Onslow pumped storage

1. Background
Government policy is for New Zealand to transition toward a low-emissions economy, making use of renewable electricity to replace fossil fuel use in transport and industrial heating. Hydro will remain a significant component of the required increased power generation. There is thus a need to buffer any transformed economy against future dry years, given limited national hydro storage capacity of less than 4.5 TWh. Dry years happen from time to time and public calls for reduced electricity consumption were made in 1992, 2001, 2003 and 2008. Pumped storage at Lake Onslow is a favoured option for providing backup power in dry years. Funding has been set aside for Onslow feasibility investigations, along with evaluating other energy storage options. Further information is in the NZ Battery web page.

2. Onslow energy storage potential
I was the first to note (in 2005) the possibility of pumped hydro storage in the Lake Onslow basin, published in a brief paper in the Journal of Hydrology (NZ). Energy storage would be achieved by raising the present 8.3 km2 Onslow reservoir (Fig.1), with water obtained by pumping up from either the Clutha River or from Lake Roxburgh. The main energy storage potential is in the Onslow Basin, requiring an earth dam at the Teviot River exit from the Onslow reservoir. In addition, there is possibility for a further storage increment to be added from the adjacent Manorburn basin to the north. The latter would require constructing a short tunnel through the low saddle separating the two basins, with a new concrete dam constructed at the present Upper Manorburn Dam.

Fig. 1. Energy storage potential of the Onslow Basin as a function of water level above the existing Onslow reservoir. From Majeed (2019). Note: 1,000 GWh = 1 TWh.

Various amounts of energy storage capacity can be achieved, depending on the specified upper and lower Onslow levels, and whether Manorburn is included or not. It would seem desirable to aim for a large storage capacity, given that the intended use of the scheme is as dry year buffer in the absence of fossil fuel backup. One configuration would be to construct a new 50-metre concrete dam at the present upper Manorburn Dam, build a 100-metre earth dam of the Teviot River exit of Onslow, and have a 4 km narrow-diameter tunnel linking the Onslow and Manorburn reservoirs at 740 metres elevation. Given an upper water level for both reservoirs at 780 metres, this would give about 8 TWh total energy storage capacity, with Onslow dry year drawdown permitted to 720 metres. The extent of an expanded Lake Onslow raised to 780 metres is shown in Fig. 2.

Fig. 2. Lake Onslow extent if raised to 780 metres elevation. From Majeed (2019). A connecting tunnel is shown here linking to Lake Roxburgh. An alternative tunnel would link Onslow with the Clutha River below Roxburgh. Map source: LINZ

The significant energy storage potential at Onslow derives from permitting a large water level drawdown in dry years. This could never be contemplated with existing scenic hydro lakes like Tekapo or Hawea because of the unacceptable visual impact of large areas of exposed silt and gravel around the lake margins. In contrast, the Onslow basin is bounded by schist rock hill country with thin soils that would be removed before lake filling to avoid dust issues during the rare drawdowns. A major dry year drawdown would see the lowered lake surrounded by an extensive zone of bare schist until the levels rose again.

3. Onslow pumped storage operation
The 2005 paper visualised Onslow pumped storage operating with some combination of seasonal water storage and holding water back against dry years. However, a recent PhD thesis (Majeed, 2019) recognised that the scheme could simultaneously operate in an enhanced commercial way, with income from a variety of on-going operations including frequency keeping, spinning reserve, security against outages, and buffering short-term wind power fluctuations. That is, the pumped storage system would always be in some form of continuous operation within the New Zealand electricity market, not used just two or three times a year as has been suggested.

Onslow pumped storage would operate at perhaps 75% efficiency, taking system losses and lake evaporation into account. That is, the scheme must purchase more electricity from the grid than it will sell. However, this energy difference would be offset in financial terms by pumping at times of lower prices and generating at times of higher prices. This price-based pump-generating sequence would fit the local hydrological conditions because lower electricity prices generally coincide with higher Clutha River flows and vice versa. Downstream of Roxburgh, the effect of Onslow operation would be to make Clutha high flows lower and Clutha low flows higher, staying within the normal flow range of the river.

Market-based operation of Onslow pumped storage is likely to result in some overall net power gain to the nation. This is because Onslow would purchase power for pumping at low-price times when South Island hydro lake levels are high, resulting in spring/summer release of some of their water for power generation. This reduces the frequency of high hydro lake water levels, in turn reducing spill loss from any sudden floods into already-high lakes. Simulations in the Majeed thesis indicate that an additional 100 MW could be gained on average from the Waitaki power scheme if it was operated to minimise spill by keeping Tekapo and Pukaki lake levels near to their mid-range.

