Contact powers up latest geothermal plant

Te Mihi power station in Wairakei has capacity to power 160,000 homes.

Contact Energy will today formally open its latest geothermal power station, likely to be the last big plant built this decade.

Sagging domestic electricity demand and doubt about the future of some big industrial users means building of large wind and geothermal stations of the last 10 years is at an end.

Contact's $623 million Te Mihi power station will be opened this afternoon and is part of a programme to develop the historic Wairakei steamfield, including developing the Wairakei Bioreactor and drilling a number of new wells.

Contact chief executive Dennis Barnes said the Ti Mihi plant with two 83MW steam turbines could power more than 160,000 homes.

"The plant has been designed to make the best use of steam and maximise capacity," Barnes said.

A network of pipes connects Te Mihi to the Wairakei steamfield, increasing efficiency and reliability.

The Taupo region geothermal fields are large by international standards, ranking seventh in the world with a combined gross generation output of 431MW across Contact's five power stations in the region - enough to supply 400,000 homes.

"Besides the clear environmental benefits, these long-life assets offer strong cash flow for investors that can be sustained over the long-term," Barnes said.

"Provided a stable and supportive policy and regulatory environment is maintained, Contact and its shareholders will investigate further geothermal investment in New Zealand's electricity market when market conditions dictate."

Barnes said Ti Mihi suffered some delays but if "you want it to last 50 years or so you want it to be right".

Te Mihi, contact Energy's newest geothermal power station in Wairakei.

The station had been "running like a dream" since it started producing baseload power in May.

Contact was cutting back on use of gas-powered stations, particularly in Taranaki, and its geothermal stations were now generating around a third of its power. With domestic consumers cutting back on power or using more efficient appliances and doubt over prospects of big users, there were few signs of increased demand.

"Our modelling is that with modest demand growth - which is a question market - we don't need to build another [big] scale power station until the end of the decade at least across the industry," Barnes said.