Power industry 'openly resistant' to Lake Onslow, minister suggests

Thursday, 10 June 2021

The Detail podcast investigates the case for pumped hydro storage at Lake Onslow, and asks if a focus on renewable energy is the best way to deal with climate change in NZ. (First published June 2020)

Energy Minister Megan Woods says progress is being made towards the possible development of the multibillion-dollar Lake Onslow pumped hydro scheme despite opposition from within the power industry.

Officials are assessing Lake Onslow alongside alternative renewable options to replace the country’s reliance on burning gas and coal to power the country in ‘dry years’ when hydro generation is low.

“I think it is fair to say there are many in the industry who are openly resistant to using a renewable source of ‘dry year’ storage and who will have questions,” Woods told a select committee on Thursday.

The Electricity Retailers’ Association, whose members include the major generators has been approached for comment.

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Enerlytica analyst John Kidd has previously forecast that if the Lake Onslow scheme did eventuate, it could tip the power industry “on its head”.

But Woods said burning coal for power was “unsustainable” if New Zealand was to have any chance of meeting its climate targets.

The existing lake at Onslow would be greatly enlarged under what appears to be the Government’s currently preferred ‘dry year’ storage option.

Supply problems that had plagued the gas industry this year showed gas was not “the silver bullet for ‘security of supply’ that many people have made it out to be”, she also said.

The Government was investigating pumped hydro “with a focus on Onslow and other renewable technologies”, she said.

Woods said good progress had been made looking into the feasibility of the Lake Onslow scheme, which included conducting Lidar (3D laser) imaging of the site.

“There has also been a lot of on the ground engagement both with landowners and also the local runaka,” she said.

A tender for “geo-technical support” to the Ministry of Business, Innovation and Employment (MBIE) was being issued on Thursday, she said.

Options being weighed up by MBIE through the NZ Battery Project also include smaller pumped hydro schemes in the North Island and storing ‘green hydrogen’ in form of hydrogen itself or ammonia, Woods indicated.

But officials have been asked to come up with solutions that would store about 5 terawatt-hours of power, which is equal to about 12 per cent of the country’s annual electricity demand.

Lake Onslow would be capable of providing storage on that scale.

Mercury Energy is understood to be considering proposing allowing the water level of Lake Taupo to vary more than normal in dry years and using it as a partial back-up solution.

Genesis Energy has raised the idea of building an alternative pumped hydro scheme in the North Island, on army land near Waiouru.