Geothermal Opening up Offshore Growth Options

MEDIA RELEASE

21 March 2011

Geothermal Opening up Offshore Growth Options for Mighty River

Mighty River Power’s 2011 Interim Report released today shows the importance of geothermal expertise in broadening the company’s domestic generation portfolio and also in opening up new growth opportunities offshore.

Mighty River Power Chair, Joan Withers, said the strategic investment of $1 billion, including the addition of two large geothermal plants in New Zealand, over the past five years were important milestones in the sustained growth and evolution of the company. New geothermal capacity was a major contributor and driver of the 22% increase in the company’s earnings (EBITDAF) to $233.6 million for the six months (to 31 December 2010).

Mrs Withers said geothermal was now the third-most important fuel for generation in New Zealand, making up about 13% of all generation in industry data released this week from the Ministry for Economic Development.

“We are seeing the importance of geothermal, at a company level in broadening and diversifying Mighty River’s predominately renewable generation base – reducing exposure to the risks of weather and hydrology. And, for New Zealand Inc, this is an important story both in increasing generation from renewables and opening up new growth options offshore.

“Over the past decade, by using new technologies to tap deep reservoirs that enable sustainable use of this country’s geothermal reservoirs, geothermal has gone from a minor fuel (around 5%), to significantly reducing the requirement for New Zealand to burn coal and helping to reduce greenhouse gas emissions from electricity generation.” MED figures for the December 2010 quarter show the contribution from geothermal (1441GWh) was more than three times that of wind (413GWh).

Mrs Withers said Mighty River Power was taking its geothermal competencies and experience offshore by investing in international developments – a strategy that is now seeing substantial progress.

Mighty River Power Chief Executive, Doug Heffernan, said the company is among the top 10 geothermal companies in the world (based on production) and was “sought-after as a partner in international geothermal developments”.

Along with the company’s expertise and track record in geothermal development, construction and operation, Dr Heffernan said New Zealand had a significant reputation as a geothermal leader.

“This has opened up new opportunities for us in the global niche market of geothermals.”

Dr Heffernan said geothermal represented less than 0.5% of generation globally – but was growing strongly internationally as many countries looked to expand their domestic electricity generation from renewable sources, and incentivise this development option.

“Global demand for geothermal is significantly outpacing the low demand for electricity in New Zealand. So these opportunities to put our expertise alongside investments offshore are attractive for Mighty River Power both in terms of growth and offering superior returns on capital than we would get locally.”

Dr Heffernan said the company had deployed US$124 million of the current US$250 million capital committed through international partner GeoGlobal Energy (GGE) and made good progress in the half year on projects in the US and Chile, along with an extension into Germany.

In New Zealand, Dr Heffernan said the Company was working with its partners the Tauhara North No.2 Trust on plans to build a geothermal power station on the Ngatamariki geothermal field, which was consented in FY2010. He said the earliest this project would come to market is late 2013.

To view Mighty River Power’s 2011 Interim Report please click here: http://www.mightyriver.co.nz/content/2645/MRP%20Interim%20Report%202011.pdf
[Scoop copy: MRP_Interim_Report_2011.pdf]

ENDS

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