4. Onslow discussions
There was a government announcement in July 2020 to consider pumped storage buffering as a means of achieving 100% renewable electricity in New Zealand, with $30 million allocated for an initial evaluation over a range of sites. This was followed by an election announcement in September 2020 that pumped storage could be used to achieve 100% renewable electricity by 2030, with $70 million set aside for Onslow site studies if initial feasibility evaluations were favourable. There seems general local support for the project in the Teviot and general Otago region, particularly with respect to employment prospects. However, various topics of concern have also been raised. See the below listing (4.1- 4.8), together with my comments.

4.1 Focus should be on reducing emissions generally rather than seeking 100% renewable electricity from pumped storage
This argument notes that electricity generation accounts for only a small proportion of our non-agricultural greenhouse emissions. Therefore, billions spent constructing a large pumped storage scheme like Onslow to eliminate fossil fuel power generation does not seem an optimal way to reduce emissions. See, for example, the article by the BusinessNZ Energy Council, the comment by Genesis Energy, the Newsroom item by Marc Daalder, and the Climate Change Commission 2021 Draft Advice for Consultation.
This line of reasoning assumes that Onslow is motivated primarily toward an end-goal of achieving 100% renewable electricity generation after 2030 for its own sake. While “100% renewable power by 2030” is a compact election statement, it distracts from the main climate-related purpose of Onslow pumped storage. That is, to provide the dry year buffer for a future low-emissions economy based on increased renewable electricity generation that will replace fossil energy sources in transport and industrial heating. If Onslow is constructed then the coincidental elimination of relatively small amounts of emissions from power generation does give us a good branding opportunity as a nation with 100% renewable power. However, it is not a single goal to be sought in its own right at great expense. In other words, it is not an either/or situation. The 100% renewable power goal and significant emission reduction can be achieved at the same time.

4.2 There are better dry year solutions than Onslow pumped storage
Given that we wish to transition to a low emissions economy based on renewable power, the issue is then is whether it is Onslow or something else that is the best way to achieve the required dry-year buffering that will enable the transformation to proceed without climatic disruption. The selection decision is currently the task of the NZ Battery project. It has been suggested that there are lots of low-hanging fruit when it comes to dry year solutions. In fact, given the magnitude of the problem, it is difficult to find the required fruit at any height on the tree. Some of the suggested alternatives are listed below with comments. The selected option is obviously important because it will determine the form of the New Zealand energy scene for decades to come.

(i) Buffering using fossil fuels
This is the position taken by the Climate Change Commission’s 2021 Draft Advice Report. It does seem strange that the CCC should take this view, which is in direct conflict with stated government policy to shift toward 100% renewable power (confirmed in February 2021). It will be interesting to see whether the final version of the report maintains the conflict, or (more sensibly) suggests instead awaiting the outcome of the NZ Battery feasibility review of non-fossil dry year backup. The negative aspects of fossil fuel buffering are: (i) fossil fuels produce emissions and are ultimately unsustainable into the future, particularly noting the present restrictions on gas exploration, (ii) infrastructure issues can create uncertainty with gas supply (the Pohokura marine pipeline is presently experiencing issues relating to scale accumulation), (iii) reduced post-Tiwai wholesale electricity prices may make fossil fuel power generation uneconomic, so there is no certainty of always having this backup against future dry years (iv) fossil fuels as generators of last resort ensures high electricity prices at times of reduced power availability.
With respect to (iv), the effect is well illustrated at the end of February 2021. Low lake levels and low inflows contribute to particularly high electricity prices (Fig. 3), enabling Genesis to generate significant profit by burning tons of cheap Indonesian coal at Huntly.

Fig. 3. Snapshot of wholesale electricity prices on 27/02/21. Prices exceeding $120 /MWh are regarded as “high”. High wholesale prices eventually contribute to increases in home power bills. Source: WITS Free To Air

Use of fossil fuel buffering would be justifiable as a temporary measure if there was some cost-effective giant battery or similar on the technological horizon, capable of storing TWh energy magnitudes. Left-field breakthroughs are always possible but there appears no indication as yet of any new large-scale energy storage technology. That being the case, the finite nature of the fossil fuels means that adopting fossil fuel dry year buffering now means that later generations would have to face the dry year issue all over again.

