Building a pumped hydro scheme at Lake Onslow in central Otago to tackle the dry year problem where hydro-electricity lakes run low, would take seven to nine years to build, and come with an estimated price tag of $15.7 billion, the Government says.
The Government says it will progress to the next stage of the NZ Battery Project, which is looking into the viability of pumped hydro as well as an alternative, multi-technology approach to build "a resilient, affordable, secure and decarbonised energy system," Minister of Energy and Resources Megan Woods says.
Woods says the Government will continue looking at alternatives including a combination of comparator technologies and scoping a possible smaller pumped hydro scheme in the central North Island, subject to agreement with iwi. Newsroom reports the North Island site is at Upper Moawhango, near the Waiouru Military Camp.
Woods says biomass, flexible geothermal energy, and hydrogen have been identified as the possible alternatives to pumped hydro, because they have the most potential collectively to store enough energy to help solve the dry year problem.
“Until we address the dry year problem, we will continue to rely on burning expensive and polluting fossil fuels to produce our electricity. That’s bad for the climate and our power bills,” says Woods.
“Pumped hydro is an ingenious way of storing energy in a big reservoir, which is released into a lower reservoir when more power is needed, like a giant battery. A dry year solution would be a huge step towards our mission to move towards more renewable energy generation and power more of New Zealand in New Zealand."
There's much more about the proposed Lake Onslow pumped hydro storage project in this episode of our Of Interest podcast featuring Earl Bardsley, who first proposed the idea in 2005. Previously it has been estimated the project would cost at least $4 billion.
"Phase 1 investigations show a pumped hydro scheme at Lake Onslow would take approximately seven to nine years to build, with an estimated building cost of $15.7 billion. In comparison, initial estimates for the capital element of the portfolio option are about $13.5 billion, but with significantly higher ongoing operating costs," Woods says.
“We always knew that any dry year battery storage solution will require significant investment, that’s why it’s important we thoroughly test these scenarios and get it right."
“Now some more detailed work has been done we have a much clearer picture of the projected costs which have differ significantly from the 2006 high level costings. The next phase will be to dig even further before we look at spending such a huge amount of money, but one thing we do know is that doing nothing to plan for climate change is not an option," Woods says.
She says there's still a long way to go with a lot more work required to understand the full environmental, cultural, social and commercial impacts, as well as the engineering requirements.
"A detailed business case is expected to be developed by the end of 2024, followed by a final investment decision, which is expected to take a further two years.
The NZ Battery Project was established in late 2020 to find innovative solutions to the dry year problem, when hydro-electricity lakes run low, leading to the burning of more fossil fuels to cover the electricity shortfall, and often higher power bills, the Government says.
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