What Companies Are Using Geothermal Energy In New Zealand?

What companies are using geothermal energy in New Zealand?

Geothermal energy is heat derived from the earth. It is generated and stored in the earth’s core, and can be extracted by drilling water or steam wells in areas with adequate underground temperatures. In New Zealand, geothermal energy is an important renewable resource that provides around 17% of the country’s electricity generation.

There are several benefits to using geothermal energy. It is a clean, sustainable energy source that produces very low emissions compared to fossil fuels. Geothermal plants have high availability, as the earth’s heat is constantly being replenished. The energy source is reliable, not being dependent on weather conditions like wind or solar power. Geothermal regions often become tourist attractions as well, providing economic opportunities. However, there are also challenges. Drilling and operating geothermal wells can be expensive upfront. There are concerns about potential small earthquakes induced by water injection at some sites. Usage must be carefully managed to avoid depleting underground reservoirs.

The major geothermal resource regions in New Zealand are located in the central North Island volcanic zone that extends from White Island through the Taupo Volcanic Zone. Significant geothermal systems are found in the Taupo, Rotorua, Kawerau and Wairakei areas.


Geothermal energy has a long history of use in New Zealand. Māori were the first to use geothermal resources for cooking, bathing and therapeutic purposes. The earliest recorded use of geothermal energy in New Zealand was by Māori more than 700 years ago in the central North Island. European settlers started using geothermal energy in the 1860s for bathing and laundry.

The first commercial use of geothermal energy in New Zealand was in 1901, when the Crown Hotel at Whakarewarewa installed boilers heated by geothermal steam to provide hot water and heating. In the 1920s, a 9 kW power station was built at Wairakei, the first geothermal power station in New Zealand. Major developments in geothermal power generation started in the 1950s, with the commissioning of the 192 MW Wairakei power station in 1958, still the largest geothermal power plant in New Zealand.

Current Use

Geothermal energy plays an important role in New Zealand’s electricity generation. According to the Ministry of Business, Innovation and Employment (MBIE), geothermal energy accounts for approximately 18% of New Zealand’s total electricity generation as of 2022. The total installed geothermal generation capacity in New Zealand was approximately 1,030 MW as of June 2022.[1]

The use of geothermal energy for electricity production has grown steadily in recent decades. Statistics New Zealand data shows that geothermal generation has increased from around 130 MW in 1990 to over 1000 MW in 2022, representing an average annual growth rate of around 5%. The growth in geothermal electricity production has been supported by substantial investments in new geothermal power plants, especially in the Taupo Volcanic Zone where most of New Zealand’s high temperature resources are located.[2]

With its abundant geothermal resources, New Zealand is expected to continue expanding its installed geothermal capacity to meet rising electricity demand and achieve its renewable energy targets. However, growth may slow down in the future as the best geothermal resources are developed.

Major Geothermal Regions

New Zealand has several major geothermal regions across both the North and South Islands. The most significant is the Taupo Volcanic Zone, located in the central North Island. This area contains Lake Taupo, New Zealand’s largest lake which was created by a massive volcanic eruption approximately 26,500 years ago. The Taupo Volcanic Zone stretches from White Island in the Bay of Plenty to Ruapehu in the south, covering an area of around 6,000 km2. It produces about 10% of New Zealand’s electricity and contains famous geothermal attractions like the Wai-O-Tapu Thermal Wonderland.

The Ngawha geothermal region in Northland, containing the Kaikohe and Ngawha springs, is the second largest in New Zealand. Hot springs have been used for bathing here for centuries, especially by Māori for cooking and other purposes. Today, the springs provide heat for agriculture, aquaculture, accommodation, and other facilities in the area. Its potential for electricity generation is also being explored.

Other significant geothermal areas in New Zealand include the Rotorua region, Hanmer Springs on the South Island, and Taupo Spa in the central North Island. Each region offers its own unique geothermal characteristics and landscapes.

Key Companies

New Zealand has a number of key companies utilizing geothermal energy resources across the country. Some of the top companies include:

Mercury NZ Ltd operates the largest geothermal power station at Wairakei, which has a net capacity of 481 MW. Wairakei was New Zealand’s first geothermal power station and has been operating since 1958. Mercury also operates geothermal power stations at Rotokawa and Kawerau with a combined capacity of 243 MW (NZGA Member Companies).

Contact Energy Ltd operates the Te Mihi power station located south of Taupo, which is the largest single-shaft geothermal power plant in New Zealand with a capacity of 166 MW. Contact Energy also operates other geothermal plants like Te Huka (28 MW) and Ohaaki (112 MW) (Profiling the top five largest geothermal power stations in New Zealand).

