NZ Battery Project

Cabinet has approved funding to investigate pumped hydro against other possible solutions to New Zealand’s dry year electricity problem.

Finding a solution to our dry year problem

The ‘dry year problem’ is that New Zealand’s existing hydro-power catchments sometimes don’t receive enough rainfall or snowmelt and the level of the storage lakes runs low. When this occurs some form of back-up is needed, and this is currently provided by fossil fuel generation.

As we transition away from fossil fuels and increasingly rely on hydro, wind and solar, the dry year problem may expand to become a dry, calm and cloudy problem.

The NZ Battery Project will provide comprehensive advice on the technical, environmental and commercial feasibility of pumped hydro and other potential energy storage projects.

The name 'NZ Battery' refers to the manner in which the intended solution may provide stored energy for the New Zealand electricity system, similar to the way a battery stores energy until it’s needed.

The NZ Battery Project will also help achieve the Government’s target of 100% renewable electricity generation by 2030 and support decarbonising the wider energy system.

The project's first phase will evaluate the viability of pumped hydro schemes of various sizes at Lake Onslow, as well as at other possible locations around the country. The project will also consider pumped hydro against alternative methods to determine the best possible option, or options, to resolve New Zealand’s dry year problem.

In its 2019 ‘Accelerated Electrification’ report, the Interim Climate Change Committee (ICCC) recommended further investigating pumped hydro as a possible solution to the dry year problem.

The ICCC, as well as others, have identified Lake Onslow as a possible site for a pumped hydro scheme. For this reason, the NZ Battery Project’s investigations into this option will be more detailed than the other possible solutions being explored in Phase 1.

Activities as part of Phase 1 of the NZ Battery Project include:

  • Analysis into the nature of New Zealand’s dry year problem – and how it could change in the future
  • Technical investigations into different technological options to address the dry year problem (such as pumped hydro) and their applicability in New Zealand
  • Investigations into the environmental impacts and other impacts of different options, with a focus on pumped hydro at Lake Onslow
  • Research into the electricity market impacts of long-term, large-scale storage
  • Exploration on consenting pathways, with a detailed focused on pumped hydro at Lake Onslow
  • Early engagement with iwi and other key stakeholders
  • Securing land access for environmental, cultural and geotechnical investigations for the Lake Onslow option.

The results of the Phase 1 feasibility study will inform a decision on whether to proceed to a next phase. This would involve detailed engineering design and preliminary works of a chosen solution, to provide firmer knowledge of costs and capabilities and inform a Cabinet decision whether to proceed to construction.

The final phase of the project would, if approved, be the construction of the selected option, or options.

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Technical Reference Group

A Technical Reference Group has been established to provide the NZ Battery Project team with independent expertise, sector knowledge and advice as it investigates all options under Phase 1.

Find out more about the Technical Reference Group

Pumped hydro storage

Pumped hydro options are being investigated as part of the NZ Battery Project. This includes pumped hydro at Lake Onslow and other smaller-scale pumped hydro schemes elsewhere in the country.

Pumped hydro schemes are used internationally as a way of storing a large amount of energy for a long period, which can be used to generate electricity during a dry year. As such, they are a renewable alternative to the flexibility provided by fossil fuel generation.

Pumped hydro can generate to provide additional energy from stored water in the upper reservoir when there is high electricity demand and/or low levels of renewable generation. Conversely, when there is low electricity demand and/or high levels of renewable generation, water can be pumped up hill for storage and later use.

How pumped hydro storage works
Image demonstrating pupmed hydro storage

Where is pumped hydro storage used?

Pumped hydro storage is used throughout the world as a stored energy option for hydroelectricity with large schemes in the US, China and Japan. Scotland has 2 pumped hydro storage hydroelectric power stations. Australia is currently building a large pumped hydro storage project, Snowy 2.0, and is also pursuing smaller schemes.

Find out more on the Snowy 2.0 website.

Snowy 2.0(external link) — Snowy Hydro

Pumped hydro at Lake Onslow is one option being investigated.

Read more about the Lake Onslow option

Identifying and assessing other options

Non-hydro options are also being explored as possible ways to resolve the dry year problem in a 100% renewable electricity system.

3 alternative technologies have been identified as having the most technical potential to help manage dry year risk.

Possible alternative approaches to the dry year problem

Environmental considerations

A renewable energy battery solution would significantly reduce New Zealand’s reliance on coal and gas, and make major strides towards our climate change goals. However the environmental effects associated with each of the possible options needs to be considered in the course of this project.

To date, the Department of Conservation (DOC) has been commissioned to undertake a comprehensive study of environmental and conservation values at Lake Onslow and its surrounding area, and how these might be affected by a pumped hydro scheme. This will be achieved by a mix of reviewing existing resource information and detailed field work.

The hydrology and ecology at Lake Onslow is also being assessed to understand how these could change if a pumped hydro scheme was to be developed.

The potential environmental effects associated with other possible pumped hydro sites and other technologies or solutions will be considered as and when specific locations or concepts emerge.

How a ‘battery’ could operate

The NZ Battery Project is investigating different potential operational models for large-scale storage, and their relative costs and benefits, as well as possible options ownership issues. Alongside this, the Project is exploring options for how the preferred solution could integrate with the existing electricity market.

This work is currently in the preliminary stage and analysis will be included in the feasibility study at the end of Phase 1.

This work will be developed during Phase 2 once the preferred ‘battery’ solution, or solutions, is known.

Indicative project timeline

This timeline is indicative only and will be updated as the project progresses and key decision points further refine its focus.

Phase 1 – feasibility study

Scope and decision-points

Investigation and evaluation of long-term, large-scale renewable energy storage options, including pumped hydro and a range of other dry year storage solutions. The project will explore in detail the feasibility of pumped hydro at Lake Onslow, including geotechnical investigations.
Estimated cost: Up to $30 million

  • Progress report – Project overview and key preliminary findings to date. 
    May 2022
  • Update and decision-point – Early analysis and update on feasibility studies underway. Decisions on focus areas for the remainder of Phase 1.
    Late June 2022
  • Feasibility decisions – Technical, commercial and environmental feasibility studies of the Lake Onslow option compared to feasibility studies of other options, and preparation of an indicative business case. Decisions to follow on which option or options should be further investigated as part of a detailed business case in Phase 2.
    Estimated timeframe: December 2022

Phase 2 – Detailed business case (dependent on earlier decisions)

Scope and decision-points

  • Final investment decisions - Detailed investigation into the construction, funding and/or implementation of the preferred option or options.
    Estimated cost: Up to $70 million
    Estimated timeframe: To start from early 2023 (timing dependent on options)

Phase 3 – Implementation (dependent on earlier decisions)

Scope and decision-points

  • Implementation of preferred option or options
    Estimated cost: Unknown until dry year solution or solutions selected
    Estimated timeframe: Dependent on Phase 2

Procurement

The NZ Battery Project adheres to the New Zealand government’s procurement guidelines when commissioning work. This means work is procured from the relevant All-Of-Government panel, when possible. Work that is out of the scope of these panels, such as the field geotechnical studies, are sourced from the open market.

The government’s guidelines also allow for smaller pieces of work to be procured directly from a provider on the All-Of-Government panels. Where relevant, we also seek advice from others such as mana whenua, and prioritise local services.

Key documents

Project management

Updates will be provided on this page as they become available.

If you have any questions please email the project team at: nzbattery@mbie.govt.nz

Last updated: 17 October 2022