Ngaruroro pumped storage

The New Zealand government has notified that North Island options will be included as part of its business case review of pumped storage sites, with sufficient energy storage capacity to offset dry year risk. Although having less storage capacity than Onslow-Manorburn, the upper Ngaruroro River can be thought of as the North Island equivalent of Onslow. As such, a possible Ngaruroro pumped storage scheme may be be included as part of the review process. A brief outline of the scheme can be found here. This is a draft manuscript, to be submitted for peer review to the Journal of Hydrology (NZ). The published version will have some differences in content. There is no implication of advocacy for the Ngaruroro Scheme. Both positive and negative aspects are indicated as an aid for public input to the business case review.

Onslow Pumped Storage: an Overview


The need for a large pumped storage scheme in New Zealand has become more urgent because the announced Tiwai closure means the national grid will soon carry a larger component of hydro power, which will require buffering against a dry year.

In July 2020 the Government gave an announcement of a $30 million business case evaluation of pumped storage, with primary focus on Lake Onslow. Given a positive outcome, a further $70 million is to be made available for more detailed site evaluations.

With the transmission line upgrade which will enable northward transfer of Onslow power, the completed Onslow scheme would be transformative, going toward meeting the Paris Agreement emission reduction requirements as far as carbon dioxide is concerned. Some recent comment can be found here.

The Onslow scheme would enable  100% renewable electricity generation and cost about $4 billion to construct. The 100% has brand advantage but the more important value for money is the large dry year buffer that will enable energy transition to renewable electricity and away from fossil fuels. Power equivalent to the Manapouri output could keep the batteries charged for New Zealand’s entire car fleet converted to EVs. However there would be little point in EV conversions if the charging stations close when a dry year comes along. Likewise, who would risk the expense of having heavy vehicles running on green hydrogen, if the availability of the hydrogen is dependent on the weather?

In addition to dry year buffer, just the presence of the large additional energy storage will tend to depress electricity prices and thus make the transitions away from fossil energy more attractive. However, basic household electricity bills will be more important to many. Presently, wholesale electricity prices are low when all our hydro lakes are full. However, that does not happen so often. In this respect, Onslow is not a “massive overbuild”, because it represents a large new hydro lake (bigger in energy storage terms than all the others put together), that will always exist in “full” status except for rare dry years. That is, this big pile of reserve water even doing nothing at all will create cheaper electricity than a big pile of coal at Huntly doing nothing. This is an important aspect because much has been made of the $4 billion “expensive” cost of Onslow. In fact, an argument can be made that it will be even more expensive long-term if Onslow is not built. This is because, as Keith Turner has noted, if the construction cost is spread across all electricity consumption then the net effect is still a lowering of electricity prices.

There also needs to be clarification of the often-cited 14% increase in household electricity prices as the price to be paid for going to 100% renewable electricity. This derives from the ICCC report, which considered covering dry year risk by an overbuild of renewable generation – in effect, creating a large number of wind farms generating excess power in most years. This rather silly notion would of course be hugely costly, with the subsequent 39% electricity price rise for industry also having a deterrent effect on converting from fossil fuels to renewable electricity. Unfortunately, these numbers quickly gained the meaning of “cost of converting the last few percent of power generation to renewables”, omitting all mention of the overbuild assumption that was used to get those numbers in the first place. See, for example, a comment by the New Zealand Initiative here, a recent Newsroom item here, and a Newstalkzb interview with Megan Woods here.

In fact, the ICCC report recognised that pumped storage could be another alternative. The report realised that site-specific and multi-function aspects of pumped storage evaluation would require a major study, so further investigation was called for. The $30 million business case study arising from that will most probably confirm the long-term downward pressure on electricity prices from pumped storage, with consequential encouragement to transition from fossil fuel use to electricity. This price lowering is already indicated by a preliminary study.

The Onslow basin has maximum energy storage capacity well in excess of 5 TWh, being the estimated amount to buffer against dry years in the event of closure of the Huntly Power Station. Pumped storage is the only means presently (and in the foreseeable future) capable of providing 5 TWh of energy storage, which exceeds of all New Zealand’s present hydro lakes combined. It should be noted also that current total global energy storage capacity is made up almost entirely of pumped storage.

