Electricity generation to get $130m boost

Contact Energy today announced it would put $130m into new electricity generation projects and increasing current output by 100 megawatts (MW).

Projects include a rise in production at its central North Island geothermal plants, as well as at the Clutha Dam and its Otahuhu B and Taranaki gas-fired plants.

The announcement comes after soaring power demand in Auckland last week raised the prospect of power cuts.

With temperatures in the high 20s, the situation reached crisis proportions on Wednesday when demand in the city reached 1500MW and available power supply to Auckland was just 1580MW. This was in part related to the rising temperature in the Waikato River which prevented the Huntly Power station, run by Genesis Energy, from using as much river water for cooling.


Contact chairman Grant King said said a substantial increase in natural gas exploration was needed to provide certainty of domestic supply, and Contact was investigating a backstop option of importing liquefied natural gas (LNG).

Contact already holds holds resource consents for large scale combined cycle gas turbine (CCGT) plants at Otahuhu and Stratford, which Mr King described as its "most significant future generation options". One of these could be completed by the end of the decade.

"Each of these plants is equivalent to between two and three years' electricity demand growth," he said. Demand is expected to grow at more than two per cent annually.

The company would also consider direct investment in domestic gas production "should this be necessary to secure its future".

Mr King also said it was important the Government address concerns that there was a lack of investment in the national grid, which was "increasing risk to security of supply".

Contact, which generates more than a quarter of New Zealand's electricity, gained 1000 new customers in the last three months of the year, and at the end of December had 509,000 electricity customers.

It today said its revenue for the three months ended December 31 was $325m, up 9 per cent on the same period last year - but that shareholders would not get an extra pay-out and the money would instead go into the new projects.

- NZPA, HERALD STAFF, NEWSTALK ZB