(ii) Renewables overbuild
This concept involves having redundant renewable generation capacity (probably mostly wind power) in normal years so that there is still power available in dry years. Not surprisingly, an investigation in the ICCC Accelerated Electrification Report (p. 97) found this would lead to significant retail electricity price increases: 14% for residential consumers and 39% for industrial consumers. Expressed another way, the emissions reduction cost was estimated at $1,280 per ton (p.60). These figures are the basis of the statement that “getting the last few percent to 100% renewable power will be very expensive”. The overbuild price figures were incorrectly cited by Judith Collins as applying to Onslow pumped storage, in the TVNZ leader’s election debate on 22 September. The $1,280 figure was cited by the National Party in January 2021 as the cost of 100% renewables, still making the error of assuming that 100% renewable power can only be achieved by emissions overbuild, ignoring pumped storage.
(iii) Green hydrogen production and storage
This approach would use renewable-derived power to produce hydrogen from water electrolysis. The hydrogen is stored in some form and then later used when needed to generate electricity in a dry year. However, the energy inefficiencies in the conversion and storage processes means that green hydrogen storage will never be a viable option for the amount of energy needed to buffer a dry year.
(iv) Demand management
Improved electricity efficiencies, power sell-back from home and car batteries and various other methods have potential to reduce winter peak demands. However, the magnitudes of demand interruption required to offset a dry year, with the associated economic impact, would seem to make this dry year option untenable. Contact Energy and Meridian Energy have suggested that setting up post-Tiwai green hydrogen production in Southland could also serve as dry year buffer. That is, the plant could close for some duration in dry years and the power diverted for use elsewhere in the country. A variation on the theme advocates a similar demand interruption process using dry year reduced operation of the Tiwai smelter, assuming an extension of its operation could be negotiated. However, we could visualise a future dry period when Te Anau and Manapouri lake levels have reached their lower permitted range and river inflows are greatly reduced. Switching off hydrogen / aluminium production in this situation will be of little help because there would be minimal Manapouri power available to send north. It is also unlikely that the shortfall could be made up by other South Island stations. This is because when dry conditions occur they extend over wide areas in the same climatic zone. That is, low power output from Manapouri is likely to coincide with low power output from the Waitaki and Clutha schemes as well, which will also lead to higher electricity prices.
Fig. 4 illustrates the problem of demand reduction as a dry year mechanism. The Manapouri – Te Anau system is shown as at 27/02/21. However, suppose it is actually some time in the future and that Manapouri power had been supplying a large hydrogen production plant in Southland. Manapouri / Te Anau storage levels are falling, as are river inflows. If that trend were to continue, the lake levels would soon be at the bottom of their operating range and the Manapouri power output would be constrained to the water supplied by the limited lake inflows from dwindling rivers. That is, Manapouri power available to the nation from hydrogen shut-down would be minimal against a dry year in this scenario. In contrast, Onslow would have 1000 MW available for an extended duration and without the economic impact of industry closure.

Fig.4. Manapouri / Te Anau levels and inflows, February 27 2021. Source: Energy Link

(v) Alternative pumped storage options
The possibility of multiple smaller pumped storage schemes instead of Onslow has been advocated by Dougal McQueen, and also mentioned by the NZ Battery. However, the problem with a cluster of smaller schemes as dry year buffer is evident from the energy storage capacities listed in Fig. 5. The magnitude of a dry year event has been estimated by the ICCC Accelerated Electrification Report (p.64) as a deficit of 3 TWh, and it would be desirable to have a factor of safety beyond that to allow for an extended dry period. The NZ Battery has noted that they require a minimum of 5 TWh of energy storage capacity. There is potential for a maximum of 2.7 TWh of energy storage capacity in the upper Ngaruroro River near Taupo. However, Ngaruroro pumped storage is likely to be contentious for environmental reasons. It would require a long 30 km tunnel linking to Lake Taupo and may need to have a dual purpose involving water transfer to Hawke’s Bay for economic viability. The rquired 5 TWh of energy storage could only be achieved by Onslow + Ngaruroro, or by Onslow alone. Given construction expenses, it seems unlikely that two pumped storage will be built in New Zealand for dry year buffer.
Outside of Ngaruroro, it does not seem possible to specify any set of smaller pumped storage sites that have combined energy storage capacity anywhere near 5 TWh. No such grouping of sites has been publicly identified to date. There is also an economic aspect because each site would require specific engineering construction and consenting processes. It could happen that one or more smaller pumped storage schemes could play a useful North Island role as alternatives to gas peakers. However, this is a separate use from provision of dry year buffer.

Fig. 5. Comparison of energy storage capacities. Onslow and Ngaruroro are potential pumped storage schemes. The others are existing hydro storage lakes. The 8 TWh for Onslow is with respect to the combined Onslow-Manorburn system described in Section 2.

One alternative pumped storage system that has been advocated is for between Lakes Tekapo and Pukaki as upper and lower reservoirs, respectively. However, it is not clear how this scheme could provide a dry year buffer because Lake Tekapo does not have sufficient energy storage capacity. Also, keeping Tekapo levels high as dry year reserve takes it out of its ordinary seasonal operation, runs the risk of generating spill from high inflows, and would lead to increased erosion along the lake shoreline. Further, there would be times when the pumped storage system could not operate. When Lake Tekapo is at the top of its range, the low power prices at the time could not be utlised for pumping because there would be no available storage in the lake to accommodate the pumped water from Lake Pukaki. Onslow operation would have the opposite effect, with a reduced frequency of times of high water levels in both Tekapo and Pukaki.

