Government approves Lake Onslow pumped hydro scheme for ‘fast-tracking’

Tuesday, 24 March 2026

The Government has agreed to refer the Lake Onslow pumped hydro scheme, which was repeatedly ridiculed by the National Party when it was considered by the former government, for possible fast-tracking.

The Clutha Pumped Hydro Consortium, a private-sector firm whose backers include former Meridian Energy chief executive and Transpower chairperson Keith Turner, Reserve Bank chairperson Rodger Finlay and former Labour energy minister David Parker, is now leading the effort to build the power scheme.

Infrastructure Minister Chris Bishop confirmed he had agreed to the company’s request for the project to be referred for consideration under the fast-track regime, which could enable it to get speedy consents.

Read more:

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“Fast-track is available for anyone and everyone who wants to get a major infrastructure project with significant regional or national benefits over the line, and this meets the criteria, so off it goes,” Bishop said.

“Whether or not it ultimately gets approved is for the future.”

The Clutha Pumped Hydro Consortium has not yet revealed how it might raise the billions of dollars that would be needed to build Lake Onslow.

But Turner told The Post it was getting “very strong interest from some pretty large global entities” that could be funders.

“It is the sort of project that the big global companies really love. There’s a few of them around that have built hydro before and this fits into their DNA, so to speak. The key challenge is getting consent.”

Turner said he was “pretty pleased” the Government had agreed to accept it into the fast-track process.

The consortium’s contention has been that the power scheme would be the best long-term solution for the country’s “dry-year” problem, creating what would in effect be an enormous battery in central Otago capable of storing 5 terawatt-hours of power, with an attached power station.

That power storage would be equivalent to roughly six weeks of national electricity demand.

Meridian Energy has recently been mooting a potentially competing solution that would involve significantly raising the water level of the country’s deepest existing hydro lake, Lake Pukaki.

Energy Minister Simon Watts, who made clear last month the Government had no problem with the Lake Onslow project potentially proceeding as a private sector initiative, said he had been consulted on the fast-track referral.

“I support pretty much any project that’s going to increase generation and abundance of energy in this country,” he said on Tuesday. “At the end of the day, it’s going to come down to the ability for them to make sure that the numbers stack up and they can do the project, but fast-track is not going to stand in the way.”

In 2024, Prime Minister Christopher Luxon blamed the former government’s decision to investigate building a pumped hydro scheme at Lake Onslow for some of the electricity sector’s woes.

Lake Onslow had “a chilling effect” on investment, he said during that winter’s energy crunch.

“When there was talk of Lake Onslow sitting there at $16 billion in 2038, that stops people from wanting to invest in actual proper infrastructure and renewables as a consequence.”

But Watts said last month the Government’s issue had been the “Labour Party version of Onslow, which was the government writing a cheque to, in effect, fund it”.

Labour energy spokesperson Megan Woods clarified the former government had not made decisions on the scheme’s potential funding when it asked officials from the Ministry of Business, Innovation and Employment to investigate it as one option for addressing the country’s dry-year risk as part of its NZ Battery Project investigation.

Turner said the consortium’s next task would be to complete the resource consent application, which it hoped to file this year.

“There is already a large body of material resulting from earlier work which will help with preparation of the resource consent application,” he said.

“We are fully committed to consulting further with landowners, Ngāi Tahu, the Department of Conservation, the Otago Regional Council, the Central Otago District Council and others,” he said.

Lake Onslow was a “100-year plus zero emissions solution” to the country’s exposure to dry years and would also be able to store power in the short-term to meet peaks in power demand when wind and solar outputs were low, he said.

“These functions effectively insure against extreme high electricity spot market prices.”

Woods said the Government’s statements on Lake Onslow had been contradictory.

“When we were in government they said it was going to have a chilling effect. Now they are in government they are saying ‘we’ll see how it goes’.

“What remains the case is they have done nothing about energy storage. All they have come up with is a ‘white elephant’ solution of LNG,” she said.