Mercury NZ Takes Big Stake In Tilt Renewables

Image: Seagul

New Zealand energy company Mercury NZ Limited has announced it will take up to a 26.8% stake in NZX and ASX-listed Tilt Renewables.

Mercury (ASX: MCY / NZX: MCY) says it reached agreement with the Tauranga Electricity Consumer Trust (TECT) to acquire a 19.99% stake for a total purchase price of NZ $143,895,594.60, or $2.30 per share.

It has also secured an option to acquire the remaining approximately 6.81% of Tilt Renewables (ASX: TLT / NZX: TLT) shares held by TECT at $2.30 per share, an option it must exercise within 6 months.

As well as aligning with Mercury’s strategy for economic growth, the move will give it more of a look-in across the ditch – here in Australia.

“The investment will allow Mercury to meaningfully participate in Australia’s accelerating transition to renewable energy sources,” said Mercury Chief Executive Fraser Whineray.

Tilt Renewables’ Presence In Australia

Tilt has four operating wind farms in Australia and one under construction. Among its projects in development are a 300MW/1350MWh pumped hydro energy storage project at Highbury, near Adelaide, the 250MW Western Downs Solar Farm in Queensland, a 45MW solar facility featuring up to 25MW of battery storage near Snowtown in South Australia and a 75MW solar power project for Queensland’s Mareeba region.

The Mercury stake will be a welcome show of confidence in Tilt, which had a bit of a rough run in terms of electricity generation over the past 12 months. In its recently released Full Year Results for the year ending 31 March 2018¹, Tilt Renewables says its wind portfolio produced 1,796 GWh of electricity in FY18, 253 GWh lower than the previous year. The company says this was due to wind speeds being significantly below average in New Zealand and slightly below average in Australia during the period, resulting in group production 8% below long-term expectations.

Tilt also notes production from Snowtown I & II was curtailed by 24GWh (2.4%) in FY18 by AEMO-imposed constraints for SA system strength.

Mercury’s Green Power Credentials

As for Mercury NZ, it has pretty solid green energy street cred, with 100% of its generation coming from renewable sources. The company has 9 hydro generation stations on New Zealand’s Waikato River and 5 geothermal plants throughout the central North Island.

Mercury is an interesting name choice for an energy company given it’s one of the many toxic substances spewed by coal power plants, but it’s good to see the little black/brown rock isn’t to be found in Mercury’s generation portfolio.