Mighty River beefs up its business lines with solar

Mighty River Power [NZX: MRP] is buying local solar business What Power Crisis, to help build up its technical expertise in the increasingly popular power generation technology.

The purchase is due to settle at the end of next month. Mighty River would not disclose how much it paid due to commercial sensitivities but said in a notice to the NZX it is not a material amount.

What Power Crisis (WPC) installs residential and commercial solar projects throughout New Zealand and the Pacific Islands. These include the Fred Hollows Foundation Eye Hospital in the Solomon Islands and commercial solar for Auckland Museum and Air New Zealand.

While solar remains a niche renewable energy – accounting for less than 1% of generation in New Zealand – it is becoming increasingly popular with consumers.

“We know a number of Kiwis are looking at solar to complement grid-connected electricity. In the past two years solar installations have increased fourfold up from about 2000 in January 2014 to more than 8000 now,” Mighty River chief executive Fraser Whineray says.

The purchase will let Mighty River add solar technology and installation expertise to its business, and introduce solar to its retail brand Mercury Energy’s customers, he says.

The founder of Auckland-based WPC, Dave Keppel, will remain general manager to oversee day-to-day operations. Matt Olde, chief executive of Mighty River’s metering business Metrix, will head the solar business.

Mighty River currently generates its power wholly through renewable hydro and geothermal sources, after closing its 170MW Southdown gas-fired plant in December.

The company suffered a 22% fall to $145 million in underlying earnings after tax in 2015 with earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments down 4% to $482 million due to poor hydro conditions.

But it is forecasting ebitdaf for the 2016 year of  $490-515 million, pointing to strong medium-term overlying volume growth in the industry.

The company's stock price is at $2.82 and has fallen about 9% in the past year.

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