One of the Government’s most ambitious ideas to potentially build a massive pumped hydro scheme at Lake Onslow has survived the prime minister’s policy bonfire.

However, completion of the first round of investigation into the “NZ Battery Project” suggests it’s now expected to cost $15.7 billion – $2.2b more than previously estimated.

However, operating costs are expected to be lower.

Energy and Resources Minister Megan Woods said the scheme is also likely to take between seven and nine years to build.

She told Parliament’s Transport and Infrastructure Committee the Government had spent about $24 million on the first phase of the project and would now progress to the next stage. This involved looking at the viability of a pumped hydro scheme in Otago, but also exploring the use of other technologies and scope a possible smaller pumped hydro scheme in the central North Island, subject to agreement with iwi.

“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,” Woods said.

She said biomass, flexible geothermal energy, and hydrogen had been identified as possible alternatives to pumped hydro, as they have the most potential collectively to store enough energy to help solve the problem of dry years limiting hydro-electricity supply.

The NZ Battery Project was established in late 2020 to find innovative solutions to the problem, which leads to more fossil fuels being burned to cover the electricity shortfall, increasing power bills.

“Now some more detailed work has been done we have a much clearer picture of the projected costs which differ significantly from the 2006 high-level costings.”

A detailed business case is expected to be developed by the end of next year. A final investment decision would take a further two years to make.