Contact also announced today that it had committed to the construction of the 166 megawatt Te Mihi geothermal project. An engineering procurement and construction contract was signed this morning with a consortium of McConnell Dowell Constructors Limited, SNC-Lavalin Constructors Inc, and PB New Zealand. The turbines will be supplied to the consortium by Toshiba International Corporation.
Two units of 83 MW each (with expected net output of 159 MW) will be constructed near the 52 year-old Wairakei geothermal power station, northwest of Taupo.
Once completed in mid 2013, approximately 45 megawatts of the existing Wairakei geothermal station will be decommissioned, resulting in a net increase in output from the combined Te Mihi and Wairakei stations of about 114 megawatts.
The total cost of the project is approximately $623 million which will be funded through a combination of debt and equity. A pro-rata renounceable rights issue will be launched in the near term. Contact’s majority shareholder, Origin Energy has advised that it will subscribe for its share of the rights issue.
Mr Baldwin, says the commitment to Te Mihi reflects the company’s view that geothermal is currently New Zealand’s most cost effective new base load generation.
“The additional 114 megawatts is expected to be required by the market by 2013 as economic growth resumes, and will also contribute to lowering Contact’s average cost of generation,” he said.