Onslow pumped storage

Comment by Earl Bardsley, University of Waikato, March 2023.

If constructed, the Onslow pumped storage scheme in Otago (New Zealand) would be the world’s largest in terms of energy storage capacity (5 TWh). This large capacity would enable New Zealand’s green transition by avoiding the present need for fossil fuels (coal and gas) for power generation through hydro dry years. It is difficult to see the transition going ahead without Onslow.

General video overviews can be found here, here, and here.

The Lake Onslow reservoir on February 21, 2023. Energy storage would be achieved by raising the lake to have an upper level about 80 metres above the present level. Credit: Yasaman Karaminik.

The current situation is that Cabinet now has the initial reports on dry year options from NZ Battery, including Onslow pumped storage. The estimated Onslow construction cost has been increased to $15.7b and the proposed scheme will be subject to more detailed investigation. A combination of other alternatives will also be considered, which are less expensive in total but have a higher running cost. The National Party has confirmed that they would not proceed with the Onslow scheme if they become government after the October election. Also, they would remove the current ban on offshore hydrocarbon exploration. It seems that the National Party has chosen to place itself on the wrong side of history and Onslow has now become an election issue.

The recovery from Cyclone Gabrielle and cost of living issues has forced Labour to drop a number of its climate change policies, to the extent that there is now appears to be little difference between the two major parties. This gives opportunity to the government to be remembered in history as having initiated the Onslow scheme as a bread and butter project leading to long-term lower electricity cost for New Zealanders. This is in addition to Onslow’s climate change mitigation role in making coal and gas fired power generation uneconomic.

Apart from climate change mitigation and lowered electricity prices, the Onslow scheme also offers the possibility of regional climate change adaptation. The Cyclone Gabrielle impact on Auckland has revealed the city had an infrastructure ill-prepared for an unprecedented rainfall event. The lesson is that extreme event impacts on our cities need to be anticipated and prepared for. At the other end of the country from Auckland, the Dunedin water supply is vulnerable to the opposite extreme – an unprecedented drought. This is because there is no significant nearby river that arises in the wet Southern Alps. Dunedin water supply resilience could be readily achieved with a narrow tunnel extending from an expanded Lake Onslow to the city water intake. This would mean that emergency water would always be available via Onslow from the Clutha River, which is New Zealand’s largest river by discharge. This and other aspects of how Onslow could provide resilience against extreme Otago droughts can be downloaded here.

A scheme as large as Onslow pumped storage will of course have environmental impacts. In particular, nearby wetlands will be flooded. This could be seen as a continuation of past hydro impacts in Otago and Southland, ranging from the flooding of the Cromwell Gorge to the diversion of Southland’s Waiau River. It is important, therefore, that some Onslow funding be directed toward setting up environmental offsets, should the scheme proceed.

One offset possibility might be constructing floating wetlands over part of the expanded lake Onslow. A different type of offset could be restoration of Lake Monowai in Fiordland National Park. This lake is an icon of environmental impact with many kilometres of shoreline forest and lake beaches drowned by raising the lake for hydro storage. Restoration would be achieved by government purchase of the Monowai power scheme and the lake put back to its original level. The shoreline beech forests would be replanted (with carbon credits). The Monowai power station, which is located outside of the National Park, would be reconfigured to run of the river mode and then sold.

Remnant stumps of the drowned shoreline Lake Monowai beech forest, which originally would have been like the forest in the background. Credit: Yasaman Karaminik.

There is mention of Onslow in the wider context of increasing future electricity demand in the podcast discussion here. A useful overview of the geographical distribution and sizes of pumped storage schemes around the world can be found here. The potential value of pumped storage in smoothing electricity price fluctuations can be found here, in the case of Norway. The world’s present largest energy storage capacity is the 3.3 TWh Saurdal scheme in Norway (see Table 2 in the publication that can be downloaded from here).

If it was built, the Onslow scheme would be the greatest national impact achieved by a research concept originating from a New Zealand university. Although at the other end of the country from Lake Onslow, the University of Waikato can take some pride in being both the initiator and sole researcher to date on Onslow pumped storage from 2005. In this regard, I would like to acknowledge the work of my University of Waikato former research students, Sarah Bear and Mohammed Majeed:

Sarah Bear (2005). Hydrological evaluation of pumped storage in the Onslow-Manorburn basin (MSc).

Mohammed Majeed (2019). Evaluating the potential for a multi-use seasonal pumped storage scheme in New Zealand’s South Island (PhD).

