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The estimated $1.6billion hospital rebuild will be the biggest building development in Dunedin.
Pete Hodgson, chairman of the committee co-ordinating the rebuild, last night narrowed the area for the potential site of the new hospital to flat land, north of the Octagon and south of the existing hospital.
Property owners and shop managers of businesses in the four blocks south of the hospital between Cumberland and Great King, Cumberland and Castle Sts said last night they had not been approached by anyone regarding the use of their land for the new hospital.
The committee has now recommended a site to Health Minister David Clark, who has submitted it to Cabinet for consideration and approval.
The site will be within Dr Clark's Dunedin North electorate.
Mr Hodgson has previously said the new hospital would be the biggest building in Dunedin's central business area, and that it might be spread over multiple sites rather than one large site.
''Work on the site has concluded.
''This means the local advisory group can get on and deal with other issues,'' Mr Hodgson said yesterday.
The group was set up three months ago by Mr Hodgson to assist in site selection and infrastructure planning.
With its site selection work done, it yesterday turned its attention to how the new hospital would be heated, Mr Hodgson said.
''Dunedin has New Zealand's only district energy scheme, which heats the current hospital, but it is old and it is run predominantly on coal.
''The opportunity exists to switch to renewables, perhaps wood chips, and it is almost certain that the new hospital will therefore be heated with renewable energy.''
The hospital might also become a ''cornerstone consumer'' in a larger district energy scheme involving the University of Otago and other users, Mr Hodgson said.
''That depends on feasibility work currently under way with the Dunedin City Council, and with Pioneer Energy who are possible providers.
''In the final analysis, the way forward will depend on costs and prices, but we can already be pretty sure that the new hospital will not be using fossil fuels as a heating source.''