Small pumped storage schemes could also be constructed at various locations in the North Island, but they would not be much more than a set of little ponds. The exception is possible use of the upper Ngaruroro River, with Lake Taupo as the lower reservoir. That scheme could store in the order of 2.5 TWh but would involve a long tunnel and various environmental issues would need to be negotiated.  In principle, multiples of the large Tesla battery in South Australia could store the 5 TWh somewhere near Auckland. However, the many batteries required would have a current total cost in excess of 3 trillion New Zealand dollars. Also, those batteries would need to be replaced from time to time.

Demand-side management also has potential for buffering to a degree. However, against a major dry year the “management” can be little more than repeating past electricity conservation campaigns to reduce power use by the public and major electricity-intensive industries.

It is true that it would have been better if the Onslow geography had been located in the North Island because that would reduce the need for transmission line upgrades. However, we should be grateful that New Zealand is fortunate enough to have the Onslow basin at all. In contrast, the large Snowy 2.0 pumped storage scheme in Australia will store much less energy but cost about the same as Onslow.

What pumped storage does

Like a battery, pumped storage is a means of energy storage. Power drives pumps which move water from a lower reservoir to a higher reservoir, creating a fixed amount of gravitational potential energy. Power is extracted later by running the water back down, with the pumps running in reverse as generators.

The amount of energy stored depends on the volume of water raised and the height difference between the upper and lower reservoirs. The upper reservoir must be an existing lake or constructed reservoir, but the lower reservoir is not necessarily a “reservoir”. For example, a large river might be utilised instead.

All energy storage systems have some degree of inefficiency. Pumped storage efficiency has improved with turbine development and a modern system could have a to-and-fro efficiency as high as 80%. Some further loss may arise from scheme-specific factors such as how far apart the two reservoirs are.

A pumped storage scheme has two components: energy storage capacity and installed capacity. The energy storage capacity is the maximum amount of energy that can be stored, often specified in GWh. The installed capacity is the maximum power output / use associated with generation / pumping, typically given in MW.

Most pumped storage plants around the world have high installed generating capacity and low energy storage capacity. This is because their purpose is usually to provide brief peaks of power to match short-term daily fluctuations in demand. The Fengning pumped storage scheme, under construction in China, will have the world’s largest installed capacity at 3,600 MW. However, it could only maintain this power output for a few hours. At the other extreme, some pumped storage plants have sufficient energy storage capacity to operate seasonally.

Pumped storage for New Zealand?

An economic and environmental case can be made for a New Zealand pumped storage scheme with large energy storage capacity. Unlike Norway and Canada, our total existing hydro generation capacity is not supported by a large hydro storage capacity. As is well known, this can lead to changes in wholesale electricity prices when hydro levels decline.

For example, 2019 did not rate as an “abnormal” hydrological year, but it is interesting to see the electricity price effect of the Southern Alps heavy rains of March 26, 2019. This was the same weather event which caused temporary closure of the main West Coast tourist route through washout of the Waiho River bridge.

As seen in the graph, the New Zealand total hydro storage declined through March prior to the flood inflows into the South Island hydro lakes. Wholesale electricity prices over this time were around $200 per MWh. Those buying power from the spot market would have been impacted. This would also apply for major electricity users taking out hedge contracts because the hedge cost would have to take into account the risk of the water in storage becoming even further reduced.

Effect of March 26 (2019) South Island rain event on wholesale electricity prices. Prices are median daily values at Haywards node (excluding weekends). Daily storage values provided by NZX.

The sudden increase of southern lakes hydro storage from March 26 caused prices to quickly drop to around $120 per MWh. In other words, if the storage had been at 3,200 GWh from the start of March then the prices would never have been far from $120 per MWh. Equivalently, if the flood inflows had not happened then the prices would have remained at around $200 per MWh.

There was also an environmental impact from the higher prices because they encouraged coal-fired power generation.  In the two weeks prior to the flood events the rate of coal burning at the Huntly Power Station was never less than 7,000 MWh per day. However, if a punitive carbon tax had been in place then the coal might not have been burnt at all and the electricity price would have been even higher.

The desired trend in New Zealand is toward an even greater renewable contribution to power generation, with 100% being an aspirational goal. This applies particularly in the longer term as the natural gas reserves become depleted, and further exploration for new gas fields is no longer permitted. However, the present situation of weather-related electricity price variation does not seem a good path toward electrification playing a significant role in a low-carbon economy.

