POWER March 2015 - 51

RENEWABLES
kilometers in area. The springs at Ngawha village are among the very
few external signs of the huge natural boiler buried deep below.
It was anticipated that these could start generating electricity as
early as 2020. " We've been conducting scientific research and modelling
. . . to understand how much geothermal resource might be
available, " Top Energy chief executive Russell Shaw says. " Although
we won't know exactly what we have until we explore through test
drilling, we believe there could be enough resource for an additional
100 MW of energy. "
The original Ngawha geothermal power station opened in 1998
with a capacity of about 8 MW. An expansion was completed in 2008,
increasing it to 25 MW. The Ngawha Power Station was the first
power station to come into operation via a resource consent applied
for and issued under the Resource Management Act. It is owned and
operated by Top Energy and uses a binary cycle manufactured by Ormat
Industries. Plant Manager Ray Robinson says the Ngawha plant
had " a complex resource consent. It's subject to continual audit by
the Northland Regional Council and also to peer review by an independent
panel of environmental experts. " Such considerations add a
further dimension to developing geothermal power in New Zealand.
Many ambitious plans are currently on hold. Drilling and exploratory
work scheduled for 2014 has been pushed back as part of a
series of cost-cutting measures Top Energy has had to implement as
a result of a softening New Zealand electricity market and a corresponding
drop in projected revenues from Ngawha. There are still
plans, however, to apply for its first resource consent with a view to
expanding the existing 25-MW station by 50 MW in two stages.
Economic Conditions Prompt Developers to Look
Abroad
Since 2013 the hiatus in construction of geothermal capacity due to
flat demand growth has prompted developers to shift their focus. New
Zealand geothermal operators are concentrating instead on sustaining
and maintaining existing developments, looking to share experience
by partnering in international developments, and investigating some
new prospects.
Greg Bignall, coauthor of a paper to be presented at the upcoming
World Geothermal Congress in Melbourne, Australia, and senior scientist
at GNS Science, says several New Zealand companies have invested significantly
in large-scale industrial direct geothermal energy applications
in the past five years. They include Ngati Tuwharetoa Geothermal Assets
Ltd. supplying the Svenska Cellulosa Aktiebolaget tissue mill at Kawerau
and Tuaropaki supplying clean steam generated from geothermal energy
to the Miraka milk powder processing plant at Mokai.
Despite these new developments, there has been a reduction in
geothermal direct use overall since 2010, primarily a consequence
of Norske Skog Tasman closing one of the paper production lines at
its Kawerau facility in January 2013. " There is more that needs to be
done in New Zealand to further foster direct geothermal heat use, and
the uptake of geothermal heat pumps, " Bignall says.
Developers also are responding to the downturn by setting their
sights offshore. MRP for example, is now applying its geothermal
expertise in Chile and in the U.S. through EnergySource.
Geothermal Investment and Cost Trends
A steep increase in geothermal investment that took place in New Zealand
about 10 years ago looked set to continue and was sustained until
the middle of 2014. On the whole, investment in the past five years has
been similar to the previous five years but has shifted from the stateowned
MRP to the publicly listed Contact Energy, although both companies
and a range of others have been active throughout the period.
There has also been significant investment in large industrial direct
heat projects in the past five years, as well as in geothermal heat
March 2015 | POWER
pumps and smaller direct heat applications, but data on such uses is
difficult to obtain.
Another indication of investment activity is well drilling, with well
costs being a substantial, and growing, proportion of total project
costs, whether for electricity generation or heat supply. There is a
startling contrast between efforts in earlier decades-when drilling,
exploration, and development were controlled by the New Zealand
government-and the past decade, during which these efforts have
been driven by market conditions and a combination of public and private
investment. Recent drilling efforts have exceeded those of former
years in both number of wells drilled and diversity of fields in which
drilling has been undertaken. Recent wells are generally deeper and
larger in diameter than early wells, and so are more costly.
There have been reports of significant drilling cost increases outrunning
inflation, but rising costs are also said to be attributable to
changes in well design and construction methods. Basically, investment
has been enabled on fields that were previously investigated by
the New Zealand government, and the heritage exploration data has
facilitated additional investigation activities, leading in some cases to
further drilling and field development.
Each project will have its own peculiarities with respect to concept
and cost, the costs being highly dependent on the nature of the reservoir
(especially temperature and productivity of wells). The scale
of development has less effect on the cost/MW installed. Given that
most future developments will be of a larger scale, typical investment
will be on the order of NZ$4/MW installed. With approximately
1,000 MW of viable, consentable generation, this indicates upcoming
investment of the order of NZ$4 billion. ■
-Chris Webb (www.bluegnumediasolutions.com) is a freelance
energy journalist based in Auckland, New Zealand.
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POWER March 2015

Table of Contents for the Digital Edition of POWER March 2015

Contents
POWER March 2015 - Cover1
POWER March 2015 - Cover2
POWER March 2015 - Contents
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