MRP to go it alone overseas
Mighty River Power says years of investing in overseas geothermal projects have given it the confidence to go it alone internationally at a time when Kiwi development opportunities are drying up.
The state-owned energy company yesterday announced it had reached a deal with GeoGlobal Energy (GGE) to withdraw from the GGE Fund after five years.
MRP is taking two Chilean development projects and a minority stake in US firm EnergySource with it, currently held by the GGE fund. In exchange GGE will take control of the fund’s interest in Germany, and other non-EnergySource related assets in the US.
MRP has been a significant investor in the GGE Fund for over five years, with the bulk of the US$250 million (NZ$294m) committed to the venture already invested. MRP will also pay GGE US$24.8m to exit the fund.
‘‘The fund was a way to learn about the international market, and we learned about what works and doesn’t work, and it is timelyfor us to move on,’’ said MRP chief executive Doug Heffernan.
The timing of the announcement comes as MRP is being prepared to list on the New Zealand stock exchange, and falling wholesales electricity prices have watered down enthusiasm for geothermal development in New Zealand.
Heffernan said the plan was to apply MRP’s existing geothermal expertise to the Chilean business, which consisted of two sites and an office in Santiago.
Meanwhile, EnergySource would continue with its 49.9 megawatt John L Featherstone geother- mal power station in Southern California, and push on with the similar-sized Hudson Ranch Power II project.
MRP said it will provide further details on the projects when it releases its interim results next week.
The financials will be closely scrutinised, with MRP expected to be the first of the state-owned energy firms partially floated.
The timing of the IPOs has drawn criticism from various sectors recently because of the flat electricity demand and falling wholesale prices.
The Government has given no concrete detail on when Genesis Energy, Meridian Energy and Solid Energy will come to market.