Contact Energy has withdrawn its Environment Court appeal against Meridian's wind farm in central Otago, Project Hayes.
Instead, the two companies will push for an upgrade of the lower South Island's transmission system so it can cope with both existing and planned generation.
Contact had appealed against the
176-turbine wind farm on grounds that transmission constraints would restrict the amount of energy that could be transmitted northwards.
It said those constraints would potentially "crowd out" its existing hydro dams at Clyde and Roxburgh, resulting in the spilling of valuable water.
Meridian chief executive Tim Lusk welcomed Contact's decision.
In a joint statement, he and Contact's chief executive David Baldwin said the real challenge was the need for the timely development of more transmission capacity.
"Building new power stations without the ability to get the power to customers isn't going to help either customers or our shareholders," the statement said.
Power companies are very focused on new generation, with at least 1,300MW due to come online in the next four years.
The two companies plan to talk to Transpower and the Electricity Commission. Transpower is currently seeking the commission's approval of a major grid upgrade.
- NZPA
