance-of-plant systems with the station’s 21 headgates and associated equipment.

The investment will be treated as a combination of growth capital expenditure (15% of the investment) and a new classification, repowering capital expenditure (85% of the investment).

Repowering capital expenditure, as it is incurred, will be excluded from the calculation of operating free cashflow under Meridian’s dividend policy.

It will, however, be added back into operating free cashflow calculations proportionately over the expected useful life of the repowered station, currently estimated at 50 years.

Meridian’s revised total capital expenditure guidance for the 2027 financial year is unchanged at $370m to $410m.

Stay-in-business capital expenditure is expected to be between $110m and $120m, growth capital expenditure is expected to be between $220m and $250m and repowering capital expenditure is expected to be $40m.

The different accounting treatment was designed to project Meridian’s dividend, chief executive Mike Roan told the Herald.

“We created this new category called repowering capex that will get spread over the life of the new asset, which we’ve classified as being 50 years,” he said.

The upgrade will involve new turbines and generators, cranes and auxiliary gear.

There are seven units at the station.

“We’ll take one out at a time and do a complete restoration of that one unit so that we can keep producing energy from the rest of the station and we won’t lose the productive capacity,” Roan said.

The Waitaki Power Station currently generates enough electricity for about 51,000 average homes.

It was constructed with manual labour as a “make-work” project during the 1930s Depression.

The station started generating electricity in 1935, with two 15MW generators able to meet almost half of the South Island’s electricity needs at the time.

Three more generators were installed between 1940 and 1949, bringing generation capacity up to 75MW.

The remaining two units were constructed between 1952 and 1954, with the powerhouse extended to accommodate them.

Roan said the station is an important part of New Zealand’s social and energy history.

“This project will breathe new life into this iconic asset, powering on the legacy of those who built it for decades to come,” he said.

Meridian chief executive Mike Roan.

“As well as increasing generation output, this upgrade will improve seismic resilience, operational reliability and long-term station performance,” he said.

“Hydro generation has an even more vital role to play in our energy system as New Zealand transitions away from thermal fuels and increases intermittent wind and solar generation.”

“Firming” – the ability to provide reliable, dispatchable electricity when variable generation – such as wind or solar – is unavailable or insufficient – is an important part of the electricity system.

“More system firming is essential and, as part of the Waitaki Power Scheme, the station benefits from the reliability of New Zealand’s biggest battery, Lake Pūkaki,” Meridian said.

The hydro station will continue to operate during project works with unit outages carefully planned to minimise impact on generation.

Meridian has appointed two main contractors.

International hydro generation expert Voith Hydro will supply the turbines and generators, with New Zealand-owned Gentec Solutions covering the headgates and associated works.

The project complements a broader programme of work to improve availability and flexible generation output of Meridian’s generation assets, including others on the Waitaki Power Scheme.

Meridian has increased the operating capacity of its existing hydro assets by 75MW in the last two years and it expects more in the coming years.

“These incremental improvements are important additions to an electricity system that is integrating increasing volumes of intermittent renewable generation,” the company said.

The other major hydro power generators are also revamping their facilities.

Mercury is investing $550 million into three of its historic hydro stations, aged between 64 and 75 years old.

The work is expected to increase the efficiency of Mercury’s Maraetai, Ōhakuri and Ātiamuri sites and boost output by up to 58MW.

Contact Energy has completed a turbine upgrade at its Roxburgh station.

Genesis has upgraded its Waikaremoana hydro station, and is upgrading its Tongariro and Tekapo systems.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.