Small generator with a big future

In the Far North there’s a little, public owned renewable energy company that last year got a whole lot bigger. Hugh de Lacy reports on a project that is taking the region closer to electricity self-sustainability.

There’s a clause in its trust deed that requires Top Energy to regularly review its community ownership, but if the last such review is anything to go by the small geothermal electricity generator won’t be hocked off to the private sector any time soon.

Top Energy supplies 28,000 consumers in the Far North of the North Island, and annually remits between $5 million and $6 million as dividends to local power consumers. Managing $160 million in assets and employing 200 staff, it is one of the region’s biggest employers and generates nearly $35 million in community funding annually. The company is owned by the Top Energy Consumer Trust, and prior to its registration under the Companies Act 1993 it was known as the Bay of Islands Electric Power Trust.

Under former Energy Minister Max Bradford’s sweeping reforms of the electricity industry in the late 1990s, which created a free market in a sector that had previously been under political control, consumer-owned power companies like Top Energy were required periodically to review their ownership. The idea was that if the consumers thought they’d be better off selling the company into private ownership and using the returned capital for something else, they could do so.

It’s not an option that Top Energy consumers favour. In the last ownership review in July 2005, a decisive 93 percent of the 1500 people who took part favoured retention of the company by the trust – and nothing has happened since that’s likely to change their minds at the next review. Indeed, developments last year that vastly increased the value and output of Top Energy are likely to have strengthened the local community’s affection for their trust structure.

In September last year Top Energy completed the $75 million expansion of its output from the Ngawha geothermal field, which is about five kilometres east of Kaikohe. The field covers 25 square kilometres and is the only high-temperature geothermal area in the country other than the better known Taupo volcanic zone. It sits in a topographic basin centred on the township of Ngawha Springs where the hot water baths have been a luxury for local hapu and the Ngapuhi iwi for generations.

There are about 20 hot springs, ranging in temperature between 40 and 50 degrees centigrade. They are slightly acidic and give off a hydrogen sulphide smell, but much fainter than that at Taupo and Rotorua. The field sits on a greywacke base estimated at more than a kilometre deep, and the water contains high concentrations of boron, ammonia and bicarbonate, and exhibits mercury mineralisation.

Though first established in 1935, Top Energy did not start producing electricity from Ngawha until 1998. This followed the Ministry of Works drilling 20 wells during the 1980s, of which the company uses four for generation, and others for re-injection and monitoring. In a joint venture between Top Energy and the Tai Tokerau Maori Trust Board, work started on the sole power station in the mid-1990s, using a binary-generated unit manufactured by the Israeli firm Ormat Industries, and producing about 10 megawatts.

The unit draws hot water and steam from the geothermal field and uses it to heat a motive fluid, pentane, until it vaporises. The pentane expands under heat and spins low and high pressure turbines at either end of the generator. It’s a closed system that keeps the corrosive and toxic geothermal fluids separate from the both the operating mechanism and the atmosphere, and re-injects them into the field after use.

For 10 years this original plant supplied about 35 percent of the electricity used by consumers on Top Energy’s distribution network, but when investigations showed that far more energy could be extracted from the field without affecting it, plans were laid to increase the output by 150 percent, using the same binary system. Initially the expansion scheme ran into problems when the Northland Regional Council declined in 2004 to issue resource consents to increase the quantity of fluid being drawn off, even though the Far North District Council had given its consent.

Through its subsidiary Ngawha Geothermal, Top Energy appealed to the Environment Court, producing computer-modelled analysis that showed no significant effects from the expansion on the field. It also submitted a mitigation system to support the pressure in the field should it prove to be reduced. The court initially approved a six-months trial to ensure the field pressures would not be affected by the expansion, and then in September 2006 it issued the full consent.

Earthworks started in January the following year, followed by the concrete foundations and the fire ring main, and simultaneously the fluid pipeline system was installed. As with the original system, Ormat Industries won the contract to install and test the new plant. When it became operational last September it raised the power station’s output to around 25 megawatts, and increased the proportion of the power the company supplied to about 75 percent of the Far North’s requirement of around 350 gigawatt hours a year.

Nor is Top Energy stopping there. Chief executive Russell Shaw told Energy NZ the company has further expansion plans.

“We’re looking at future options at Ngawha, firstly to provide peaking load and whether it’s possible to expand generation. We’re only in the early stages at the moment. The priority for us for the next 12 months is to get the recent expansion bedded in. We’re working through a shake-down period, and any further expansion would be four or five years down the track,” Shaw says.

There was no chance of the geothermal field being depleted.

“We very carefully monitor the resource as part of the consenting conditions. They allow a certain amount of geothermal fluid to be taken from the field on a monthly basis, and we’re careful to stay within that consent. Any future large-scale expansion would require our consent to be reviewed or an additional consent obtained,” he says.

Shaw joined Top Energy only last December. He is an electrical engineer who began his career with East Midlands Electricity, a regional electricity company serving 2.2 million consumers from a base in Nottingham, United Kingdom. He went on to have seven years as a partner in the UMS Group, a global utility management consulting group with operations in the UK, the United States and Australasia. He was the general manager of operations with Waikato lines company WEL Networks for the five years before he joined Top Energy.

Top Energy financed the latest expansion from its own resources. The new plant added $50 million to the value of the company’s assets and is expected to take about 10 years to pay for itself.

Ngawha is of strategic importance because without its renewable geothermal capacity the Far North would be far more dependent on power generated south of Auckland, and prone to being hogged in times of shortage by the Queen City. With no rivers of any significance and no mineral resources to compare to the likes of the Waikato and Southland coalfields, Ngawha Geothermal is a vital element of regional supply.

And once the dust has settled from the recent surge in production, Ngawha looks set to take the Far North even closer to electricity self-sustainability.