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Contact Energy is planning a major increase in its geothermal power generation - likely to involve the construction of new plants - to be announced with its financial results on Friday.
The Business Herald understands Contact plans to significantly boost geothermal generation, which currently accounts for about 7 per cent of New Zealand's electricity, with 5 per cent generated by Contact.
The electricity generator may reveal plans to add to the three geothermal plants it already has, in capital spending likely to run into the hundreds of millions of dollars.
Contact will also update investors on its plans for windpower. Late last year it signed an agreement with boutique investment bank Investec to develop sites Investec had acquired around New Zealand.
The planned increased in geothermal generation comes after the release of the Government's draft energy strategy in December, where it said it would encourage renewable energy and signalled that emitters of greenhouse gases were likely to face a policy of user pays.
About 30 per cent of New Zealand's electricity comes from fossil fuels. About half of Contact's electricity generation comes from fossil fuels, with the remainder coming from hydro dams and geothermal power.
Geothermal power, generated using steam from hot springs which drives power turbines, is not dependent on the weather.
Contact's 2006 first-half profit is expected to be lower than the $146.6 million of 2005 because of low wholesale electricity prices. First NZ Capital is forecasting a 17 per cent drop in net profit to $122.2 million. Contact shares fell 15c to $8.50 yesterday.