4.3 Pumped storage at Onslow is uneconomic
The construction cost of Onslow is likely to be in excess of 4 billion dollars. In terms of cost per unit of stored energy, Onslow (in whatever final configuration) is likely to be much more cost effective than the Snowy 2.0 scheme in Australia (0.35 TWh of storage).
Quantifying the various economic benefits of Onslow pumped storage is multi-faceted and requires careful study. The most detailed economic evaluation to date is in the thesis by Majeed (2019). Taking into account various aspects including aiding new wind power generation, increased irrigation water, flood peak reduction, and reduced power prices, the thesis abstract concludes that Onslow pumped storage is economic. Final economic evaluation will need to await analysis from the NZ Battery project.

Two new economic factors have recently come into play: a national downturn associated with Covid-19 impact, and the announced future closure of the Tiwai Point aluminium smelter at the end of 2024. A large engineering project like Onslow construction will provide economic stimulus to Central Otago for some years. Also, there is the additional factor of long-term stimulus for the Southland economy. Tiwai closure will provide new power for Southland industry but power reliability is a factor also. Fiordland is wet on average but there can be dry periods as well. Low lake levels in March 2006 resulted in a partial shutdown of the Tiwai smelter and record low lake and river levels were recorded in April 2017. If a decision is announced that Onslow will be built, marketing could begin immediately for Southland as an optimal cool-temperature location for electricity-consumptive industry, with power reliability guaranteed by a mega- pumped storage scheme just to the north.

Negative comments concerning Onslow pumped storage economics are sometimes superficial. The former National Party energy and resources spokesman Jonathan Young was reported as stating that the Productivity Commission had looked into the Lake Onslow scheme in 2018 but found it “didn’t make sense economically”. In fact the “looked into” by the Productivity Commission Report was only a short footnote on the bottom of p.395 as a personal communication by Sapere consultants who suggested that Onslow pumped storage would impact existing hydro-generators. No supporting argument was given in the footnote and the nature of the impact was not specified, although it was presumably concern over reduced wholesale electricity prices.

The possibility of reduced wholesale electricity prices may have prompted Contact Energy to state that Onslow pumped hydro could temporarily paralyse investment in renewables, a theme also taken up by Mike Hosking on Newstalk ZB. However, it is interesting to note the warning by Meridian Energy that public investment in pumped storage might instead push up electricity prices, thus slowing down the electrification of the economy. ACT party leader David Seymour expressed similar sentiments with respect to electricity price increase. The Climate Change Commission in its 2021 Draft Advice for Consultation also raises the specter of dry year buffer costing taxpayers billions of dollars (p.112). It seems strange however, that such statements could be made with apparent certainty in the absence of knowledge of how Onslow would be owned, operated, and the time period over which it would be paid for. Contact Energy at least have now backed away from their original assertion of Onslow paralysing renewable investment and propose instead that all dry year and firming options be first considered “dispassionately and scientifically” – see Contact canvasses firming, dry-year options (Energy News, 18 February, 2021).
The Ministry of Business, Innovation and Employment has commissioned a review on the likely effect of Onslow in the electricity market. It seems probable that some downward influence on wholesale prices will be confirmed because (i) electricity prices tend to be lower when the hydro lakes are full and Onslow will be near maximum capacity most of the time, more than all the existing hydro lakes put together, (ii) Onslow will presumably generate when the prices are high, effectively giving a hard upper price bound which will be below that required to initiate thermal generation from coal and gas, which will be removed from power generation.

In terms of paying for construction costs, Keith Turner has argued that a long payback time would make Onslow invisible to retail electricity prices. A similar conclusion concerning the merit of long payback times on electricity prices was reached in a preliminary study by the University of Auckland.
However, any downward effect by Onslow on electricity prices is likely to be relatively minor in the long term, compared the effect of northward transfer of Manapouri power. This is because the Onslow scheme would be a net consumer of power, not a net generator. In particular, it would be a purchaser when electricity prices trend down, thus creating a price floor. Contrary to the suggestion of paralysing investment in renewables, this pricing situation is likely to be strongly encouraging of renewable investments and not in any way crowding it out. For example, wind power must be sold when the wind blows, regardless of how low the electricity price may be at the time. Having both an upper and lower ceiling to power prices will enable a degree of planning of wind power developments. For example, Onslow is likely to be beneficial to the economics of proposed wind farms at Mahinerangi (Otago) and Kaiwera Downs (Southland).

In addition, having 1000 MW of power (available for generating or taken up by pumping) will buffer the destabilising effect of having an increased amount of intermittent renewables in future. This would avoid instability situations like that presently developing in Australia. It is easy to say that New Zealand needs thirteen large wind farms as part of the move toward a low emissions economy, but the grid instability potential has to be considered as well. For example, 500 new MW of wind generation capacity needs to be supported by 250 MW of hydro power generation capacity to offset wind speed fluctuations – which could conveniently come from pumped storage.

