The first wind turbine - of the second-stage development of the 68MW wind farm on the Tararua Ranges, near Palmerston North, is due to be installed before the end of the year and TrustPower is actively investigating half a dozen or so more sites - here and in South Australia - for possible wind, hydro or geothermal schemes.

"There are huge advantages in being relatively small, flexible, and being a niche player rather than the mainstream," chief executive Keith Tempest recently told EnergyReview.Net.

He said one industry analyst had looked at shareholder returns compared to size, "and the returns to our shareholders were better than all the others, significantly better than the State trio of Meridian Energy, Genesis Power and Mighty River Power."

Genesis - with about 500,000 electricity customers and 1600MW of generation capacity - made similar net profits TrustPower which has just 500MW of generation and 250,000 customers. TrustPower made an after-tax operating surplus of $NZ47m for year ended March 2003, while Genesis earned $NZ21 million for the half-year ending December 2002.

TrustPower - a listed company since 1994 - was totally renewable energy focussed. It had 33 hydroelectric stations scattered around the country, from Tauranga down to the South Island, and that geographical spread acted as a safeguard against power crises caused by cold dry winters. These locations also ensured power was used close to where it was generated, thereby minimising transmission costs and losses.

Wellington-based investment company Infratil is now TrustPower's major shareholder, following AGL's withdrawal last April when it sold its 20.5% stake for $NZ151 million.

Tempest said he agreed with Infratil electricity specialist Bruce Harker who last month said he welcomed the New Zealand government's carbon credits and proposed emissions tax from 2007.

"It's all about creating a level playing field and we simply cannot wait another four years; we need to start now and phase in renewable energy schemes that otherwise would not be economic."

TrustPower estimated new coal-fired generation would be economic at just under 6c per kilowatt-hour, but with a mid-range emissions tax (of about $NZ12 per tonnes) that would rise to 7.2c to 7.5c per kWh. Wind power was commercially viable at wholesale electricity prices of 6.5-7.0 cents per kWh, and new hydro schemes at more than 6.5c.

Tempest said care was needed planning wind farms and they had to be well situated. "Tararua is one of the best places in the world for wind productivity and our 104 turbines will be able to generate a maximum of 68 Megawatts."

The carbon credit contribution from the government amounted to about 5% of total capital expenditure and that has "tipped the balance" for the Tararua expansion.

As well, TrustPower was investigating the economics of a 110MW hydro scheme in the Wairau Valley in Marlborough and a 65MW station near Dobson on the West Coast, but it would not commit to these schemes without carbon credits.

There was also a possible small geothermal project in the Bay of Plenty and the Myponga wind farm proposal, south of Adelaide - consent approval for which was expected by the end of October.