Renewable energy project waiting on Tiwai decision

14:50 pm on 23 June 2020

Contact Energy has begun early work on a new geothermal field near Taupō, but it won't be full steam ahead until the Tiwai Point smelter makes its intentions clear.

Contact Energy's Te Mihi power station. Photo: Contact Energy

The Tauhara renewable geothermal project is an attractive proposition in New Zealand's transition to a low-carbon future.

Contact chief executive Mike Fuge said the development was essentially "shovel ready" but they needed to be sure of demand.

"Tauhara's a very good project. It's not a question of if it goes ahead, it's a question of when it goes ahead.

"The key thing on Tauhara, or any new renewable energy development in New Zealand is getting certainty around what's happening with Tiwai. Obviously that sort of uncertainty around demand hanging over the market creates uncertainty and we just need to get clear on that."

"You obviously don't want to build a multi-million dollar electricity project into a market where market conditions are very suppressed.

Fuge said electricity demand had recovered post Covid-19, but the company still needed some certainty around industrial demand and how that was going to hold up.

In August last year, Contact began a $40 million appraisal of the site.

Fuge said that appraisal proved the site was "world class".

"All the more attractive because of its very low associated carbon dioxide emissions... to put things in perspective, coal-fired generation emits 18 times more carbon than is expected from the Tauhara project, and gas-fired generation from a peaker emits eight times more."

In the meantime Contact had engaged Japan-based Sumitomo Corporation as the preferred construction partner and an early works contract had been signed.

Sumitomo would work with New Zealand construction company Naylor Love for the civil engineering components of the project, and with Fuji Electric for the supply of the steam turbine.

"We're not sitting back waiting," Fuge said.

About 400 jobs are expected to be created during construction.