The government-owned coal company is looking at lodging resource consent applications for the 100-150MW station, which is likely to be built in the Southland or Buller regions on the South Island's west coast.

According to media reports, chief executive Don Elder said the company's application would depend on its view of the energy market, the costs of the carbon charges under the Kyoto protocol and other issues such as electricity transmission. Resource consent applications could be lodged by the end of 2003, with construction taking 18 months from mid-2005.

Southland, with its dairy processing, smelting, forestry processing and an aluminium smelter expansion, was looking more attractive than the Buller region, though Buller had the transmission capacity to export the electricity to other regions. Coal could generate electricity competitively, for less than 5c a kWh in Southland and Buller, but the cost would be more than 6c a kWh with the carbon charge.

Elder said Solid Energy was talking to local generators and international companies to become partners in any power station development. He said New Zealand had huge reserves of low-grade coal, equivalent to 50 times the size of the Maui gas field, but that 90% was in Southland, a long way from centres of demand.

Solid Energy mines coal in Southland, the West Coast and at Huntly in the North Island.