Lake Onslow scheme to cost $15.7 billion


The Government announced the estimated costs of the Lake Onslow pumped hydro scheme as well as a multi-technology alternative option on Thursday, Marc Daalder reports

A pumped hydroelectric power scheme at Lake Onslow in Otago would cost four times as much to build as previously expected.

Energy and Resources Minister Megan Woods announced the $15.7 billion price tag – up from initial estimates of $4 billion – on Thursday, as part of the next phase of the NZ Battery project. The project is seeking a solution to the dry year problem, in which low precipitation across a year means our hydro stations can’t generate enough electricity over winter.

“Until we address the dry year problem, we will continue to rely on burning expensive and polluting fossil fuels to produce our electricity. That’s bad for the climate and our power bills,” Woods said.

* Solving the critical flaw in our power grid
* Govt considering North Island pumped hydro scheme

Pumped hydro involves two basins, with water pumped from a lower one into an upper lake when power is abundant and then filtered back down to generate power in dry years. The schemes aren’t dependent on precipitation.

Woods said the Government was proceeding with a detailed business case for a massive pumped hydro scheme at Lake Onslow as well as an alternative option. The alternative would involve a portfolio of technologies, including burning biomass, next-generation geothermal energy and green hydrogen, as well as a smaller pumped hydro scheme in the central North Island.

Newsroom first reported on Thursday morning that the Government is considering a pumped hydro scheme on the upper Moawhango River. Woods didn’t specify in her statement whether this was the scheme she wants to scope out, but said the North Island option was “subject to agreement with iwi”.

The alternative, portfolio option would cost about $13.5 billion, Woods said, but it would have much higher operating costs than Lake Onslow.

“We always knew that any dry year battery storage solution will require significant investment, that’s why it’s important we thoroughly test these scenarios and get it right,” she said.

“Now some more detailed work has been done we have a much clearer picture of the projected costs which differ significantly from the 2006 high level costings. The next phase will be to dig even further before we look at spending such a huge amount of money, but one thing we do know is that doing nothing to plan for climate change is not an option.”