Kawerau co-generation station study

By CHRIS DANIELS energy writer

State-owned power company Genesis and paper maker Norske Skog are joining forces to look at building a new co-generation power station at Kawerau.

The station, with a capacity of 100 megawatts, would be fuelled with "biomass" wood waste and gas to supply steam and electricity to the paper mill.

Engineers are expected to spend the next four months studying the proposal, which will include the Carter Holt Harvey pulp plant at Kawerau and Fletcher Forests' nearby sawmill and timber-drying plant. Biomass will come from surrounding forest operations.

Genesis already runs a 40 megawatt co-generation plant for Carter Holt Harvey's Kinleith mill at Tokoroa, which has had a troubled history.

Carter Holt Harvey is seeking millions of dollars in costs and damages from Genesis and turbine maker Rolls-Royce for what it says is a fundamentally flawed plant that does not work as promised.

Genesis chief executive Murray Jackson said yesterday that the benefits of the proposed co-generation plant for large industrial customers included a stable electricity price and a source of reliable heat and steam for processing.

Building the plant would also alleviate transmission constraints in the central North Island and reduce greenhouse gas emissions.

Co-generation plants are based where there is a heat "host". Hosts are industrial heat users such as dairy factories, pulp and paper mills, steel mills, hospitals and large building complexes. Electricity generated can be exported to the national grid, as well as being used by the host. Most of the electricity generated at Kinleith is used on the site.

Recent technological improvements in turbine design mean that such plants are becoming cheaper to install. Proponents of "distributed generation" say co-generation plants reduce reliance on big power stations a long way from the load centres.

Yesterday's announcement of the study did not reveal the cost of the station, nor how it would be paid for.

Government officials are studying a Genesis request for help in underwriting the construction of a new gas-fired power station at Huntly.