Ngāwhā Generation Ltd operates the Ngawha geothermal power station near Kaikohe, Northland which has a capacity of 25 MW. The Ngawha plant provides electricity as well as heating hot water which is distributed to local buildings and homes (Geothermal in New Zealand |Systems, Electricity and Uses).

Direct Use Applications

Geothermal energy in New Zealand provides a reliable and cost-effective source of direct heating for various applications, with substantial potential for further growth. According to the New Zealand Ministry of Business, Innovation and Employment, the most notable direct uses include:

Greenhouses – Geothermal heat allows year-round plant growth in greenhouses, supporting the horticulture industry. Major greenhouse operations using geothermal heating are located in Taupo, Rotorua and Ngawha.

Aquaculture – The consistent water temperatures provided by geothermal resources enable farming of species like trout and salmon. Aquaculture ventures leverage geothermal heating in the Central North Island and at Ngawha.

Industrial heating – Geothermal steam is used directly for drying wood products, washing wool, and milk processing across regions like Kawerau and Wairakei. Other industrial facilities use geothermal for sterilization and washing.

Additional promising direct use categories pointed out by the International Geothermal Association include bathing and swimming, greenhouse soil sterilization, gold ore roasting and cooling of geothermal turbines, showing the wide potential of geothermal applications in New Zealand.

Future Outlook

The future growth potential for geothermal energy in New Zealand is significant. According to GNS Science, geothermal power generation could triple over the next 30 years to meet increased electricity demands.[1] There are several new developments in the pipeline, including Mercury Energy’s plans to expand the Kawerau Geothermal Power Station and Contact Energy’s Te Mihi power station reaching full capacity in 2014.[2]

Enhanced or engineered geothermal systems also offer potential in New Zealand. These technologies enable greater energy extraction by injecting fluid into hot dry rock reservoirs to create a geothermal system. A research project led by GNS Science demonstrated proof of concept at a site in the Taupo Volcanic Zone.[3] However, enhanced geothermal systems are not yet commercially viable in New Zealand. Overcoming technical challenges and reducing costs will be necessary for large-scale deployment.

Overall, geothermal resources will play a key role in New Zealand’s renewable energy future. Both proven conventional systems and emerging technologies have room for substantial growth.

[1] https://www.gns.cri.nz/research-projects/new-zealands-geothermal-future/
[2] https://www.eeca.govt.nz/insights/energys-role-in-climate-change/renewable-energy/geothermal/
[3] https://www.gns.cri.nz/research-projects/geothermal-the-next-generation/


While geothermal energy has many benefits, it also comes with some challenges that need to be considered. Some of the main challenges with geothermal energy include:

Economics vs Alternatives: Geothermal power plants are expensive to build, with high upfront costs for resource exploration, drilling and plant construction. The levelized cost of electricity from geothermal plants can be higher than alternatives like natural gas, solar or wind power in some locations (RFF).

Drilling Risks and Costs: There are inherent risks with drilling deep wells for geothermal resources, including not finding a viable resource orproduction levels declining over time. Drilling accounts for over half the capital costs of a geothermal plant, which can make projects prohibitive if reservoirs are difficult to locate or access (TWI).

Environmental Impacts: Geothermal sites can release harmful emissions like hydrogen sulfide, carbon dioxide and silica. The fluids extracted can contain heavy metals that must be disposed of properly. There are also risks of subsidence and small induced earthquakes from reservoir pressure changes and reinjection wells (Lafayette College).

Government Policy

The New Zealand government has set ambitious goals for renewable energy, targeting 90% of electricity generation from renewable sources by 2025 and 100% by 2035 ([1]). Geothermal energy is expected to play a major role in achieving these targets.

There are several incentives and policies in place to support geothermal development in New Zealand. The government provides research and development funding through institutions like GNS Science to help lower the risks of exploration and improve technologies ([2]). Tax incentives are also offered, including accelerated depreciation rates on geothermal wells.

The Emissions Trading Scheme puts a price on greenhouse gas emissions, which favors renewable sources like geothermal over fossil fuels. There are also streamlined permitting processes in place to facilitate geothermal projects.


In conclusion, geothermal energy continues to play a major role in New Zealand’s energy mix. The country is blessed with substantial geothermal resources, primarily located in the central North Island. Major electricity generators like Contact Energy and Mercury utilize these resources to provide renewable, affordable power to homes and businesses nationwide.

Geothermal power meets approximately 17% of New Zealand’s electricity demand. Its unique advantages as a stable, renewable baseload source position it as a key part of the country’s energy security and transition away from fossil fuels. Companies also use geothermal’s direct heat in applications like agriculture, aquaculture, and tourism.

While geothermal faces challenges around resource management, New Zealand’s vast reserves mean it will likely continue growing as a clean energy source for the country. Overall, geothermal energy has provided and will continue providing major economic, environmental, and social benefits as part of New Zealand’s diversified energy portfolio.

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