Christopher Luxon says a new large-scale, renewable energy project in Niue should be operating by the the end of next year.
Luxon is in Niue for bilateral talks with Premier Dalton Tagelagi, and to celebrate 50 years of free association between the two countries.
Earlier on Wednesday, in a joint media statement Luxon and Tagelagi announced that New Zealand plans to invest $20.5 million into a new, large-scale, renewable energy project in Niue, reducing the nation's reliance on diesel.
At this afternoon's media conference Luxon said the renewable energy would be solar with battery storage with construction expected to start in the first quarter of next year and the plant would be in commission towards the end of next year.
Asked who was going to pay off Niue's large deficit, Luxon said New Zealand had agreed to increase what was essentially Niue's operating budget from $12.8 million to $15m.
New Zealand was looking for good long-term infrastructure investment in Niue, Luxon said.
"When you think about the experience of doing a quality repaving of the airport runway for example, it's going to last 25 to 30 years and that's a very good outcome."
Niue is undertaking feasibility work on its wharf which was built in the 1930s to work out what was needed, he said.
It can be difficult to get boats in and out of Niue in bad weather, Luxon said.
The wharf and the runway were both critical pieces of infrastructure and how Niue stayed connected to the world, he said.
The New Zealand government was moving as quickly as it could on the solar project, he said.
Luxon acknowledged that the price of diesel was very expensive, likely three times as much as a renewable option.
"The key thing is to get Niue onto a long-term footing that gives energy security, energy resilience and obviously does it in a cleaner, greener way and also at a lower cost."
Luxon said he discussed with the Premier how to get an infrastructure pipeline established over the next 15 to 20 years in Niue to establish infrastructure priorities over the longer term.
New Zealand is the dominant funding partner for infrastructure in Niue, but there are a number of other countries such as Australia and Japan which have funded facilities, he said.
"All we're asking for is that when those major world actors come into the Pacific that they actually respect the centrality of PIF (Pacific Islands Forum) and that we are there as the dominant partner and are happy to engage on any of these topics."
Luxon will board a Defence Force flight in Niue this afternoon (NZ time) to head for Fiji and will fly back to Auckland on Friday.