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New Zealand utility plans $2 billion in green projects

Feb 28, 2007 Refocus.net

Contact Energy will invest NZ$2 billion to develop green power from wind and geothermal facilities over the next five years.

New generation will be needed by 2012 and new green power facilities must be developed by that time, says chief executive David Baldwin. With government support for the consenting of geothermal and wind development, the national goal of meeting energy growth from renewables could be realized.

"Given appropriate policy settings, the company's investment plans in renewable generation could play a significant role in helping to advance a more sustainable and climate-friendly energy generation sector," says Baldwin. The next stage of Contact's generation growth would come primarily through investment in 260 MW of new geothermal generation, with two new power stations planned for the Taupo region.

"Contact is New Zealand's leading provider of geothermal electricity, and we have a world-class geothermal resource in the Taupo region that can provide New Zealand with much greater amounts of the only form of baseload, and easily accessible renewable electricity generation," he says. "Contact will now work to further quantify the geothermal resource and, upon confirmation of satisfactory results, enter the site design phase before moving to resource consenting for a new power station with a potential capacity of up to 200 MW, powered by steam from the Tauhara steamfield." The new plant could be producing energy by 2012.

Contact has also been considering upgrading or replacing the Wairakei geothermal power station, and it will develop these plans to have a new facility commissioned by 2011. Replacing the station with an efficient plant would add new capacity of 60 MW.

The utility "would need a streamlined consenting process for its geothermal investment programme if it were to be implemented within the timeframes anticipated by Contact to help meet the country's growing demand for electricity," Baldwin warned. Its 2001 resource application for Wairakei remains unresolved and, for new geothermal investment, it is exploring various options for approval such as recommending that government direct applications from green power developers to a board of inquiry or to the Environment Court for swift consideration.

"We have been encouraged by the draft New Zealand Energy Strategy and have held positive preliminary discussions with the energy minister over possible call-in options," he adds. It will also look to government to finalize a market-based pricing system for carbon emissions within the next 18 months.

Contact is developing two sites with significant wind resources which may generate 400 MW of green power. It had agreed to purchase two more sites, with potential capacity of 300 MW, although further feasibility work is required. Development of any two of these windfarms would cost up to $1 billion.

"We support the government's commitment to addressing climate change but feel strongly that, if New Zealand is serious about taking meaningful steps to reduce our GHG emissions, then we need price signals across the entire economy," Baldwin explains. "With the energy generation sector producing around 10% of the country's GHG emissions, Contact will support the implementation of a mechanism to price carbon, but believes it must be applied across the economy."

Contact Energy is owned 51% by Origin Energy of Australia, and is New Zealand's largest energy company with $4 billion of assets.