Govt awards $11.5m contract to investigate feasibility of Lake Onslow power scheme

Thursday, 14 October 2021

The Government is considering Lake Onslow for a $4 billion hydro storage scheme.

The Government has awarded an $11.5 million contract to a consortium to investigate the feasibility of a hydro storage scheme at Lake Onslow in Central Otago to generate power in dry years.

The contract was awarded to Te Rōpū Matatau, led by engineering consultancy Mott MacDonald New Zealand, with engineering consultancy firm GHD, and environmental planning and design consultancy Boffa Miskell.

The Government is looking at options to solve the country’s ‘dry year problem’ when hydro catchments are low and fossil fuels are burnt to generate electricity to cover the shortfall. The Lake Onslow scheme, estimated to cost $4 billion, would generate power when water is transferred between two reservoirs.

Energy Minister Megan Woods said the first part of the investigation would look at the design and environmental effects of the proposal as well as determine the geotechnical fieldwork programme.

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Energy Minister Megan Woods says the proposed Lake Onslow hydro scheme would be the biggest infrastructure project since the 1980s.

The second part would refine the design, informed by fieldwork investigations of key geotechnical aspects, including the regional geology, rock properties, fault lines and the availability of rock and earth fill at the location for potential dam construction.

The environmental planning work would look at consenting options and what further work may be needed to assess the environmental effects.

The fieldwork investigations were likely to involve drilling shallow and deep boreholes to better understand the underlying geology, the best route for a tunnel and the best location for a potential underground powerhouse.

“This work, along with the environmental and cultural investigations already underway, will give a better picture of the feasibility and costs of the Lake Onslow storage scheme,” Woods said.

The Government has committed to spend $30m to investigate whether it can expand the capacity of New Zealand’s hydro electricity.

If the business case supports creating a scheme, Woods has said it would lead to “the biggest infrastructure project since the 1980s”.

The pumped hydro scheme being considered at Lake Onslow works by pumping water from the bottom of a generator to the top during periods of low demand, which is then released through the generator during periods of high demand, generating electricity.

The scheme aims to help the electricity grid meet demand by having back-up clean energy.

It would, in effect, turn the South Island rock basin into a massive 5000 gigawatt rechargeable battery to power the country during periods of little rainfall or wind, ending its dependence on gas and coal generation.

It is estimated the project would take between four and five years to build and a further two years to fill and could be in operation by 2030.

Some energy analysts have said that uncertainty around the Lake Onslow proposal could dissuade electricity companies from investing in other generation that could be needed within the next few years to avoid power shortages in the North Island during periods of peak demand.

It is not known who might own and operate the Lake Onslow scheme and whether it would run on a commercial basis.