Contact Energy, the country's biggest privately owned power generator, is poised to start a new geothermal drilling programme near Taupo.
The four wells will add 18 megawatts of renewable power generation.
Each well will be about two kilometres deep and take 30 days to drill, with work due to begin
this month.
The drilling comes as Contact issues a strong warning to the Government, saying that power generation plans could be at risk.
The company says an upgrade to the national grid could be delayed by the probing of alternatives to Transpower's $500 million plan for a 400kV line of power pylons through the Waikato.
Energy Minister Trevor Mallard has told Electricity Commissioner Roy Hemmingway to extend an investigation into alternatives.
Transpower will go ahead with its planning, but opponents will be given more scope and time to suggest new options.
Barrett said the company was concerned that an upgrade could be delayed. "The fact is that upgrading the national grid is not an either/or choice."
Contact has full resource consent and plans for a natural gas-fired power station to sit alongside its existing Otahuhu B station.
Such a station, in the heart of Auckland, would be the most likely candidate to at least delay the need for new transmission lines into the region.
"Contact has no doubt that a grid upgrade into Auckland is essential, as it will be in other parts of the country," he said. "A power plant is not a replacement for a fully functioning national system for transporting electricity,"said Barrett.
His counterpart, the chief executive at state-owned Meridian Energy, Keith Turner, has been stressing that a good transmission network is vital if New Zealand is to move towards more renewable sources of energy.
Meridian is building wind farms and Turner has often said their future depends on a reliable way of delivering the power they generate in remote locations to the cities.
Barrett said a failure to build a robust transmission system would increase the risk of blackouts, because of limited access to back-up stations outside Auckland.
Bob McQueen, the vice-chairman of the pylons opposition group New Era Energy, said Mallard's announcement was reasonably good news for opponents.
"One thing we are disappointed about is that he has signalled to Transpower that they carry on with their work," he said.
"We would like to see their route selection put on hold."
McQueen said he would ask Mallard to stop Transpower's work.
Energy initiatives
* Contact is about to start drilling for new geothermal resources at Te Mihi, northwest of Taupo.
* Chief executive Steve Barrett says an upgraded national power grid is vital to New Zealand.
* Energy Minister Trevor Mallard has told the Electricity Commissioner, Roy Hemmingway, to take a broad look at alternatives to a Transpower plan to build a new line through the Waikato.
* Barrett says the minister's actions "put a question mark over investment decisions".
