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Contact Energy cans plans for new geothermal plant

May 17, 2024
in Business
Contact Energy cans plans for new geothermal plant
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Photo: RNZ / Nate McKinnon

Contact Energy is going back to the drawing board on plans for a new geothermal plant in the central North Island due to rising costs.

The company planned for a new plant near Taupō to come online in 2027, replacing the existing 1950s-built Wairākei power station.

Contact said since the project was initiated, construction costs have increased, with a weak New Zealand dollar also hampering costs.

“On completion of detailed development activities, assessed total project costs have come in substantially higher than previously expected, with the impact of increased construction costs compounded at scale,” the company told the share market.

Contact did not disclose how much the original plans for a new plant would have cost.

Last year, it approved $114 million in development costs ahead of a final investment decision this year.

It has now set aside an additional $30m in development costs.

Contact said geothermal economics remained favourable, but said “given the assessed total project cost and complex integration with Contact’s existing operations on the Wairākei steamfield, a range of alternatives will be revisited”.

Alternatives included a phased approach to a new power station investment, while potentially extending the life of the existing plant.

Contact said it would provide an update on development options in its full-year results in August.

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