The Government’s proposed flagship Lake Onslow pumped-hydro energy storage project is “fatally flawed” according to the Sustainable Energy Forum (SEF). 

The latest edition of the forum’s newsletter EnergyWatch suggests that changes to the electricity market could instead ensure security of NZ’s power supply in dry years.

The forum’s convenor, Steve Goldthorpe writes: “The proposal to use pumped-hydro, which is a daily night-to-day load-shifting technology, for storage of energy to accommodate low rainfall conditions and to use it only one year in eight makes no economic sense.

“Furthermore, water evaporating or leaking away from an expanded Lake Onslow could result in loss of a third of the stored energy by the time it would be required.

“Filling the raised Lake Onslow could create an electricity shortage in New Zealand bigger than would occur in the “dry-year” situation.

“MBIE has a $30 million fund for a feasibility study and the design for pumped hydro using Lake Onslow. It is very clear that they will find out that it is a fundamentally flawed concept. 

“MBIE should change direction now before more public money is wasted.”

New Zealand would be far better off if the electricity market was modified to ascribe value to a Security of Supply Service (SSS) arrangement, which would require a back-up generator for use only in adverse conditions, such as a very low rainfall year. 

A radical change is needed to open a market for SSS, funded by a levy on electricity sales, like insurance. 

A key condition must be that SSS would only be used when strictly necessary and would not participate in the half-hourly competitive electricity market.

“If New Zealand designated Huntly power station as an SSS facility it would be much cheaper than the Lake Onslow scheme. 

“The existing Huntly units could be maintained, with a secure fuel stockpile and trained staff. 

“It would be fired-up every few months to test that it was ready to run as required to provide a reliable back-up generation facility for NZ. 

“Further emission reductions could be achieved by adjusting Huntly units to operate on wood-derived fuel”, Steve says.

These topics will be discussed further at an SEF seminar on June 23 in Wellington.