A major increment of hydro storage capacity would seem a logical step toward achieving lower and more stable electricity prices. Just as importantly, it would provide buffer against dry years in a future electrified green economy. The closure of the Tiwai smelter will increase dry year risk because the Stratford combined cycle station will be closed earlier and the Tauhara geothermal developments are being put on hold by Contact Energy. That is, rain-independent power will be replaced by an equivalent amount of rain-dependent power from Manapouri. This would exacerbate the impact of a future extended dry period in the southern South Island. Although Fiordland is thought of a being wet, the lowest lake levels on record were recorded in April 2017.

The required increase in national storage buffer could in principle be achieved simply by permitting massive lowering of lakes like Tekapo and Pukaki in a dry year. This should be regarded as unthinkable, given the degree of impact already evident on the southern hydro lakes with their erodible shorelines of soft glacial till. Back when they were first raised, the southern lakes were just the low-hanging fruit for quickly and cheaply creating storage, irrespective of consequential shoreline impacts.

The effect of seasonal water level variation in the southern hydro lakes on river flow is seen by the Waitaki River flow at Kurow, before and after hydro development. The pre-hydro river had high flows in spring and summer, from melting snow and summer rain. Winter flows were low because much of the mountain precipitation occurs as snow. However, the main electricity demand is in winter, so the high summer inflows to Lakes Tekapo and Pukaki are now held back to give the needed high lake levels for winter power generation with more winter water release to the river. The end result, shown below, is reduced seasonal flow variation in the lower Waitaki River.

Mean monthly Waitaki River flow at Kurow, before and after upper Waitaki hydro development

New hydro storage should result in reduced power prices while at the same time removing some seasonal storage variation from the southern hydro lakes, with the Waitaki River moving back toward its original seasonal flow regime. This leads to the possibility of pumped storage at Onslow.

The Onslow setting

Lake Onslow looking south

Lake Onslow is located among gentle hills in a high schist rock basin near Roxburgh in Central Otago. It is a small artificial reservoir 8.3 km² in surface area, with a maximum depth of 10 metres near the small dam at the Teviot River outlet. The nature of the topography means there is a considerable increase in lake surface area if dam height is increased. The lake has been raised a number of times since the first dam was constructed in 1888, most recently in 1982 to give the present lake.

The gentle relief and rock nature of the bounding hills reduces risks of rock instability in the event of using the basin for hydro storage with varying water levels. It is unlikely there would need to be landside mitigation operations as in the Cromwell Gorge. Importantly, the schist rock would also provide a far more erosion-resistant shoreline compared to the soft glacial deposits around the South Island main hydro lakes.

Small pumped storage schemes could be set up almost anywhere in the New Zealand if there is a hill comprised of sufficiently strong rock to hold an upper reservoir. A major energy user might consider a hill-top scheme if there was sufficiently large variation in electricity price at different hours of the day. Such small distributed pumped storage schemes might be of value for providing brief peaking capacity on the scale of a day or so, and might be of particular value in association with wind power development in the North Island.

However, finding a suitable location for an upper reservoir large enough for dry year buffering is difficult. In this regard, New Zealand is fortunate in having the Onslow rock basin, which is located within pumping distance of Lake Roxburgh or the Clutha River. This appears to be the only New Zealand site suited to the required scale of energy storage.

Energy storage and lake surface area of an expanded Lake Onslow, as a function of the water surface elevation of the new lake.

The expanded Lake Onslow would have some minimum operating level, which would require a one-off energy expenditure to achieve. This would be the initial raising of the lake.  For example, it can be seen from the above figure that a minimum operating level of 730 metres above sea level (50 square kilometre minimum lake size) would require a one-off energy input of a little more than 2,000 GWh. Fortunately, the closure of the Tiwai smelter means that there should be available low-cost power to achieve this. Further power input would be required to bring the lake level up to the mean operating level (to be decided, in the event of development).

Onslow pumped storage layout

A pumped storage scheme at Onslow would operate by pumping water up from either Lake Roxburgh or from the Clutha River below Roxburgh, through a tunnel to an expanded Lake Onslow. Some of the water would  be run back later when power generation is required. The essential civil engineering would comprise a rock tunnel and an earth dam at the Teviot River outlet from Lake Onslow. The installed capacity could be as much as 1,200 MW. Total cost would probably be about 4-5 billion dollars, depending on scheme size. A large surge chamber and pressure release valves would be required to buffer short-term fluctuations such as wind power buffering and other ancilliary services. This is because of the inertia effect of water in the long tunnel.