Unfortunately, however, some misconceptions about Onslow keep coming up:

* Not a single energy expert supports pumped storage at Lake Onslow.
* Onslow pumped storage will deter investment in new renewables.
* If it was any good, it would have been built already by private enterprise.
* An Onslow-equivalent pumped storage scheme should be in the North Island.
* Lake Onslow pumped storage is old technology and it could become a white elephant.
* Onslow pumped storage will cause increased transmission loss.
* We should build more wind farms and hydro dams instead.
* Onslow is an expensive means to get the last few percent to 100% renewable electricity.
* Onslow pumped storage is too expensive.
* Onslow will cause higher home electricity bills.
* It would create a net energy loss to the nation.
* Hydro spill will not be reduced.
* Onslow pumped storage can only be justified if hydro spill is reduced.
* There will be significant loss of the pumped water through evaporation and leakage.
* A large lower reservoir will be needed.
* There will be no local environmental gain to offset the Onslow wetland loss.
* Mudflats will be exposed at the maximum Lake Onslow drawdown.

Responses to the above can be downloaded here.

Onslow in the news
Selected items, both positive, negative, and silly, are listed below in time order. There is inevitably a degree of overlap. Comments are appended to some. Most news items date from the July 2020 election announcement of investigation of dry year alternatives, with emphasis on Lake Onslow pumped storage.

January 2009
Govt eyes price of power as water spilt

August 2018
ANU pumped hydro researchers take out Eureka Prize
This is not about Onslow but there are similarities in that Australian pumped storage sites were identified that would enable 100% renewable electricity there. In New Zealand, the University of Waikato has played a similar role to ANU, but with focus just on the Onslow scheme.

September 2019
Storing energy for a transitioning grid

July 2020
Govt looks to boost clean energy supply, commissions $30m investigation
Includes two 1News video clips about the New Zealand government July 2020 announcement of initiation of investigations into Lake Onslow pumped storage.

Pumped hydro may result in ‘biggest infrastructure project since the 1980s’

Industry figures say Lake Onslow hydro project not worth it

Lake Onslow hydro plan expensive and unnecessary
The Centre for Sustainability at the University of Otago advocates modification of electricity demand rather than increased storage capacity at Onslow. However, it isn’t clear that demand could be sufficiently reduced to take New Zealand through a dry year without significant economic impact.

A prudent approach to New Zealand’s renewable energy goals
Raises the possibility of a Taranaki gas alternative to Onslow.

Solving the critical flaw in our power grid

Time for new nation-building hydro project

August 2020
$4 billion Lake Onslow pumped hydro scheme could ‘tip electricity market on head’
This is something of an over-reaction to the size of Onslow impacting the electricity market. Onslow is only “large” with respect to energy storage capacity. The generating capacity at Onslow will be about 1000 MW, which is just a little larger than the MW capacity of the Huntly power station. Nobody has suggested that Huntly is a huge energy gorilla with capability of tipping the electricity market on its head.

Lake Onslow project: area has seesawing history

Otago pumped hydro a fanciful, rainbow project

Lake Onslow: bold vision or engineer’s pipe dream?

September 2020
Election 2020: Labour pledges 100 per cent renewable power by 2030

Labour pledges extra $70m for Lake Onslow dam project

Labour’s 2030 ‘100 per cent renewables’ goal is realistic if Lake Onslow scheme stacks up

Will pumped hydro result in significant energy price hikes for NZ?

Ardern talks environment and economy on campaign trail in Taupō
Recognition of trade-offs between advantage and disadvantages of the Onslow scheme.

October 2020
The Detail: Is renewable energy the best way for NZ tackle climate change?
The 100% renewable energy mentioned here is actually 100% renewable electricity.

As a minister plumps for hydro, uncertainties loom

November 2020
Contact says Lake Onslow scheme would ‘paralyse’ investment in renewables
The potential ‘paralysis’ of renewable investment is often repeated. However, it is not clear why construction of what amounts to a large battery should deter new investment in renewable electricity in any way. Since November 2020 there have been many announcements of new solar, wind, and geothermal projects.

March 2021
Pumped hydro to take a year longer

June 2021
Power industry ‘openly resistant’ to Lake Onslow, minister suggests

Lake Onslow energy storage proposal ‘fatally flawed’

Lake Taupo possible ‘battery’ for power production
Energy storage possibilities in the Central North Island

Our hydro dams are bubbling up climate-warming methane

July 2021
Understanding Lake Onslow
A good overview. An initial error concerning the area of the expanded lake has been corrected.

September 2021
Coal generation rises to highest share in 13 years
Energy Minister Megan Woods points out the potential value of Onslow pumped storage to offset coal use for power generation.

