Mighty River admits risk

Mark Trigg. Photo / Supplied

Mighty River Power has admitted its investments in geothermal exploration in Chile could come to nothing, but believes it is worth the risk given Chile's massive geothermal resources and energy demands.

The energy company has invested a total of US$250 million internationally, including on exploration in Chile and Germany and establishing the Hudson Ranch geothermal plant in the United States - the first of MRP's international investments to go into commercial production last year.

It comes as the Government prepares to partially privatise the power company and investors begin pre-registering for shares.

In Chile yesterday, Prime Minister John Key said there were always risks in overseas investment but Mighty River Power was unable to get into the same sort of trouble as Solid Energy, which had invested in undeveloped technology such as lignite. Mighty River, however, was sticking to its knitting with geothermal exploration.

Mark Trigg, Mighty River's general manager of development, was in Santiago as part of the Prime Minister's trade delegation.

Since 2008, the company has done exploratory drilling in two geothermal fields in Chile and he said it was also looking at a third field. Trigg did not know the potential of those fields because the work was still exploratory.

Asked how confident he was that it would pay off in the long term, he said geothermal generation required capital to be spent up front before it was clear how commercially viable it was. That decision also depended on power prices.

Prices were strong in Chile at the moment, partly because drought had driven up spot prices and there was a push towards using more renewable energy.

Key said Chile had an underdeveloped geothermal energy market and large demand for energy from the mining industry: "There are always risks ... but we understand this country well, they understand the resource well."

Chile's President Sebastian Pinera had raised the issue of developing Chile's geothermal energy generation in his meeting with Key, saying it was a priority for the country.