As part of the release of its interim financial results for the six months to December 31, 2020, New Zealand-based energy company Contact Energy announced it will proceed with the Tauhara geothermal project.
The Contact Board confirmed the company will proceed with the NZ $580m (around USD 418 million) development of a new geothermal power station on the Tauhara field, near Taupo.
In June of 2020, the company had signed an EPC contract with Sumitomo and Fuji Electric for the construction of the plant, yet with a luring closure of an important aluminum smelter in New Zealand, things were a bit unclear until now. With a planned power generation capacity of 150 MW it will be a significant push for New Zealand’s geothermal sector and the role of geothermal in the total energy mix of he country. Japanese engineering, procurement and construction contractor Sumitomo Corporation is leading the build, in partnership with New Zealand construction company Naylor Love and Fuji Electric as turbine supplier.
Contact Chair Rob McDonald said: “We’re absolutely delighted that market conditions now allow us to proceed with this important development for New Zealand – one which has been in the planning stages for over a decade.
“We believe the Tauhara geothermal project is New Zealand’s best low-carbon renewable electricity opportunity. It will operate 24/7, is not reliant on the weather and is ideal for displacing baseload fossil fuel generation from the national grid which will significantly reduce New Zealand’s carbon emissions.”
Construction will begin shortly and is expected to be completed in the middle of 2023. Japanese engineering, procurement and construction contractor Sumitomo Corporation is leading the build, in partnership with New Zealand construction company Naylor Love and Fuji Electric.
Mr Fuge said the investment in Tauhara was a significant commitment aligned with Contact’s vision to build a better New Zealand. “It’s hugely exciting to be moving into a growth and development phase. We have a fantastic team from within and beyond Contact who will ensure the construction of a world-class power station that everyone can be very proud of.
“Proceeding with Tauhara is also the next chapter in our longstanding commitment to the central North Island and is expected to make an important contribution towards the region’s post-COVID19 economic recovery.”
Beyond those economic benefits, Mr Fuge said the development would support New Zealand’s transition to a low-carbon economy.
“Tauhara will provide a foundation to support New Zealand’s increased electricity needs over the next decade. Geothermal is something of an unsung hero in Aotearoa, but it plays a crucial role in our generation mix and the transition away from fossil fuels.”
Key details about the planned plant:
- Planned power generation capacity 152 MW with annual generation of 1,300 GWh
- Turbine from Fuji Electric with single shaft steam turbine
- Planned completion date: mid-2023
Earthworks have already begun on flattening the site, and construction is expected to begin soon. Around 800,000 cubic metres of dirt will be needed to level the site, create storage ponds and to create the visual berm planted with native trees in front of the station by Broadlands Road.
There will be approximately 500 people working on the power station at the peak of construction.
At the same time, the company announced it will seek NZ$400 million in an equity raise, with proceeds to “reduce net debt and provide financial flexibility to fund the Tauhara Project and other future growth projects.”
Mr McDonald said the equity raise would give Contact the flexibility to execute on a development pipeline beyond Tauhara, comprising up to $800m of additional projects including the potential replacement and expansion of the company’s geothermal power station at Wairakei. “It will mean Contact can maintain optionality in respect of future investment decisions, which will be able to be sized and timed to meet market demand.”
Source: Company release by email