October 2021
Govt awards $11.5m contract to investigate feasibility of Lake Onslow power scheme

December 2021
Project Onslow is the key to unlocking our renewable future

February 2022
Critics warn Lake Onslow power scheme’s $4b price tag may balloon
Includes discussion of some engineering aspects.

March 2022
Genesis imports US wood pellets to fuel Huntly renewable energy trial
Biofuel burning at Huntly is suggested as an Onslow alternative. However, that this would maintain high electricity prices into the future.

The giant puddle that could power NZ
A local view of the Onslow scheme and its environmental setting. Some great pics as well.

Farmers unhappy crucial land to be flooded under Government’s proposed Lake Onslow hydro storage scheme
Some less than optimal dealing with local farmers.

April 2022
Geotech investigations to get underway for pumped hydro at Lake Onslow
Initiation of Onslow geotechnical investigations announced by Megan Woods.

July 2022
So far, so good for multibillion-dollar Lake Onslow power scheme, Cabinet decides
Overview of the mid-year progress to date on dry year options.

August 2022
Pumped hydro plan ticks boxes
Further comment on mid-year progress to date.

September 2022
Lake Onslow climate conundrum
Concerns over environmental impact raised by Forest & Bird. A good summary on the ecological side. One correction is that the downstream Clutha River impact of Lake Onslow water will in fact be more positive than negative. This is because Onslow water will be released at times of low Clutha flow. The impact will be the other way around – didymo and other aquatic weeds will be introduced from the Clutha River into Lake Onslow and then to the Teviot River. If Onslow pumped storage goes ahead, it is important that constructed environmental offsets be considered as part of the scheme.

October 2022
Onslow scheme no ‘done deal’
Summary of the Onslow open day at Roxburgh on October 29. It is noted that the start of construction, if it happens, is still years away. The dirty water shown in the video is of a river flood and not indicative of Onslow water appearance if the lake is raised.

November 2022

NZ Battery Project has air of déjà vu
This article was written just after the Onslow open day at Roxburgh on October 29. It was revealed for the first time that the underground power station could be 80 metres below the level of the Clutha River. This may be to enable the system to operate without having to construct an expensive new dam on the Clutha.

Lake Onslow not ideal for battery lake, cost ‘vastly understated’ – Contact Energy
This claim by Contact Energy is on the basis of a report by the Boston Consulting Group (BCG). The report was commissioned by Contact Energy, Genesis Energy, Mercury, and Meridian Energy. However, even in this context, the essential conclusion of the report concerning Onslow was not to have a conclusion:
The Government’s $80 million investigation into Lake Onslow will provide improved information on the project, including greater details on the cost, timeline to build, generation capacity, lake storage, how Lake Onslow will operate in the market, and other aspects like consenting. Until these details emerge it is too early to develop a strong view on its viability. (BCG p.12).

December 2022

Ministers push back next call on Lake Onslow power scheme until the new year
Notification that the dry year Phase 1 results and Phase 2 proposals will not now be in December as previously indicated. The initial intention was “early in the new year” but the Auckland flood events mean that the announcements will be in March.

January 2023

February 2023

Power companies don’t have green interests at heart – watchdog
Simon Upton (Parliamentary Commissioner for the Environment) queries motives of some critics of the Onslow scheme.

March 2023

Josie Pagani: How to pay to fix our broken infrastructure
Evidently Onslow pumped storage will incorporate “a massive valley in Otago that will be concreted over..”. There will be environmental impacts but emplacement of a layer of concrete over the Central Otago landscape is not one of them.

Government to take Lake Onslow power project forward despite $16b price tag
The government announces that further investigation will commence for pumped storage at Lake Onslow, despite a large increase in estimated construction cost from $4b to 16b.

Minister says $15b Lake Onslow investment decision should be above politics
Call made for an unlikely change of heart by National with respect to Onslow


What about North Island peaking ability?

This is not about Onslow as such, but if Onslow (or some other system) results in 100% renewable electricity, then the North Island fossil gas peaker stations would no longer be operative. Ability to bring in additional electricity quickly for a short time aids the robustness of the grid, particularly in the case of a brief outage in south-north transfer. One approach is to have large batteries set up. However, batteries have a finite lifetime and are presently expensive – Contact Energy have cancelled their planned 100 MW battery because of rising material costs. An alternative approach is to construct some small pumped storage schemes in the North Island where the terrain allows. Such schemes are more expensive than batteries and will take time to construct. However, they have the advantage of being sustainable once operational, store more energy than batteries, and have low operating costs. See, for example, this newsletter item.