Top Energy power project gathering speed at Ngawha

A panoramic image of work underway at Ngawha, including a large sediment pond, to prepare a well drilling site for a new geothermal power station. Photo / Top Energy

Work has begun on an ambitious geothermal power project which could have the Far North producing all the electricity it needs.

Lines company Top Energy, which already operates two geothermal power plants totalling 25 Megawatts (MW) at Ngawha, east of Kaikohe, gained consent earlier this year for a two-stage expansion which could eventually boost capacity to just over 80MW.

Earthworks preparing the geothermal well drilling site have now begun on farmland bought by Top Energy near Ngawha Prison. Drilling is due to start early next year.

Providing a viable geothermal resource is found, the next stage will be earthworks for the power station itself.

Top Energy chief executive Russell Shaw said the company had now passed the final hurdle in the way of construction, which was getting major transaction approval from the Top Energy Consumer Trust and Top Energy Board.

Stage 1 of the project, building a 28MW power plant, was due to be completed in June 2021.

A bank loan of $175 million had been secured to pay for the project.

While borrowing the money meant Top Energy's ability to spend on other capital projects would be constrained in the short term, it meant ownership of the power station - and the benefits it brought - would stay in the Far North.

The other option would have been using equity funding by selling off part of the existing power station to pay for the new one.

It would be clear by September 2018 whether the geothermal resource was viable. Once that was clear the company could finalise contracts for the transmission connection, supplying the station, and the fluid conveyance system.

No decision had been made yet as to the power station supplier. The two existing stations were made in Israel.

Mr Shaw said it had been a "long and convoluted road" to reach a point where the company was confident the project would go ahead.

The power station expansion was one of the most significant projects ever undertaken in the Far North, and could ultimately secure the district's energy independence, he said.

Stage two of the project, if it goes ahead, would add another 28MW power station, bringing the total to 81MW - more than the Far North's peak power demand of 70MW.

Peak power demand in the Whangarei-Kaipara area served by Northpower is just under 180MW.

Currently the Far North, and Northland as a whole, imports the bulk of its electricity, making it vulnerable to outages and power price hikes.

The resource consents granted for the project in July 2017 are valid for 35 years.