Mercury Energy to expand Kaiwera Downs wind farm after smelter deal

Mercury Energy will expand its Kaiwera Downs wind farm.

Mercury Energy has confirmed it is going ahead with a $486 million expansion of the Kaiwera Downs wind farm near Gore, after signing a long-term power supply agreement with New Zealand Aluminium Smelters last week.

Construction is due to start this month but is dependent on the Electricity Authority approving the remaining NZ Aluminium Smelters (NZAS) supply contracts.

Once that is done, Mercury will issue contractors with notices to proceed.

The stage-two expansion will add 36 turbines and generate 155 megawatts (MW), or 525 gigawatt-hours a year. Mercury said that was enough electricity to power the equivalent of around 73,000 homes.

The wind farm expansion is expected to start generating electricity in mid-2026 and reach full generating capacity by the end of that year. It doesn’t share any infrastructure with stage one at Kaiwera Downs.

It will make Kaiwera Downs the second-largest wind farm in NZ, generating a total 198MW of electricity.

Capital costs for the Kaiwera Downs expansion are higher than for the existing stage-one installation. The long-run marginal cost of the new installation is around $95 per megawatt-hour.

Mercury’s 20-year agreement with NZAS will give the smelter a baseload of 50MW of electricity from January 2025, increasing to 75MW in 2027.

The generator said its total commitment to new renewable energy in the June 30, 2024, financial year was more than $700m.

Other projects include the Ngā Tamariki geothermal station now under construction near Taupō. Mercury also said it was close to a final investment decision on its Kaiwaikawe wind farm near Dargaville.