Mercury NZ Limited has taken a further step to the low carbon future of New Zealand with a wind farm development at Turitea.
On Wednesday, Mercury NZ Limited (ASX: MCY) announced that it has contracted with Vestas-New Zealand Wind Technology Limited to construct the first 33 of 60 consented wind turbines at Turitea near Palmerston North. The agreement has been fixed for a term of 25 years that will include the construction and maintenance of 119MW Turitea wind farm.
The project has the potential to generate 470GWh electricity per annum in New Zealand, representing the energy enough to power 210,000 cars. On-site construction is reportedly scheduled to commence around August 2019 with the commissioning expected to start from late 2020.
‘Turitea will be New Zealand’s third largest wind farm!’ As stated by the company the wind farm project at Turitea has been positioned as a prospective third largest wind farm of New Zealand and the first large-scale energy generation addition in the capacity of New Zealand since 2014.
Mercury’s Chief Executive, Fraser Whineray stated that with this contract Mercury has realised the ‘awesome foursome’ of renewables – hydro, solar, geothermal, and wind – that enhance the company’s contribution to the green energy future of New Zealand.
The report further read that overall capital cost of the project is estimated to $256 million while the operating cost is estimated to ~$13/MWh assuming CPI increase of 2% p.a. over the 25-year term of the contract. Moreover, Turitea complements Mercury’s existing baseload geothermal and flexible hydro assets that would also enable the utilisation of flexible Waikato Hydro Scheme to ‘firm’ intermittency of wind.
This contract underscores Mercury’s strategy to increase wind generation to its portfolio of renewable generation assets. For this purpose, the company has been working towards the wind farm development for the past 15 years including the construction of 53-turbine wind farm at Puketoi range to the east.
Mr Whineray stated that the development $ $256 million wind farm project would support the further investment opportunity in the development of wind energy which could be as much as $750 million worth.
Wind is considered as the premier generation development technology in New Zealand as the high resource quality and technological improvement have driven improved economics. Mercury, therefore, has planned to capture the growing renewable generation market of New Zealand by increasing its investment in the near-term. It would not only serve to the escalating demand of renewable energy but would also enable the shift to a low carbon economy over the medium-term.
On this news, MCY shares sky-rocketed by 15.259% to set a new 52-week high of $4.230 on 27 March 2019. The stock last traded at a price to earnings multiple of 26.010 x with a market capitalisation of $5 billion. Over the past 12 months, the stock has moved up by 20.33% including a surge of 4.56% recorded in the past three months.
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