NZ Contact Energy delays decision on geothermal power project
Contact Energy Ltd, which is the biggest utility in New Zealand, is considering the delay of new investments, including the development of the Te Mihi geothermal power plant near Taupo, New Zealand.
As reported by Bloomberg, Contact Energy Ltd, which is the biggest utility in New Zealand, is considering the delay of new investments, including the development of a geothermal power plant.
The discussions are based on “the worst recession in more than 30 years cuts demand and increases funding costs.”
The company’s plan for a 220-megawatt plant at the Te Mihi geothermal steam field near Taupo will be reviewed “later in the year,” Contact spokesman Jonathan Hill said in an interview. The Wellington-based company had previously planned to begin construction this year and have the plant generating in 2011.
Contact, half-owned by Sydney-based Origin Energy Ltd., sold NZ$550 million (US$328 million) of bonds last month to help fund a proposed NZ$1.2 billion investment in new geothermal and peaking capacity gas-fired generation. At the time, it said contract negotiations for Te Mihi were well advanced and that the project was on target for 2011.
“Economic conditions have changed and we obviously make investment decisions based on, at least in-part, the economic climate,” Hill said yesterday. “It’s still an extremely good project and it is very well advanced in terms of its development. It’s just a question of when the final investment decision is taken.”
Contact makes about 15 percent of its power using underground steam. Building Te Mihi would make better use of that resource and help meet increasing power demand without incurring rising fuel costs and proposed emissions charges for gas-fired plants.
The company doesn’t have a firm date to reconsider the project and is unable to say whether the 2011 output target can still be met, Hill said. Contact previously described Te Mihi as a 24-month construction project.
Further engineering work is being done while the project’s economics are reviewed, Hill said. An investment decision will be taken “sometime in the future,” he said.