16 Aug 2017

Contact Energy keeps power station switched on

1:15 pm on 16 August 2017

Contact Energy's combined cycle power station at Stratford in Taranaki will now keep generating electricity for five more years.

A silhouette of power lines.

Photo: RNZ / Cole Eastham-Farrelly

A year ago, the future of the 377 megawatt gas-fired plant was looking shaky, and company management openly spoke of closing it down.

It had earlier shut another gas-powered plant at Ōtāhuhu.

But the Stratford generator is about to undergo its fifth big refurbishment, which will see it though until 2022, because this has proved to be the cheapest way of getting back-up electricity.

The company's chief executive, Dennis Barnes, said the work would start in November.

"Every 25,000 hours you have to put new blades in the turbines," he said.

"It costs about $50 million to do that. Obviously before you do that you need to know that you will get value for that investment.

"A year ago or even as recently as six months ago we were not convinced we would get value from that investment. We got convinced and we are going ahead in November."

Mr Barnes said the decision to maintain the physical plant at Stratford was taken after attempts to get back-up supply contracts from other electricity companies proved unworkable.

"If you think about our portfolio, we sell out renewable [electricity] but that causes a [supply] risk in winter," he said.

"We need to manage that risk with physical [generating] plant or with contracts [for supply from other companies].

"It was clear to us from going to market that the Taranaki plant was cheaper in terms of managing that risk, but you don't know that until you go and ask for a price.

"We found that out and that convinced us to invest."

The Stratford plants generates electricity for three to five months each year during peak demand.

At other times, it is priced out of the market by cheaper hydro or geothermal power.

Get the RNZ app

for ad-free news and current affairs