Monday, November 5, 2018

New Zealand: Contact Energy Weighs its Future Geothermal Options

Contact Says Earnings Ahead of Last Year, Eyes Geothermal Options

Contact Energy says its operating earnings during the past four months are ahead of last year.

The company, which has simplified its business to improve its retail and generation margins, generated 3,158 GWh of electricity in the four months through October, about 8 percent more than the year before.

The company said it will keep working to lower the costs of its geothermal operations, which provide baseload electricity but need to remain competitive with the combined ability of wind and hydro-power stations to work together also to produce baseload.

Contact says it has a range of geothermal generation options at Wairakei and on the nearby Tauhara field that can be developed depending on demand.

While the resource consents for the original Wairakei plant expire in 2026, Contact says there is a compelling case for future generation development there, given the fluid volumes available beyond the requirements of the company’s Te Mihi and Poihipi plans.

The company has consent to build a third unit at Te Mihi, but notes it has alternatives, including re-powering Wairakei or building a new plant, which would require less capital.

Contact says its consented 250 MW Tauhara development remains the country’s “pre-eminent” renewable option.  But it says that field also lends itself to staged developments and that a brownfield development of the existing Te Huka plant is also attractive.

Chief executive Dennis Barnes noted those options will only be developed if they are backed by observable demand or contracts.

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