Photo: RNZ
Genesis Energy says it could be generating electricity using biomass at its Huntly station in three to four years.
The power company is backing the development of local biomass production to reduce its reliance on imported coal and falling gas reserves.
Biomass can be made from timber and forest waste but is only produced in bulk overseas.
Genesis chief executive Malcolm Johns said it will work with local investors and forest owners to build domestic production and offer long term supply agreements.
"We'll sign up for 10 to 20 years of biomass supply and that guarantees the income for the people that will invest in the technology in the forest to produce it. So we're not planning to invest directly into the production or growing of forests.
"We'll invest in the generation of electricity and we'll be a buyer of that fuel from those entities."
Johns said Huntly power station would need around 300,000 tonnes of biomass to replace coal in an average year.
"The largest biomass production facility in the world at the moment is producing 120,000 tonnes per year. We need 300,000 tonnes, but Japan has a target for 10 million tonnes by 2030, so the biomass opportunity is going to grow exponentially over the next decade or so.
"We'll focus on working with domestic investors and forestry owners to stand up 300,000 tonnes first... It would start with low levels of production, and we would expect to see those in the next one to two years. In terms of high levels of production, we would sort of expect to see those 3, 4, 5 years out."
More biomass means less coal and gas but dry, windless winters will remain a problem, said Johns.
"In a normal average year, we would burn 150,000 to 300,000 tonnes of coal. If we could produce 300,000 tonnes of biomass, then we wouldn't need to burn any coal.
"In a dry year like we've just been through that figure can go up to over a million tonnes of coal and so whether we can displace all of coal will depend on how much biomass production is feasible in New Zealand.
He said the security of the country's electricity system relies in the ability to store energy and biomass offers that.
"You can store it in a living tree and you can harvest that tree when you want to and turn it into biomass.
"When you turn it into biomass, you can also store it as a solid fuel and burn it when you need to burn it and because you're planting a tree when you're harvesting it, you're creating a zero carbon cycle."
On Thursday, Climate Change Minister Simon Watts said Genesis Energy's moves to use biomass at Huntly showed the private sector was acting on emissions without any government funding.
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