Mighty River Power has confirmed plans to build a $466 million geothermal electricity generation plant north of Taupo.

Work was due to start at the Ngatamariki geothermal steam field site next month, with the plant expected to be operating at full capacity by mid-2013, the state-owned company said today.

Mighty River Power general manager development Mark Trigg said the plant, 17km northeast of Taupo, would have an initial output of 82 megawatts (MW).

The development would lift the company's geothermal energy production from over 30 per cent to more than 40 per cent of generation output, measured on ownership interests. It would lift total geothermal capacity under Mighty River Power's operation above 460MW.

The company recently secured $250 million additional debt facilities which would be used to finance the project from the company's balance sheet, Trigg said.

The $466m project cost included all expenditure to date and capitalised interest during construction, as well as a significant contingency allowance to cater for steamfield development either during construction or in the five years after project commissioning.

Mighty River Power has invested more than $1 billion in geothermal generation in the past five years.

Chief executive Doug Heffernan said the Ngatamariki project, along with the company's international geothermal developments, would allow Mighty River Power to continue building on the core competency it had developed in geothermal.

The company has committed US$250m to international geothermal investment early last year, and has interests in southern California, Chile and Germany.