Mercury NZ plans to start site works for a $256 million wind farm south-east of Palmerston North in August.

The company plans to install 33 Vestas turbines – each with 3.6 megawatt capacity – at the company’s consented site at Turitea on the Tararua Range. The turbines are expected to deliver about 470 gigawatt-hours of electricity annually and will earn Mercury about $30 million a year, assuming an average generation price of $75/MWh. The total project involves 60 turbines. 

It is the company’s first wind development, and commissioning is expected to start in late 2020. 

“With this announcement, Mercury has realised the ‘awesome foursome’ of renewables – hydro, geothermal, solar and wind – that enhance our contribution to New Zealand’s green energy future,” chief executive Fraser Whineray said.

“The Turitea wind farm will contribute to New Zealand’s sustainable, low-emissions future, as well as to our country’s energy freedom by making more renewable, kiwi-made electricity available for homes, businesses and vehicles around the country.”

The project represents 1.2 percent of national demand “so that lifts New Zealand’s renewability and electricity by slightly over 1 percent through this one investment alone,” Whineray told analysts. 

He said there is no timeline for commissioning the remaining 27 turbines. “We will get this one out of the way and then make decisions as to when we think it’s optimal to expand,” he said. 

“It is a matter of pacing ourselves in terms of the most economic way to develop the site. There is quite a lot of money involved… we will consider subsequent stages which we are future-proofing for as we see demand and supply develop in New Zealand electricity,” he said.

Mercury shares rose 1 percent to a record $3.87. The stock has risen about 18 percent the past year. 

Flat national electricity demand has stalled new generation development in recent years. But signs of underlying demand growth and moves to retire or reduce use of gas-fired plant as part of the country’s emission-reduction effort have seen Tilt Renewables and Meridian Energy advance work on wind projects at Waverley on the southern Taranaki coast and on the Maungaharuru Range north of Napier respectively.

Mercury is the biggest hydro generator in the North Island where it also operates five geothermal plants and has a solar business. It spent almost a decade through 2013 identifying and then consenting wind options in the lower North Island.

In 2011 it was approved to erect 60 turbines at Turitea and the following year was granted consent for 53 turbines on the Puketoi Range 30 kilometres to the east in Wairarapa. Regarding the 53 on the Puketoi Range, Whineray said that consent will expire in 2023.

Regarding possible discussions about that opportunity, he said it was “far enough away that we don’t need to be having those discussions at this point.”

He said Mercury would look at what to do with that consent over time, noting it could be extended, modified or even ruled out. “Those are all decisions we will have to make over the coming couple of years.” 

The initial development at Turitea will be the country’s third-largest wind farm with capacity of 119 MW. The project includes construction of a 220 kV transmission line from the Linton substation.

Developing the other 27 turbines in the southern part of the Turitea project and longer-term a transmission link east to Puketoi represents another $750 million of potential investment, he said.

“When we break ground for this in a matter of months, it further establishes the Manawatu as New Zealand’s hub for wind energy production. It’s one of the best locations in the world,” he said.

“If you are looking at gas fields, you’d be in Kuwait. And if you are looking at wind, then right where we are and maybe a couple of parts of Scotland are the pre-eminent wind sites in the world,” he said. 

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