Powerco chief executive Steve Boulton is reported as saying his company has already had unofficial talks with the owners of several small fields regarding Powerco buying gas from their fields for use in the 1MW mini power stations, each of which could generate enough electricity to supply up to 1000 households.

However, Boulton says a hitch is that Powerco cannot yet sell any power it generates from such schemes.

The government recently allowed electricity lines companies to participate in "green" power generation projects, such as wind farms and gas-fired mini power stations, but has not yet allowed them to retail that power.

Boulton said that did not make sense and that Powerco should be allowed to retail what it generated, "otherwise the investment risk would be too high".

Associate Energy Minister and New Plymouth MP Harry Duynhoven said he is keen to see the concept proceed and that there are ways around the Powerco concerns. The field partners could own the generation, or a joint venture involving all parties could do that.

He described possible workable scenarios as "win-win" situations, where field owners would still be able to produce gas from wells, that gas would be used for power generation, and the resultant electricity used locally, not having to be transported on the national grid.