Jubilant Lake Onslow backers forecast it can be built by 2034 and slash power bills
Saturday, 28 March 2026
The Lake Onslow pumped hydro scheme could be fully constructed in 2034 — about three years earlier than officials had once forecast — providing a “pathway to 100% renewable electricity” and slashing power bills, its backers say.
Infrastructure Minister Chris Bishop confirmed on Tuesday that he had agreed to refer the project for possible fast-tracking, despite National Party ministers having previously ridiculed the proposal.
The Government’s acceptance letter said Bishop was satisfied the project would have significant benefits.
Clutha Pumped Hydro said in its application to be admitted into the fast-track process that the enlarged artificial lake and power station would serve as a giant battery back-up for the energy system.
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It would be capable of generating about 4 terawatt-hours of power over six months when other electricity was in tight demand, providing the “ultimate solution” to the country’s so-called dry-year problem when hydro inflows are low, it said.
It would cost about $2 trillion to create a similar-sized battery using the lithium-ion battery technology popularised by Tesla, it said.
The individuals behind the proposed multi-billion project include former Meridian Energy chief executive and Transpower chairperson Keith Turner, Reserve Bank chairperson Rodger Finlay and former Labour energy minister David Parker.
They said in their now-accepted referral application that electricity prices would fall and be less volatile with Lake Onslow in place.
The Ministry of Business, Innovation and Employment (MBIE) had estimated when it was evaluating the scheme as part of the “NZ Battery Project” that it could slash consumers’ power bills by between $670m and $923m a year by 2050, the application said.
Clutha Pumped Hydro suggested the savings could be double that, in part because of the reduction in gas supply since MBIE made its calculations.
Once built, Lake Onslow would remove the need to continue to import LNG, which the Government is currently proposing to facilitate as a nearer-term solution to the dry-year problem, it said.
Prime Minister Christopher Luxon and former Energy Minister Simeon Brown had said Lake Onslow had a “chilling effect” on investment in the energy sector while it was being evaluated by the former government.
Those concerns mirrored views previously expressed by Contact Energy chairperson Rob McDonald. Brown confirmed at the time that his views had been informed by the company.
But Clutha Pumped Hydro said in its application letter that Lake Onslow would facilitate “a significant uplift in renewable generation investment” by providing a more predictable market for intermittent generation.
“Under current electricity market structure and rules, there is limited incentive for current major generators to invest in projects that reduce wholesale prices. It is especially difficult for them to justify investments to reduce dry-year risks.”
Gary Holden, managing director of the country’s largest solar-power developer, Lodestone Energy, backed the assertion Lake Onslow would assist renewable energy developers.
In a letter of support for the fast-track referral included in the application, Holden said he “enthusiastically supported” Turner’s efforts to advance the scheme.
“Long duration storage is still the ‘Achilles heel’ of the market and requires urgent attention. In my view, a long-term pumped storage solution is of equal importance to importation of LNG, and should be pursued at pace,” he said.
Consultation documents released on the Government’s Fast-track website also show the Environment Ministry advocated in favour of the referral being granted, arguing Lake Onslow would have significant regional and national benefits “specifically by supporting climate change mitigation”.
Energy and Climate Change Minister Simon Watts was supportive, saying large-scale water storage and generation would support energy security and create downward pressure on wholesale electricity prices.
Lake Onslow would have “significant national benefits in terms of climate mitigation”, he also said.
Resources Minister Shane Jones agreed water storage could improve energy security and prices, but joined Finance Minister Nicola Willis in noting Clutha Pumped Hydro had not quantified its claimed economic benefits.
Enerlytica analyst John Kidd forecast in 2020 that Onslow would tip the electricity market on its head if it proceeded.
Clutha Pumped Hydro said it recognised the scheme “could itself exercise market power, especially in a dry year”, but made only passing comment on the implications that might have for the regulation of the sector.
“We expect the Electricity Authority … would need to update its rules and would do so before this project is completed,” it said.
The company acknowledged the expanded lake at the heart of the power scheme would have “significant” impacts on flora and fauna.
About 1300 hectares of wetlands containing some critically endangered plants would be lost and alternative habitats would be needed for several “at risk” or threatened species of lizards, it said.
Contact Energy said it owned land in the project area but was “open to a commercial arrangement to enable the project, provided its interests are appropriately protected”.