‘Pumped hydro’ study for 100% renewable electricity goal

Options to green the grid such as ‘pumped hydro’ schemes to allow widespread electrification of transport and industry are being investigated by the government.

It’s allocating $30 million towards a detailed development of a business case for a solution to address New Zealand’s dry year storage problem, Energy & Resources minister Megan Woods says.

This analysis will mostly focus on a pumped hydro storage project at Lake Onslow in Central Otago, but will also include the assessment of smaller potential pumped storage options in the North Island, as well as other alternative technologies, she says.

Pumped hydro involves moving water to an upper reservoir when electricity demand is low and releasing it back down to a hydro power station when demand is high, especially in dry hydro years.

“If a business case stacks up pumped hydro would be a game changer for securing sustainable, cheaper, low-emissions electricity for the long term,” Woods says.

“This would be transformative for our energy system, and we would no longer be reliant on fossil fuels for meeting our electricity demand.”

Pumped hydro schemes are a key recommendation by the Interim Climate Change Committee.

“It works like a battery because the stored energy in the water is released when it is used in the hydroelectric dam. This opens up huge possibilities for cheaper electricity and increased supply,” Woods adds.

“The project could create thousands of jobs, make wholesale electricity cheaper in the long run, and it would decarbonise the grid as we wouldn’t have to rely on coal and gas to make electricity.

“Pumped hydro would also open up opportunities to electrify sectors across the economy, such as transport and industrial heat, as a lower electricity price would make it more competitive than fossil fuels.”

Woods says it would make New Zealand one of only a handful of countries with a fully renewable electricity system, and solve its dry year storage problem.

The Lake Onslow project would be the single biggest infrastructure project since the 1980s, she says.

The business case would create hundreds of jobs, while construction could employ thousands more, Woods adds.

The pumped hydro project would take about four to five years to build, plus two years to fill the reservoir, and will be a multi-billion dollar project for which separate funding would be required, she says.

Funding for the project comes from the $3 billion tagged contingency set aside in Budget 2020 for infrastructure.

Woods also announced a further $70 million investment to increase electrification of industrial and process heat in the lower South Island, with transmission line upgrades, and direct support to industrial users to convert coal boilers to electricity.

The potential closure of Tiwai Point’s aluminium smelter provides a near-term opportunity to use some of that electricity for switching out coal boilers to low emission options.

A national direction under the Resource Management Act on renewable electricity to accelerate generation will also be established, with $2 million of funding provided.

“Any solutions for New Zealand’s dry year risk that can provide deep energy storage at affordable prices are welcomed,” Genesis chief executive Marc England says.

“This would help New Zealand reach its wider emissions targets and reduce the pressure on Huntly Power Station to provide backup support to all market participants.”