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After years of delay and controversy, the Arnold River hydro-electric scheme near Greymouth has been shelved indefinitely because the economics "are not sufficiently attractive'', according to TrustPower.
The 46MW scheme would divert the Arnold River through a series of canals from the existing powerhouse near Kamaka, on the Arnold Valley Road, almost as far as Stillwater.
It would provide power for about 27,000 homes and was initially estimated to cost $185 million.
Trustpower said the scheme was designed to make the West Coast more self-sufficient in terms of energy supply.
But community relations manager Graeme Purches said yesterday the project became too costly after environmental objections and the fallout of the Christchurch earthquake.
"By the time we got out of the Environment Court the cost had risen to about $235 million,'' he said.
TrustPower first applied for consents in November 2006 but did not get a hearing date until the following year, only to be adjourned. Consents were finally granted in October 2008, and were immediately appealed by lobby groups.
Fish and Game West Coast objected to the project over fears that the altered river flow and water temperature would damage trout fisheries.
Forest and Bird, local environmentalists and kayakers also had concerns about changes to the river.
Objections were slowly whittled down as Trustpower compromised on details of the scheme. One key agreement was to incorporate an artificial whitewater kayak course into the design.
After 11 years of planning, TrustPower received consent from the Environment Court in November 2010.
But in February this year, the scheme was put on the backburner, along will all other major South Island projects.
"It doesn't mean we're not going to do it,'' Mr Purches said. "Right now it's just not financially viable.''
He hoped it would become viable again as Christchurch was rebuilt and energy demand rose.
In the meantime, TrustPower is awaiting a final investment decision on a much smaller, 2.6MW Arnold `residual flow' project in the coming months. The residual flow project would capture water that spills past the Arnold dam.
"Currently that flow is not captured and we don't get a lot of generation value out of it.''
The residual flow project was not a replacement for the main hydro scheme and would have no impact on the kayaking issue, Mr Purches said.
- Christine Linnell of the Greymouth Star