The new binary plant, designed to recycle geothermal heat through a secondary generating system, will make more efficient use of the existing geothermal energy resource and provide an additional 10%, or 14.4MW, of additional generating capacity to the national grid.

Contact Energy has contracted international energy technology provider ORMAT to design and construct the binary plant and Contact will fund the project from corporate funding facilities and fully-hedged US dollar payments.

Construction is due to start early next year and the plant is expected to be operational by June 2005. The Wairakei binary plant will be the eighth geothermal plant built by ORMAT in New Zealand.

Contact chief executive Steve Barrett said the binary upgrade would help close the looming energy supply gas facing this country later this decade.

The decision also reflected Contact's on-going commitment to improving the efficiency of its existing operations. "The binary plant will increase the efficiency of the Wairakei geothermal plant by nearly ten per cent and generate an additional 120 gigawatt hours per year, enough to run about 15,000 homes," said Barrett.

The binary plant has all required resource consents for operation and will not affect the supply of separated geothermal water from Wairakei used by existing ventures.

Contact Energy is New Zealand's largest generator of geothermal energy.