Reduced variability of wholesale electricity prices is likely to have various positive effects on the national economy. For example, major electricity users like the pulp and paper industry will appreciate not having to plan against the possibility of dry year price spikes, as happened in 2008. Similarly, knowing there will be a hard price ceiling on wholesale electricity prices will encourage transition away from existing fossil fuel use for industrial heating requirements.

As a generator, Contact Energy in particular stands to gain from Onslow construction. Apart from a small amount of storage in Lake Hawea, Contact’s Clutha hydro power scheme (Clyde and Roxburgh stations) is run of the river and there is spill loss from time to time. Pumping from an Onslow intake at Lake Roxburgh will reduce flow at the Roxburgh dam (including possible spill) at times of low electricity prices. That same water will generate more income from Roxburgh power generation when later returned to Lake Roxburgh from Lake Onslow when prices are higher.

Finally, part of the economics of setting up Onslow will involve purchasing a significant one-off energy increment over the initial duration of time when the lake height is increased by increments to its final mean operating level. Taking into account the dead storage volume needed to reach minimum operating level, this could involve the purchase of more than 8 TWh from the grid. This would seem a good initial use of some of the post-Tiwai Manapouri power. If a decision was made for pumped storage at Onslow (construction starting in 2023), there may be just a few years between first pumping of Clutha water and Tiwai closure at the end of 2024.

4.4 Onslow would “stand the electricity market on its head
This provocative headline is a reflection of genuine concern over the magnitude of Onslow pumped hydro and how it might impact the electricity market. However, regardless of storage capacity, Onslow can only interact with the market through power purchase or power selling to a limit of around 1000 MW – not much more than the generating capacity of the Huntly Power Station. But to help offset concerns, it is desirable that Onslow should be notified as operating in a commercial way in the electricity market. That is, Onslow would purchase power for pumping when prices are low and generate for selling when prices are high. This will reduce the variability of wholesale electricity prices but Onslow otherwise would be just another player in the market and not a major disruption to it. Put another way, if Onslow pumped storage had been constructed before the electricity market was established, the presence of Onslow would not have prevented the electricity market from being set up.

4.5 Availability of Manapouri power post-Tiwai means Onslow pumped storage may be unnecessary
This aspect was mentioned by Janet Stephenson (Otago University) as part of an article advocating that demand-side management should also be considered. However, to compare Onslow and Manapouri is to confuse power and energy. Manapouri is a power scheme – it’s purpose is to generate electricity. If constructed, Onslow would be a hydro lake for storing energy, no different from any other hydro lake except that water is pumped up to it. A power station cannot substitute for a hydro lake or vice versa – they are different entities.
In fact, it happens that Manapouri power going north (after transmission upgrades) will make Onlow more urgent. This is because Onslow pumped storage would primarily buffer South Island hydro generation against dry years. The significant Manapouri increment of hydro power output from the same climatic region would make a South Island dry year impact greater because there would then be more hydro generating capacity that is not generating power.

4.6 Onslow is in the wrong island
This issue has been raised as part of a general comment on Onslow. It has to be kept in mind that Onslow would be a hydro storage lake as backup against a South Island dry year, because the South Island has 85% of national hydro storage capacity. In that context, it makes little difference where Onslow is located as long as there is transmission capacity to send the power out when needed. For example, when Lake Pukaki was raised to increase hydro storage, there was no suggesting that the raising should not take place because Lake Pukaki is in the South Island.
South Island transmission upgrade will be built in any case for moving Manapouri power north, so those same lines can be used for Onslow power output in the event of a South Island dry year. The line upgrade was given special fast-track status and work started near Alexandra. Onslow buffering of just the Clutha and Waitaki power schemes against a dry year would require only a minimal transmission upgrade beyond that at present.
From the environmental viewpoint, it is desirable for a scheme like Onslow to be located in the same climatic zone as the hydro power stations that are being buffered against low river flows. That is, when the power is needed there will be low Clutha River flows, so the discharge released from Onslow generation will not cause the river to go above its normal discharge range. Likewise, pumping will correspond to times of high Clutha flow because electricity prices will be low at such times.

4.7 Onslow is a return to “Think Big
The Onslow pumped storage scheme would be significant, and any large project has potential to be seen in hindsight as a large mistake. However, it works both ways. For example, the Benmore Dam is a large government-constructed edifice that has served the country well in supplying renewable electricity. On the other hand, the Clyde Dam should never have been built and only passed through parliament with the aid of two votes from the Social Credit party. In contrast, Onslow will be subject to thorough review. Setting up a $30 million preliminary study of Onslow and other dry year alternatives gives good opportunity to overview all aspects before billions of construction dollars are committed.

