$1b plan for extra geothermal power

Mighty River Power, New Zealand's third-largest electricity generator, may spend $1 billion over the next five years to tap new geothermal fields for power generation.

Mighty River, which makes about 10 per cent of its power at two geothermal power plants in the North Island, plans to expand those as well spending $100 million drilling fields to test their ability to support another 500 megawatts of generation.

Chief executive Doug Heffernan said yesterday: "We're being quite aggressive about this.

"Over the next five years, we can fund that."

Power companies are building wind farms or expanding existing plants to boost the country's generation and meet rising demand.

A shortage of natural gas has delayed construction of large-scale generators, while environmental concerns are making it harder to build new hydroelectric dams on the nation's rivers.

Earlier, Heffernan told a parliamentary committee that unless large new gas fields were discovered soon, the country would be short of fuel for power stations by the end of 2010.

He said Mighty River was keen to see more gas fields developed and recently took a stake in an onshore gas project to aid that process.

In the meantime, the country needed to develop a range of other fuels to ensure power supplies into the next decade.

The generator was considering selling bonds to fund the expansion.

- BLOOMBERG