A Southland business is embracing innovative new technology in a project it says is "really important" for the region.

And it is warning other Southland businesses to do the same or die.

Slinkskins Ltd has just switched to a new woodchip boiler, the latest of several updates designed to make its factory more efficient.

The tanning company, based in Thornbury, prepares skins for international fashion houses.

Managing director Jonny Hazlett said the boiler would cut energy costs at the factory by several thousand dollars a year.

The project looks at viability of wood chips as an industrial fuel source.

Venture Southland and the Energy Efficiency and Conservation Authority (EECA) have partnered-up to establish Wood Energy South – the nation’s first regional renewable heat hub.

EECA is investing $1.5million into Wood Energy South, which will build capacity and create awareness about the viability of waste wood as a renewable industrial fuel source. Venture Southland will establish a cluster of wood energy use in commercial and industrial applications in Southland over the next three years.