4.8 The environmental impact at Onslow is large and would be controversial
It can be seen from Fig.1 that Lake Onslow at 780 metres elevation would represent 75 km2 of flooded land, including the present reservoir. That is, it would be an artificial reservoir the same size as Lake Benmore. In addition there would be a further area of flooded land if the Manorburn-Greenland reservoir is raised to 780 metres.

In terms of environmental negatives, the area of inundated land is significant. This would include loss of existing wetlands at the southern end of the present Onslow reservoir. During rare extreme dry years there may be up to 60 metres of visible water level drawdown and rock exposure, depending on the final permitted water level range. There is also concern over the viability of the endangered Teviot flathead fish population, which is restricted to the local area.

On the other hand, there are potential for environmental gains to be made as well and it becomes a decision as to whether the positives outweigh the negatives. At the larger scale, Onslow would play a significant role as an enabler of the transition to a low emissions economy through providing dry year security. In addition, there is also the potential of both environmental and economic gains at the regional level. Such regional environmental offset possibilities should be considered as part of the total construction cost. Also, there must be community input as to the relative merits of the various offsets. The list below is not exhaustive but gives some indication of environmental offset possibilities – which may or may not be considered for further investigation. It is a pity that even greater high-country environmental impacts are not presently subject to such scrutiny.

(1) An expanded Lake Onslow for recreation and ecological reserve
A new lake may be regarded as an asset, depending on nature of the land displaced. The present Onslow Reservoir flooded part of Dismal Swamp, but there would probably be opposition to any suggestion of draining the lake to re-establish the wetland. For the much larger new Onslow reservoir, it may be possible to establish extensive areas of artificial floating wetlands as part of an ecological reserve. Some reserve land could be set aside for establishment of one or more Teviot flathead sanctuaries above 780 metres, protected from predatory trout by constructed artificial waterfalls. Such sanctuaries could be established as part of the $30 million initial feasibility investigation. That would be a useful ecological legacy independent of whether pumped storage went ahead at Onslow.

(2) Shifting Waitaki River flows back to the original seasonal discharge regime
Like all the major rivers with headwaters in the Southern Alps, the natural flow regime of the Waitaki River is for high flows in spring and summer and low flows in winter when much of the mountain precipitation accumulates as snow. Lakes Tekapo and Pukaki are presently managed for hydro power by holding back high spring and summer inflows in anticipation of the lower winter inflows and increased winter power demand. That is, Waitaki River flows have been increased in winter and decreased in summer. As noted in Section 3, commercial Onslow operation would purchase power for pumping when wholesale electricity prices are low, leading to summer water releases from Lakes Tekapo and Pukaki. This shift back to higher summer flows to some degree re-creates the former Waitaki River natural seasonal flow environment.

(3) Potential for restoration of Lake Hawea
Using Lake Hawea and other South Island scenic lakes for seasonal hydro storage has had significant environmental impacts. The original lake shoreline environments had evolved and stabilised over thousands of years following the retreat of the glaciers. Raising the lakes for hydro storage creates enhanced local erosion from wave action on the soft glacial tills along the line of the new water levels that had never been part of a lake shoreline system. In addition, the imposed seasonal cycles on the new shorelines are greatly in excess of the small natural variations in the original lakes.

Lake Hawea is the only lake in the Clutha catchment that is used for hydro power storage operations, enabling some degree of control of water flows to Contact Energy’s Clyde and Roxburgh power stations. The lake was raised in 1959 from its original 328 metres above sea level, with the highest water levels now extending to 346 metres. Seasonal water level fluctuations of 8 metres are presently permitted, compared to the original natural variations that were about 1 metre and of short duration. The present seasonal water level fluctuations have reduced the lake’s aquatic plant diversity compared to nearby Lake Wanaka. Also, periods of high lake levels concurrent with wind waves have created eroding banks near parts of the Hawea township and elsewhere. Lake Hawea remains beautiful but there are some who can still recall how it used to be.

Hydro storage in Hawea and the other South Island lakes is an essential part of maintaining national power supply. However, significant new hydro storage capacity at Lake Onslow offers an alternative as far as Lake Hawea is concerned. If there was, say, 8 TWh of storage capacity established at Onslow then the total Clutha catchment energy storage capacity would be 8.35 TWh. The decimal places represent Hawea storage. With 8 TWh of Onslow storage and at least 1000 MW of Onslow installed capacity, we can get by without the 0.35 TWh storage component at Lake Hawea. That is, Lake Hawea could lowered and restored back to its original natural shoreline at 328 metres. Outlet water releases would be maintained at about equal to lake inflows, so the Hawea River would largely revert to its pre-hydro state. In this way, the present Lake Hawea storage and seasonal variation would be transferred to Onslow.

