Early Demand Response End Signals Growing Confidence but Raises Market Questions
Meridian Energy and New Zealand Aluminium Smelters have agreed to end their current demand response arrangement early, with NZAS ramping up production from mid-June 2025. This move reflects improved hydro storage and bolstered confidence in New Zealand’s winter electricity supply.
- Demand response to end early, targeting 11 August 2025 completion
- NZAS to increase production starting 16 June 2025
- Hydro storage levels have improved significantly
- Future demand response options remain available from April 2026
- Meridian CEO designate cites strengthened supply security as key factor
Early End to Demand Response Signals Improved Energy Outlook
Meridian Energy and New Zealand Aluminium Smelters Limited (NZAS) have jointly agreed to bring forward the conclusion of their current demand response agreement. Originally set to run until late November 2025, the arrangement will now target completion by 11 August 2025, with NZAS ramping up production from 16 June. This adjustment reflects a notable improvement in New Zealand’s hydroelectric storage levels, which underpin the country’s renewable energy supply.
Hydro Storage Recovery Bolsters Confidence
New Zealand’s electricity system relies heavily on hydro storage, especially during winter months when demand peaks. Recent weeks have seen a healthier water storage picture, alleviating some of the supply concerns that prompted the original demand response. Mike Roan, Meridian’s CEO designate, highlighted this improved outlook as the primary reason for encouraging NZAS to resume higher production levels sooner than planned.
NZAS’s Role in Balancing Supply and Demand
NZAS has played a pivotal role in supporting the national grid by reducing its electricity consumption during periods of tight supply. The current demand response option, initially modified to 50MW from a usual 185MW, allowed Meridian to manage demand effectively. With the ramp-up, NZAS will increase its electricity usage, signaling confidence in the system’s ability to meet demand without additional curtailments.
Looking Ahead – Future Demand Response Options
While this early end to the current demand response is positive news, Meridian retains the ability to call on demand response options again starting April 2026. These include options ranging from 25MW to 185MW, providing flexibility to manage supply and demand as conditions evolve. The company has also outlined specific timelines for when these options can be reactivated following the ramp-up period.
Strategic Implications for the Energy Market
This development underscores the dynamic nature of New Zealand’s electricity market, where renewable generation and industrial demand are closely intertwined. The collaboration between Meridian and NZAS exemplifies how industry partnerships can support grid stability while advancing sustainable production, in this case, of some of the world’s purest renewable aluminium.
Bottom Line?
As hydro reserves strengthen, Meridian and NZAS’s evolving partnership will remain a key barometer for New Zealand’s energy resilience.
Questions in the middle?
- Will improved hydro storage levels sustain through the entire winter season?
- How will the early end to demand response affect electricity prices in the coming months?
- What are the financial implications for NZAS with the accelerated production ramp-up?
