New Zealand's Mighty River Power Company Investing in Geothermal Project in U.S.

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Researched by Industrial Info Resources (Sugar Land, Texas)--New Zealand's state-owned electricity generation and retailing company Mighty River Power Limited (Auckland, New Zealand) is investing an estimated $90 million in a geothermal power-producing facility in the U.S. through partially owned American subsidiary GeoGlobal Energy LLC (GGE) (Chevy Chase, Maryland). The new geothermal facility will use the same proven technology used by Mighty River Power at its geothermal units in New Zealand, and will be built at a total cost of $400 million.

Although GGE, which sold 25% of its stake to Mighty River Power in 2008, has invested in the 49.9-megawatt (MW) Hudson Ranch Power I station in the geothermal resource-rich Imperial Valley in the southern part of California, it is being built by American geothermal and solar power facility developer and operator EnergySource LLC (El Centro, California). The investment made by GGE accounted for almost all the funds required for setting up the plant and enabled GGE to purchase a 20% stake in EnergySource.

According to a May 20 media release issued by GGE, the Hudson Ranch project is GGE's biggest investment in California's first stand-alone, high-temperature-flash technology-based geothermal facility that will be capable of generating baseload, renewable and low-carbon electricity.

The plant will boast the same Fuji equipment used at Mighty River Power's plants at Kawerau in the north, and the 140-MW Nga Awa Purua near Taupo in the center of North Island, New Zealand. The Nga Awa Purua facility was commissioned in April this year.

The construction of the Hudson Ranch Power I plant is expected to be completed by 2012, and the power will be marketed over a period spanning 30 years in accordance with a power purchase agreement signed with the municipal utility Salt River Project (Phoenix, Arizona).

Commenting on the fact that Mighty River Power's geothermal experience in New Zealand was vital to the tie-up with EnergySource. "Mighty River Power is the only company is the world to have built geothermal power stations within the past five years that use this particular technology, and the success of the Nga Awa Purua and Kawerau projects was an important factor in EnergySource selecting GGE as an investor in the Hudson Ranch Power I project," GGE President Michael Van Vleck said.

Noting the failures that other New Zealand businesses have faced when expanding in international markets, Mighty River Power CEO Doug Heffernon said: "A lot of those risks with New Zealand companies going offshore to Australia or anywhere else were because the market conditions were more difficult than they had anticipated. In this case, we've already laid off this market risk."

He also added that funds for the facility were being sourced from retained earnings or from market borrowings, and made assurances that in no way would New Zealand power projects be negatively impacted.

"GGE experts have decades of experience spanning all aspects of the geothermal business: exploration, development and operations," Van Vleck said. "Using a proprietary database of the world's best undeveloped geothermal resources, GGE expects to develop 500 to 1,000 MW of geothermal capacity in select markets, including the United States, Chile and Germany."

Meanwhile GGE, through subsidiary GGE Chile SpA (Santiago, Chile), which was created in August 2008, received a concession at the Tohuaca volcano in January 2009 and successfully drilled an exploration well with a minimum of 75 MW of potential resources. It also acquired another concession for 15,000 acres at Puchuldiza, which has a resource base quantity similar to the Tolhuaca area. GGE is accelerating its $26 million geothermal operations in Chile as well as its greenfield operations at Gabbs Valley in western Nevada, in the United States.

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