$2b coal-fired project on the cards for Southland

A $2 billion lignite-fired power station project is on the cards for Southland and could be operational by 2012.

Solid Energy chief executive Don Elder said the region had about 15 billion tonnes of lignite reserves, enough to power an international size 2000MW power station for at least 1000 years.

The state-owned enterprise was working towards developing such a plant that would not only guarantee a stable electricity supply to the aluminium smelter at Tiwai Point but allow the region to export power to the rest of the country.

Tiwai Point is supplied by hydro power from Lake Manapouri but production had to be cut in the dry years of 2001 and 2003 which sent power prices soaring.

Elder said the region would pay less for the electricity than the rest of the country because transmission costs would be low.

About 20 potential sites in Southland could be suitable for a lignite-fired plant but the final spot would be determined by its proximity to its main customer - the smelter and a water source.

Sea, river and underground water could all be used for cooling the plant.

Earlier this month, Solid Energy said it planned to stop supplying its relatively clean burning Ohai coal to New Zealand households within five years.

The company cited pollution and health concerns as the reasons behind its decision.

Elder fronted up to a public meeting in Invercargill on Monday, where the coal dependent community tried to come to grips with the rationale.

He said he was upset when he realised Southland had no prior understanding of pollution rates in the region and how new air quality standards would affect the community.

The company's focus was on establishing a power station as part of a national strategy. Transmission lines would have to be developed to carry the electricity north.

Solid Energy would own and operate the lignite mine but it was likely an international company would build and operate the power station.

Ohai coal would not be burned in the power plant because it was too expensive to mine.

Lignite was found closer to the surface than the Ohai coal and was a much cheaper option but, because it had a higher moisture content, was expensive to transport.

That meant any lignite-fired plant would have to be close to the fuel source. The mine and station could employ about 200 people.


- NZPA