TEXT-NZ's Contact Energy signs peaking plant contracts

(The following statement was released by the company)

WELLINGTON, April 15 - Two hundred megawatts of highly efficient gas-fired peaking capacity to support increasing levels of renewable electricity generation have come a step closer, with Contact Energy executing contracts to purchase two fast-start gas turbine peaking units.

Contact Energy Chief Executive, David Baldwin, signed an agreement with General Electric (GE) to purchase two 100 megawatt LMS100 gas-fired peaking units. The units will be installed on the site of Contact's currently disused Stratford power station and are expected to be in service before the winter of 2010.

Contact also signed a contract with United Group (NZ) Limited to project manage, engineer, and install the two peaking units, and procure and install the balance of plant required to complete the project. The project will cost approximately $250 million to complete.

Mr Baldwin said he was pleased to have signed the contracts.

"These peakers will play an important role in providing New Zealand with a secure supply of electricity, while also enabling the country to increase the level of electricity generated from renewable sources," said Mr Baldwin.

"The role of thermal generation is changing and, as recognised in the New Zealand Energy Strategy, the strategic use of efficient, fast-start peaking plants will be needed to support increasing volumes of weather-dependent renewables, such as wind generation.

"These peaking units will ensure efficient use of New Zealand's natural gas resources and underpin development of New Zealand's renewable resources," he said.

Mr Baldwin said the peaking units would be developed in parallel with an underground gas storage facility in the depleted Ahuroa gas field at Taranaki. The facility will enable Contact to store natural gas underground during off-peak periods, such as during the summer, and use it during times when it is most needed, such as during winter peaks.

"The gas storage facility is an important part of a renewable future for New Zealand. It is hoped to be operational at the time our new peaking plants enter service and will enable us to use these plants with maximum flexibility and efficiency to the benefit of the country's electricity supply."