Trust expects seven-figure windfall from power station

A small Ngati Tahu-owned trust is predicting its investment in a new power station will return a seven- figure windfall.

The 550 shareholders in the Tauhara North No 2 Trust, northeast of Taupo, have entered into a 25:75 joint venture with Mighty River Power to build a $450 million 132MW power station using the Rotokawa geothermal field.

Trust chief executive Aroha Campbell said once the lights were turned on at the new Nga Awa Purua station the return could be $40 million over a decade.

Ten years ago the trust, which owns the 326ha geothermal block, had $64,000 in the bank from farming.

But a switch in business focus to developing its geothermal field has resulted in its assets growing to $30 million.

Having a stake in its own station seemed a logical pathway after developing the field, but convincing conservative shareholders to buy into the idea wasn't an easy job, Mrs Campbell said.

"There were some that could see the vision, but also we could see that they were very sceptical with going into a project and taking an equity share. The owners were very reserved."

But views had changed as shareholder confidence in the management of the resource increased over the years, she said.

Larger settlement iwi had helped the trust with advice, but it was clear that smaller groups were making important splashes into bigger business.

"We're small fish, we're like novices. We've been talking to Tainui and to other Maori trusts and I know over time there's going to be more joint ventures between iwi."

As part of the return to shareholders, the trust hopes to provide health benefits and educational grants and is looking at setting up a charitable trust.

Construction of the station starts next month and will take two years. It will plug into existing transmission lines and eventually produce enough power to supply 100,000 homes.

Mighty River Power chief executive Doug Heffernan said the fact that Maori owned significant geothermal land is good for future power generation as well as the nation's economic development.

"It means we've got a long-term relationship, because they've got some skin on the ground. They don't want to sell their land and they've got the geothermal resources beneath their feet."

STEAM POWER

* Geothermal energy is seen as the most reliable form of renewable energy because it uses steam heated underground to drive turbines. It does not depend on weather, as hydro and wind energy do.

* It makes up 7 per cent of the total energy produced in New Zealand.

* Mighty River Power produces 150MW at Rotokawa and Mokai stations.

* Contact Energy produces at Wairakei, Poihipi Road and Ohaaki.

* Most geothermal energy is produced around Taupo.