New geothermal plant helps geothermal energy reach 26% of New Zealand's power mix

What is the background?

Geothermal energy draws on heat naturally stored underground, providing steady, weather-independent electricity generation unlike solar or wind. Geothermal energy New Zealand has grown into one of the country’s largest renewable sources, particularly across the Taupō Volcanic Zone.

What happened?

TOPP2, a new 49 MW geothermal power station, opened in early 2026 as New Zealand’s newest geothermal generation asset. In January and February 2026, geothermal energy made up 25.6% and 26.3% of total national electricity generation respectively — a significant and growing share of the country’s power mix.

The government released a new national geothermal strategy in 2026, setting a goal to double geothermal energy use across New Zealand, covering both electricity generation and direct heat use, by 2040.

How did it happen?

Beyond electricity generation, geothermal heat — described in the sector as “geoheat” — already serves a wider range of direct applications in New Zealand, including horticulture, bathing, aquaculture, and heating for water and buildings. Rotorua Hospital and several council buildings currently use geothermal heating systems, drawing directly on the geothermal resource beneath the region rather than converting it to electricity first.

Doubling geothermal use by 2040 requires growth in both categories at once: more generation capacity like TOPP2, and more direct-heat applications following the model already established at sites like Rotorua Hospital.

Why does it matter?

Geothermal’s roughly 26% share of national generation in early 2026 makes it one of New Zealand’s largest renewable contributors, alongside hydro, and its round-the-clock output complements the more variable generation from wind and solar. A national strategy with an explicit 2040 doubling target gives the sector a concrete long-term goal to plan investment around, rather than growing opportunistically project by project.

Direct heat applications like hospital and public building heating capture value from the geothermal resource without the conversion losses involved in generating electricity first and then using it for heating — a more efficient use of the same underlying heat source where it’s geographically available.

What were the key results?

• TOPP2 (49 MW) opened in early 2026 as New Zealand’s newest geothermal power station
• Geothermal supplied 25.6% of national generation in January 2026 and 26.3% in February 2026
• National geothermal strategy targets doubling energy use, for power and heat, by 2040
• Rotorua Hospital and several council buildings already use geothermal heating
• Geoheat applications extend to horticulture, bathing, and aquaculture beyond electricity and building heat
• Strategy released by the Ministry of Business, Innovation & Employment
• Geothermal now ranks among New Zealand’s largest renewable electricity sources

What happens next?

Contact Energy’s 101MW Te Mihi Stage 2 geothermal plant near Taupō is set to commission in September 2027.