NZ Battery Project

Cabinet has approved funding to investigate pumped hydro and other possible energy storage 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 and the level of the storage lakes run low. When this occurs some form of back-up is needed, and this is currently provided by fossil fuel generation.

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

The name NZ Battery refers to the manner in which the intended solution will provide stored energy for the New Zealand electricity system in an analogous manner to a battery.

The first phase will evaluate the viability of pumped hydro and consider this solution against alternative methods to resolve New Zealand’s dry year electricity storage problem in order to achieve 100% renewable electricity and help to decarbonise the wider energy system.

It will comprise a detailed investigation of the Lake Onslow pumped hydro project, which the Interim Climate Change Committee (ICCC) referenced in its electricity report and recommended for further investigation. Other smaller pumped storage proposals will also be considered as will alternative technology approaches. Following rigorous assessment of all options, a feasibility study will be developed for the preferred option or options. 

Read the electricity report(external link)

The study will likely include:

  • Initial assessment of the Lake Onslow option and other potential projects
  • A detailed feasibility project design
  • Developing plans for consenting and assessing implications on the electricity network
  • Investigating environmental impacts and options for project to generate net ecological gains
  • Analysing commercial feasibility and designing procurement methodology
  • Early engagement with Iwi
  • Securing land access for geotechnical investigation and potential project use

The feasibility studies will inform a decision on whether to proceed to a next phase, which would be a final engineering design and preliminary works to provide firmer knowledge of costs and capabilities to inform a Cabinet decision whether to proceed to construction on the chosen solution.

The final phase of the project will, if approved, be the construction of the selected option.  

Latest news

MBIE is currently seeking nominations for the Technical Reference Group to bring additional and specialist expertise to the NZ Battery Project. For more information, visit the NZ Battery Project Technical Reference Group webpage. Nominations close 5pm, 29 January 2021.

Pumped hydro storage

Pumped hydro is one of the technological options that will be investigated. Pumped hydro schemes are used internationally as a way of storing and using water independent of natural inflows. They are able to be specifically designed to meet daily demand peaks, and/or store a large amount of energy for a long period to meet dry year energy storage requirements. As such, they are an 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.  Conversely, when there is low electricity demand, water can be pumped up hill for storage and later use.

How pumped storage works
nz battery pumped storage

Where is pumped storage used?

Pumped storage is used throughout the world as a stored energy option for hydroelectricity with large schemes in the US, China and Japan. Scotland has two pumped-storage hydro-electric power stations, which pump water back up to a storage reservoir during periods of off-peak demand. Australia is currently building a pumped storage project, Snowy 2.0. For further information see the Snowy 2.0 website(external link).

Pumped hydro at Lake Onslow is one option that will be investigated

Identifying and assessing other options

In addition to pumped hydro, the ICCC identified four other options for renewable dry year security in its 2019 study ‘Accelerated Electrification(external link)’. They are:

  • overbuilding
  • biomass
  • hydrogen
  • indicative large scale demand interruption

The ICCC considered the costs of the options relative to natural gas-powered generation as in the diagram below.

Graph showing how much it could cost to remove the emissions that would be produced if gas-fired power stations provided dry year security.

Accelerating Electrification, Interim Climate Change Committee, 2019

The NZ Battery Project will look at all five options in detail, and others that may arise through the course of the investigations.

Indicative project timeline

Scope Estimated cost Estimated timeframe Decision required
Phase 1: Investigation and evaluation of pumped hydro and other dry year storage solutions. Feasibility study to inform a decision on whether to proceed to the next Phase. Up to $30 million 2021 Agreement to proceed to Phase 2
Phase 2 dependent on findings of feasibility study
Phase 2: Engineering design and preliminary field work to understand any environmental, geotechnical and seismic aspects of dry year solution option or options agreed at the end of Phase 1. Up to $70 million  2022 Decision whether to proceed to construction and agreement for funding mechanism
Phase 3 dependent on design work and securing of funding mechanism
Phase 3: Construction Unknown until dry year solution or solutions selected

Project management

MBIE is establishing this project and a project group will be up and running soon.

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

In the meantime you can email the project team at:

Last updated: 18 December 2020