Meridian Energy says it is too early to say yet what it will do with its power surplus after its supply contract with global mining giant Rio Tinto ends in August next year.

At the moment the power generator is focusing on helping Rio Tinto making an "orderly exit'' from New Zealand, after Rio Tinto announced today it would close Tiwai Point aluminium smelter, which employs 1000 people and indirectly creates another 1600 Southland jobs.

Some commentators, such as Greenpeace’s executive director Dr Russel Norman and McDiarmid Institute co-director Associate Professor Nicola Gaston, are suggesting Meridian should make its surplus electricity available for the domestic market, to power cars and industries and assist in the push for a zero carbon economy.

The Meridian-owned Manapouri Power Station provides hydro-generated power to the smelter, which is estimated to use 13% of New Zealand’s electricity production.

Meridian Energy said it was reviewing the decision and would assist Rio Tinto in making “an orderly exit” from New Zealand.

Meridian chief executive Neal Barclay said the decision was “disappointing for many and we acknowledge this news will be a huge blow to the Smelter workforce and the Southland community.”

“We have worked hard to provide solutions that we believe were of lasting value to the smelter and acceptable to our shareholders. 

“Ultimately Rio Tinto has arrived at a different conclusion and has decided to terminate their contract with us.

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“As a company we have always known an exit is a possibility and we have planned for it. 

“An exit does provide our country with a unique opportunity to accelerate decarbonisation, making way for new growth opportunities across numerous sectors."

“At this time we don’t have any further information about Rio Tinto’s decision but this decision does give the industry clarity on its future,” Mr Barclay said.

The Southland App has sought further comment from Mr Barclay about whether it would make the expected power surplus available to the domestic market, or whether the company would seek other industrial supply contracts.

Mr Barclay was unavailable for further comment but a Meridian spokesperson said as the company had only got the news of the termination today, “it is too early to talk to the detail of what the termination of contract will mean for the smelter ramp down. You are better to direct your questions to Rio Tinto on that.”

“Meridian is yet to discuss with Rio Tinto how the exit will be managed but there is likely to be a generation oversupply in the short term. 

“As you’ll know, this decision has an all of electricity industry impact and there are lots of moving parts that will need to be worked through over the coming months.

“With the financial support Meridian and Contact Energy provided last year, Transpower has been able to accelerate its work programme to upgrade transmission lines out of Southland and support the wider distribution of energy around the country. 

“This is a huge step that will help solve the issue of constraining power at the bottom of the South Island.

“Beyond the short term, the market will find a new equilibrium as a result of decisions to invest or not invest in new power stations and transmission and, potentially, we may see closures of existing thermal plant.

“There will be lots of opportunity to retail the renewable electricity that comes available and Meridian sees this as an opportunity for both small and large customers.

“As for Meridian’s business, we see only opportunity ahead. Manapouri station is the jewel in our suite of assets and will always be an important part of the country’s renewable generation. Our view is there’s a massive challenge ahead and we need skilled and smart folk to ensure we continue to serve our customers and New Zealand,’’ the Meridian spokesperson said.