NEWS RELEASE 3 October 2013 NZX: MRP
ASX: MYT
PM opens showcase Geothermal plant: boost for MRP, benefits for NZ Mighty River Power’s new geothermal power station, officially opened by the Prime Minister today will help drive strong earnings growth for the Company – and further improve New Zealand’s energy mix, with long-term benefits for all New Zealanders. Mighty River Power Chair, Joan Withers, described the new Ngatamariki Geothermal Power Station – the largest of its type in the world – as “a significant strategic milestone for the Company and very good news for New Zealand”. Mrs Withers said geothermal projects were inherently complex, and capital intensive and required high levels of commitment, capability and partnership from everyone involved. “We invested in building relationships with our partners on this resource over more than a decade and $75 million in exploration before we knew we had a project. Our commitment of nearly half a billion dollars of capital to this project was only confirmed after satisfying ourselves on each of these fronts – and the long-term sustainability of the resource and returns to our investors.” She said Mighty River Power’s total investment of more than $1.4 billion, and the successful completion of three major geothermal projects since 2008, was enabled by the strong cash flows from the Company’s Waikato Hydro assets. “These cash flows have been fundamental to this investment in reliable, renewable geothermal. We have made this investment in the expectation that our low-cost renewables production will drive improved profitability as we gain generation market share – by displacing our competitors’ higher cost fossil fuel production – to deliver a reasonable return on investment for our shareholders, and benefits for all New Zealanders.” Mighty River Power Chief Executive, Doug Heffernan, said: “Ngatamariki simply would not have happened without the underlying profits which have come from our Waikato Hydro assets.” Dr Heffernan said with the addition of Ngatamariki, Mighty River Power now operated five geothermal plants that annually generate about 10% of New Zealand’s total electricity – equivalent to the generation of the Company’s nine stations in the Waikato Hydro System. He said the Company’s geothermal investment, funded entirely from the Company’s cash flow and balance sheet, had diversified and strengthened Mighty River Power’s production base – with more than 40% of annual generation sales now coming for geothermal. “This reliability of geothermal, as a major component of our portfolio, is a distinctive competitive strength for us in the New Zealand electricity market.” As the ‘premium’ renewable – operating 24/7 and not dependent on the weather – Dr Heffernan said geothermal generation also “delivers reliable, renewable energy for New Zealand’s long-term benefit.” He said the Ngatamariki project was part of an important renaissance for geothermal led by Mighty River Power, which has seen considerable investment in high capital cost plant with low operating costs that is displacing more expensive fossil fuel generation – with Mighty River Power’s annual geothermal generation saving the country more than 3 million tonnes of carbon emissions every year, by displacing coal-fired generation.
"In step with our major investment in new power stations and growth in generation market share, we’ve also grown our retail sales market share from 18% to 22% of total demand (excluding demand from the Tiwai Smelter) over the past five years, demonstrating customers exercising preference for Mighty River Power brands such as Mercury Energy and Tiny Mighty Power. “I am very proud of Mighty River Power’s role in leading this geothermal renaissance. For many years, Geothermal was a sleeping giant, a bit of a secret in New Zealand – and now it’s the envy of much of the world for the reliability it brings, and its contribution in taking carbon out of the economy, and the environment.” Dr Heffernan said the recent announcement of the withdrawal from production of a second coal-fired unit at the Huntly station was evidence of the benefits of a highly-competitive generation market, and the positive change that geothermal was driving in New Zealand’s energy mix.
ENDS
For further information: David Glendining Head of Communications T 0272 105 337
Anna Hirst Head of Investor Relations T 0275 173 470
Mighty River Power is one of New Zealand’s largest electricity companies – with its core business based on reliable, low fuel-cost electricity generation complemented by sales to homes and businesses. The Company generates about 17% of New Zealand’s electricity. It operates the nine hydro stations on the Waikato River, five geothermal power stations in the Central North Island and a multi-unit gas-fired station in Auckland. More than 90% of its electricity production is from renewable sources. Mighty River Power sells electricity through multiple channels and retail brands, including Mercury Energy, GLO-BUG, Bosco Connect and Tiny Mighty Power. Mighty River Power’s metering business, Metrix, provides electricity retailers with advanced metering infrastructure solutions for their residential and commercial customers. Mighty River Power is one of the world’s largest geothermal power station owners, and has a successful track record in geothermal development, investing more than $1.4 billion in geothermal development since FY2006. The Company is applying this capability and experience – gained through domestic geothermal exploration, development, construction and operations – to invest in international growth opportunities.