16 Jun 2012

Costings favour small capital wind farm - Meridian

6:01 am on 16 June 2012

Meridian Energy says cheaper costs are behind its decision to start building a $169 million wind farm near Wellington.

Mill Creek's 26 turbines are expected to produce enough electricity to power the equivalent of 30,000 homes a year and should be operating by the middle of 2014.

Meridian chief executive Mark Binns says that the windfarm makes commercial sense - despite flat demand for electricity.

Its generation costs are estimated to be in the range of $80 to $85 per megawatt-hour - competitive with geothermal energy, he says.

Costs and benefits are being improved by a high exchange rate for the New Zealand dollar, falling steel prices and high levels of competition in the turbine technology and construction industries, he says.

"It was just a good time for us to do it," he says.

"This is a relatively small wind farm ... over the next five years it's unlikely you are going to get a lot of big projects. I think it's the smaller type of project you are going to see come to fore".

Large-scale wind farms are difficult to undertake in a market with low growth of energy demand, but there are bigger projects ready to go if demand picks up, he says.