A Tesla Megapack 2 XL battery storage system next to a solar array farm. Contact Energy and Tesla are collaborating to build a similar 100-megawatt plant at Glenbrook in South Auckland.
A Tesla Megapack 2 XL battery storage system next to a solar array farm. Contact Energy and Tesla are collaborating to build a similar 100-megawatt plant at Glenbrook in South Auckland.
Contact Energy chief executive Mike Fuge expects more projects along the lines of its new battery project in South Auckland to soon come to light, now the uncertainty around the Tiwai Point aluminium smelter has been resolved.
The company has teamed up with electric vehicle maker Tesla to builda grid-scale 100-megawatt (MW) battery at Glenbrook, at a cost of up to $163 million.
The battery would enhance Contact’s renewable-energy flexibility and provide enough electricity to meet peak winter demand for 44,000 homes for more than two hours, the company said.
On May 31, NZ Aluminium Smelters (NZAS) signed a deal with Meridian Energy, Contact and Mercury NZ to provide power to the smelter at Tiwai Point for 20 years, thereby resolving years of uncertainty as to whether the ageing Southland plant would close.
Part of the deal allows for NZAS to cut back or “flex” on aluminium production when the national power grid is stretched.
“The Tiwai deal, with getting that certainty over such a sustained period – and with the demand flex in there, is a great outcome for New Zealand and the industry.
“I think you will see a pretty steady run of announcements around new investments now that we have that certainty, and this project is certainly part of that,” he said.
Contact said bulldozers would make a start on the Glenbrook project immediately.
The company said it continued to advance further battery investment options and had been granted consent to build another 100MW grid-scale battery in Stratford, Taranaki.
On completion, Contact’s Glenbrook battery will be the second to come into service.
Meridian Energy is halfway through building a battery at Ruakākā, which it expects to be completed later this year.
Genesis Energy plans a battery at its Huntly Power Station, the final investment decision on which is due soon.
Contact said its battery at Glenbrook will be next to NZ Steel and Transpower’s grid connection point and will be closer to Auckland load than any other grid-scale battery project.
After a competitive tender, Tesla had been selected to supply its Megapack 2 XL battery energy storage system and to provide commissioning and long-term maintenance services.
The agreement with Tesla includes an option to expand the capacity for the battery to 130MW at this site.
Contact Energy chief executive Mike Fuge.
The battery at Glenbrook is expected to be online in the first quarter of 2026.
The battery would support new wind and solar on an intra-day and intra-week basis and ultimately reduce reliance on gas peakers as Contact transitioned to a low-carbon future, it said.
Contact has extensive geothermal assets in the central North Island, gas-powered “peaking” facilities in Taranaki plus big hydro assets in the South Island.
Fuge said the project at Glenbrook would be funded internally.
“Because it has a variety of income streams projected, it looks like a very economic project,” he said.
Land for the project is being leased from neighbouring NZ Steel, which struck a deal with Contact last year for a flexible off-peak power arrangement.
Fuge said Contact’s delayed Tauhara geothermal project was going through performance testing and Te Huka 3 was on schedule and on budget.
The company’s “GT22″ gas peaker, which broke down last September, is expected to return from the manufacturer – GE – in August.
The unit is a fast-start gas turbine, which kicks in during peak power demand.
Meanwhile, Contact’s gas-powered Taranaki Combined Cycle plant was “having a reasonable run”.
Commenting on New Zealand’s quickly declining gas reserves, Fuge said the industry was working hard to resolve the issue.
“Certainly there is a will to get the situation resolved across the industry,” he said.
Contact shares last traded at $9.13, up 13c or 1.4% on the day, having gained 12.7% over the past 12 months.
The company is due to report its annual results on August 19.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