Any Lake Hawea restoration process would probably need to be carried out by incremental lowering, concurrent with planting grass and other vegetation to avoid blowing dust. There would also be a need for replanting native trees at some locations around the restored lake margins so that the drowned forests of Lake Hawea can become real forests again. A map including the 328 metre contour will show the extent of new land area that would be gained around Hawea township.

A restored Lake Hawea could still be used for hydro power operation, but in a more benign way. The outlet dam could enable occasional major floods to be held back for short periods, giving brief water level rises. This water management regime will avoid or reduce spill at the Clyde and Roxburgh power stations. Our simulations indicate that a restored Lake Hawea managed in this way gives the possibility of a small increase in mean power output at Clyde and Roxburgh.

The role of Onslow pumped storage in Lake Hawea restoration would be with respect to specific arrangements with Contact Energy so that income from commercial operation of Roxburgh and Clyde is not compromised. The new water management would mean that power generated at the Roxburgh and Clyde stations from released Lake Hawea water will now seldom coincide with times that are best for power sales income. This could necessitate some form of compensatory arrangement by which Contact Energy receives above-market rates from Onslow power purchases, for the relatively limited amount of power involved. The other commercial issue is that Contact Energy would not have a future option of setting up a small power station at the Hawea Dam. In the end, however, commercial considerations are not everything. If Lake Hawea is restored, shareholders may take some pride in the role played by Contact Energy in writing the final history of the rise and fall of Lake Hawea.

(4) Potential for restoration of Great Moss Swamp

Given agreement of the parties involved, restoration of the Great Moss Swamp could be an environmental offset for the flooding of the wetlands at the south of Lake Onslow, if the pumped storage scheme went ahead. There would be some additional engineering works involved as part of the mitigation costs within the Onslow construction budget. However, there would also be economic advantage through increased irrigation security, possible irrigation extension, and some additional hydropower generation.

The Great Moss Swamp was an iconic Otago upland wetland on the southern portion of the Rock and Pillar Range. However, only a remnant remains because much of it was flooded by construction of the Loganburn Reservoir, which presently maintains summer water supply to an irrigation scheme in the Upper Taieri Plain. The scheme is presently operated by the Maniototo Irrigation Company and supplies water to approximately 60 farms. There has also been a tentative proposal to expand the Loganburn reservoir. This would give more storage and inflow water, but result in still further wetland loss.

As an alternative, the suggestion is made here that the Loganburn Reservoir be permanently drained and the original Great Moss Swamp reconstructed. This would be a worthwhile environmental offset because the Loganburn Reservoir has a greater area than the wetlands that would be flooded by an expanded Lake Onslow. That is, there would be an overall net gain of wetland area as a consequence of the Onslow scheme.

The viability of removing the Loganburn reservoir would depend on local support for alternative irrigation storage for the Maniototo Irrigation Scheme. This storage would need to be created concurrently with Onslow construction and should come at no cost to the Maniototo Irrigation Company. The new water storage volume would have to be at least as large and as reliable as the present Loganburn Reservoir.

An indication of how the alternative to Loganburn would operate can be seen from the indicative engineering configuration in Fig. 6. In this scenario, three new tunnels are involved. These are of much smaller size and length than the major pumped storage tunnel linking to the Clutha. For the sake of illustration, it is assumed that the expanded Lake Onslow has an upper operating limit of 780 metres asl, with maximum dry year drawdown to 720 metres asl.

Fig. 6. Proposed alternative to Loganburn Reservoir irrigation water storage, showing approximate tunnel locations in conjunction with an expanded Lake Onslow having a maximum water level of 780 metres asl. Dark blue line shows Lake Onslow shoreline as it would be at 760 metres asl. Map source: LINZ

Some Taieri River flow at high-discharge times is diverted into tunnel A, at a point on the Taieri River about 780 metres asl. A flood retention dam about 20 metres in height could be constructed at this point. This is not to create a permanent small lake, but would serve to temporarily store flood events, allowing the tunnel diameter to be smaller but still capture the flood water volume. The dam would also provide some degree of local flood control. After travelling along tunnel A for 2 km, the water exits the tunnel at Bullocky Creek and then immediately enters tunnel B. This tunnel carries the water 4 km to discharge at a little less than 780 metres asl, into a stream flowing into the expanded Lake Onslow. Just a few metres of water level change at Lake Onslow will easily exceed the operational storage volume of the Loganburn Reservoir. A variation would be just to have A,B as a single tunnel of 6 km.

