The Clutha Pumped Hydro consortium was accepted into the fast-track process last week and had started preparing its substantive application.
The consortium wants to construct and operate a large-scale pumped hydro energy scheme.
It would involve pumping water from the Clutha River via a tunnel to an enlarged Lake Onslow. The water would then be released down the tunnel to generate electricity when required.
The project would have a power station capable of generating up to 1000MW.
It has been on the books for more than 20 years and a $30million study was carried out on the project when the Labour-led government was in power from 2017 to 2023. But the National-led government canned the project in December 2023.
In documents used to get the project accepted into the fast-track scheme, the consortium outlined the benefits of the project.
It would lead to an improvement in the electricity security of supply, especially during dry hydro periods and intermittent solar and wind generation.
The Onslow project would lead to a reduction in greenhouse gas emissions following the retirement of Huntly power station, the biggest carbon dioxide greenhouse gas emitter in the country. Huntly is expected to be retired in 2035, the same year the Onslow project would be up and operating.
The construction of Lake Onslow would see a reduction in risks for new intermittent generation projects as the improvement in hedge and firming contracts would reduce the costs of entry.
Electricity prices would drop and be less volatile. Residential, commercial and industrial consumers of electricity would all benefit, in contrast to current projections on the ASX futures market for electricity which project further increases.
The battery project had worked examples into the Ministry of Business, Innovation and Employment business case under the Labour government. It had consumer bill savings by 2050 of the order of $230million–$483m per year for the South Island and $440m per year for the North Island. The consortium believed the savings now, two years later, would be considerably more.
The worsening gas shortage had pushed up electricity prices considerably as had increases in the ASX futures market for electricity. If LNG was imported to moderate onshore gas shortfalls, it would understate the benefits of the Onslow project. The consortium believed the savings by the report two years ago would now be multiplied by the factor of two.
Huntly power station is expected to be retired in 2035, the same year it is hoped the Onslow project is up and operating. The Labour study believed the project could cost $16b but the consortium believed it would cost between $8b and $10.5b.
The reduced risk and improved economics of new generation will unleash further investment in electricity generation.
A solution was needed to insure New Zealand against a deep black-out in a dry sequence.
‘‘One dry hydro inflow sequence event which left the New Zealand economy 4000GWh short of electricity could cost the country many billions in GDP, even assuming substitute economic activity.
‘‘The 1992 and 2001 dry sequences provide indelible evidence of such costs.
‘‘Further, the reputational damage and detrimental effect on New Zealand as a destination for foreign direct investment would be significant.’’
