The government will progress to the next stage of the NZ Battery Project, despite a cost increase four times larger than the original price proposed in 2006. 

The scheme would see water stored in Lake Onslow used when a dry period prevents or restricts hydro generation. 

Typically this loss of generation capacity is made up through burning fossil fuels.

Lake Onslow would effectively become a battery of stored potential hydro energy, the preferred option for Energy Minister Megan Woods to the carbon-heavy alternative.   

“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,” Megan  said.

Central Otago District Council mayor Tim Cadogan said of the continued government interest in the Onslow scheme that “uncertainty remains around the Lake Onslow project”.

“My immediate thoughts go to the landowners who may or may not be directly impacted by the project and the potential further delay through to the end of 2026 to know the outcome.

“That degree of uncertainty must be difficult for them, as it will be to a lesser degree for the Teviot and wider Central Otago communities,” he said. 

Investigations show a pumped hydro scheme at Lake Onslow would take approximately seven to nine years to build, with an estimated cost of $15.7B.

“A lot more work is required to understand the full environmental, cultural, social and commercial impacts and the engineering requirements,” the energy minister said.

“We will continue to work with our key stakeholders, including mana whenua, landowners, and technology experts.”

Alternative energy options also being explored include biomass, flexible geothermal energy, and hydrogen.

A detailed business case is expected to be developed by the end of 2024, followed by a final investment decision, which should take a further two years.