Tunnel C transports some Lake Onslow water to the Taieri River, providing water when it is required to maintain downstream summer flow in the Taieri River for irrigation. This tunnel is a little less than 5 km in length, discharging water into the Taieri River through a small new power station at a point about 600 metres asl. This station might be owned by the Maniototo Irrigation company to provide some income from electricity sales. The station turbine pressure head will vary with Lake Onslow level but would never be less than 120 metres, corresponding to the maximum Onslow drawdown. Tunnel C would need to be constructed concurrent with Onslow development because it would have to be completed prior to first raising of the lake. A variation of the scheme would be to have tunnel C only without the Taieri diversion. However, this would requirement ongoing payment for pumping water up to Lake Onslow from the Clutha.

The alternative scheme would have greater storage capacity than the Loganburn Reservoir and so would provide a more reliable summer water supply for more extensive irrigation along the Taieri River. The scheme would not conflict with pumped storage operations at Onslow because there will always be at least a few metres of storage available. In addition, the new power station would provide a small increment of renewable power output. Trustpower’s existing Paerau and Patearoa stations would be unaffected, perhaps gaining a small power increase from reduced spill loss during major flood events.

The new power station, would have the capacity for considerable discharge fluctuation to follow power prices through the day, with the flow variations being damped by the extensive Taieri wetland region just downstream. The Maniototo Irrigation Company would need to have control over mean daily outflows, analogous to its present control over water release from the Loganburn Reservoir. A water balance requirement would be that the total volume of water released through the new power station for irrigation must not normally exceed on average the volume diverted from the Taieri River. However, one significant irrigation advantage compared to the Loganburn Reservoir is the very large water volume of the expanded Lake Onslow, which would serve as drought insurance. That is, a significant Central Otago drought could be offset by release of additional Onslow water (at some cost) to maintain irrigation operation until wetter conditions returned.

The environmental advantage of the Taieri diversion irrigation scheme is that it would allow restoration of the Great Moss Swamp as an Onslow offset, and also maintain environmental flows during droughts for the existing Taieri wetlands. There is also the possibility that the Great Moss Swamp, as a high fenland, could provide enhanced carbon accumulation.

The new scheme does involve tunnel construction and probably could not be contemplated as a private irrigation system in itself. However, it would seem to have definite attraction if it was constructed as part of Onslow pumped storage budgeted environmental offsets. As such, it would be only a small component of the total Onslow construction cost.

It would be necessary to demonstrate that the alternative to Loganburn, if constructed, could be operated to provide irrigation water supply to at least the same extent as the present Loganburn Reservoir. This could most easily be achieved by a simulation study, as if the scheme had been in operation over past years. The model would need to take into account all various environmental minimum flow constraints presently in operation.

As a final assurance, the Loganburn Reservoir might be maintained in a static state for some time after the new scheme came into operation. The final removal of the Loganburn Reservoir could be carried out by incremental lowering, allowing time for progressive replanting of red tussock and original vegetation of the Great Moss Swamp. The Loganburn Dam would still maintain some functionality, because it could serve to briefly hold back major floods as part of flood control and to reduce spill loss at the Paerau and Patearoa hydro power stations, as at present.

(5) Possibility of creating new wetlands near Onslow
It happens that the topography of the upper portion of Bonds Creek (north east of Onslow) would enable a low dam to create of an extensive shallow lake (Fig. 6).

Fig. 7. Maximum extent of a shallow lake (dark blue) that would be created from a low dam (red) in the headwaters of Bonds Creek, with lake level at 760 metres asl. Map source: LINZ

Any actual lake is likely to be smaller than the 760-metre lake shown in Fig. 7. This is because the purpose of the lake is to enable the establishment of new wetlands as offsets to those lost at Onslow, should Onslow be raised for pumped storage. That is, the object is not to achieve the largest possible lake surface area, but the largest possible area of new wetlands. The lake elevation should therefore be selected such that the lake maintains a high water table over extensive areas of near-flat relief suited to wetlands establishment, just as the present Lake Onslow does for the wetlands around its southern shoreline. The selected lake elevation is therefore of importance. There would be a need to take into account details of topography, soils, drainage and various other ecological factors. An ecological study in the Bonds Stream headwaters would establish the total area of new wetlands that could be created. The whole development would also require land purchase agreement from the landowners concerned. Subject to these provisos, development of Bonds Creek wetlands might provide a relatively low-cost ecological offset as compensation for wetlands lost around the present Lake Onslow shores.

5. Summary
The Onslow pumped storage scheme is a large and many-faceted project. It is perhaps natural that some should react with initial trepidation and caution. Solution of the New Zealand dry year problem is now recognised as essential, but it could happen that the NZ Battery review decides on some other course of action. However, if Onslow proceeds then there need not be economic losers in the process, with many different gains to be made in different aspects at both national and regional levels.
All this is not a personal advocacy of Onslow pumped storage as such. No individual can advocate large expenditure on a major project, as opposed to being spent in some other part of the economy. But within the stated goal of 100% renewable power, Onslow pumped storage is a prime contender to handle the associated issue of dry year buffering.