Contact Energy signs on Sumitomo and Fuji Electric for Tauhara geothermal project, NZ

Contact Energy signs on Sumitomo and Fuji Electric for Tauhara geothermal project, NZ Planned Tauhara geothermal power plant (source: video screenshot/ Contact Energy)
Alexander Richter 23 Jun 2020

New Zealand power company Contact Energy has signed a contract with Sumitomo Corp. for the construction of the Tauhara geothermal power project

Reported this morning from New Zealand by the NZ Herald, energy utility Contact Energy has signed an early works contract for the development of the planned Tauhara geothermal project with Japanese Sumitomo Corp.

The project has an estimated investment volume of NZ$600m (around USD 387 million). Sumitomo Corp. will be working with NZ-based construction company Naylor Love for civil engineering components, while the steam turbine will be provided by Fuji Electric.

With the contract signed, Sumitomo will be able to commence plant design and advance site investigation and planning, according to Mike Fuge, CEO of Contact Energy.

Contact CEO Mike Fuge said the early works contract enabled Sumitomo to commence plant design and advance its site investigation and execution planning, “It also provides the contractual basis to procure long-lead time turbine and generator components. The Tauhara development is now technically shovel-ready and only subject to a final investment decision as soon as market conditions allow.

“If Tauhara proceeds, we expect to make an additional investment in the order of NZ$600m. This means it remains New Zealand’s cheapest and most attractive baseload renewable electricity generation project, and it will deliver substantial economic benefits and jobs in the central North Island.”

With the geothermal project at Tauhara, Contact aims to decrease its gas-fuelled power generation in efforts to reduce carbon emissions.

The Tauhara geothermal project was initially planned as a 250 MW project and received the relevant consent for it, but is now planning smaller development of 150 MW.

New Zealand is still facing the exit of a large smelter from the country, which is the largest electricity offtaker of the country. So Contact has been waiting for a decision to either continue or cancel plans, but is now aiming for the geothermal plant to fill in for a 377 MW gas-fired combined cycle plant it aims to shut down in 2023. The final decision though still needs to be outstanding, despite the contract with Sumitomo.

Contact Energy drilled four appraisal wells with MB Century that confirmed a great geothermal resource for the project. Furthermore the CO2 content of the wells indicate its important role to help in New Zealand’s decarbonisation efforts. The appraisal work for the geothermal field at Tauhara costed NZ$ 40 million or around USD 27 million.

“In addition to building our understanding of the resource, we have already secured the equivalent of 75MW of high-temperature production fluid which is a fantastic place to be at this stage of the project.”, so Contact CEO Mike Fuge.

Further details about the Tauhara geothermal project (Contact Energy)

Source: NZ Herald, Contact Energy release

Attention: we updated the piece to reflect some more concrete statements given in the Contact Energy release of June 23, 2020.