The Onslow-Manorburn basin. Sourced from LINZ

A recently-completed PhD thesis at the University of Waikato simulated the operation of the upper Lake Onslow reservoir being confined to the Onslow Basin and operating between 720 and 780 metres above sea level. These specifications were for the purposes of a thesis study to evaluate the possible influence of a large pumped storage scheme on grid operations. A 60-metre permitted operating range is large and would cause the lake surface area to almost double between maximum and minimum storage. An indication of the extent of this variation is seen in the figure below.

Possible extent of a raised Lake Onslow. The outer boundary of the grey region shows the extent of the lake at 720 metres above sea level. The outer contour shows the extent of the lake at 780 metres above sea level. Scale is in kilometres. Dashed line shows the extent of the Onslow dam crest for a lake at 780 metres.

A large permitted operating range is a necessary requirement for Onslow to store sufficient buffer to enable transition to a future low-emission economy. For example, a 50-metre range between 730 and 780 metres elevation gives an energy storage capacity of about 5,000 GWh. However, as noted, the lake shorelines will always be hard rock. The large permitted operating range is for dry year buffer only. There is no suggestion of a 50-metre seasonal water level cycle. An environmental requirement would be that all the land area located between the high and low water levels should be first washed clean of soil, to avoid dust issues during normal operation toward lower levels. This extensive area of bare schist rock will be the largest visual change around the lake. Further information as to how the scheme might appear can be found here, which is a submission written before the Government business case announcement for Onslow and before the Tiwai closure announcement.

The filling process would be slow because water loading of new large reservoirs is done by increments, with a waiting time after each increment to check for any enhanced seismic activity. There are no mapped faults under Lake Onslow but such precautions are standard.

The large surface area of an expanded Lake Onslow gives opportunity for artificial wetland development. In Otago there has been a loss of about 90% of the region’s wetlands. Today even the loss of a small upland Otago wetland is cause for concern. The present Lake Onslow also contributed to wetland loss because the lake submerged Dismal Swamp – its very name reflecting the distain held for wetlands in earlier times.

Keeping the present area of Lake Onslow as open water for recreation, an extensive floating wetland up to 30 km² could still be constructed over most of the expanded lake. That would be a new Otago wetland larger than the area of Lake Dunstan. It would be worth investigating whether the existing wetland vegetation around the present lake might be saved by physical transfer to a floating wetland structure.

The floating wetland requirement would be to create an extensive and intricate network of reeds and narrow waterways, the latter planned carefully to enable passage of eco-tourism excursions from Roxburgh. An ecological advantage is that this wetland environment would be robust against climate variation because it would not dry out in a drought. The entire Onslow system could be surrounded by an extensive predator-proof fencing in support of wetland birds.

Constructing an environmental asset of this type as an end in itself would normally be impossible because of cost factors. However, in relative terms the wetland construction cost would be small relative to the total scheme cost.

Environmental consideration would also need to be given to the new earth dam at the Teviot river outlet from the lake. Whatever the final dam height might be,  the Teviot Stream outlet is a narrow valley so the region of maximum dam height would be localised.

It is important that the new dam should not look like a smaller version of Benmore. Nature gives some guidance here with respect to Lake Waikaremoana hydro dam. Driving up to Waikaremoana gives no sense of a dam because the “dam” is actually an ancient landslide that was soon covered over by native forest. In a similar way, the Onslow dam should be constructed with the aid of landcape architects to be indistinguishable from the Central Otago landscape. That is, it should be overlain with constructed ridges, schist rock outcrops, and tussock cover.  There would also need to be minimal disruption to local hydrology. In particular, water release to the Teviot River from Lake Onslow should remain as it is now, so the present small Teviot River power scheme would not be affected.

Onslow operation

Once the operating level is reached, the Onslow scheme could operate to provide wind power buffering and moderate the seasonal variation of the main southern hydro lakes. For example, high spring and summer inflows to Lake Pukaki could now be released from the lake and not held back for winter generation. The excess spring and summer power so generated from the Waitaki power stations would be used to pump water up to Lake Onslow. Winter power generation would then bepartly from the Waitaki power stations and partly from water release from Onslow. This is only a rearrangement of storage and there is no transmission line upgrade required north of the southern hydro lakes. Replacing the buffering capacity of the Huntly station would require transmission line upgrade – recently announced by Transpower in response to the Tiwai closure.

To summarise this proposed seasonal process, water is released from a lake at the top of a hill (eg Tekapo, Pukaki) to generate power to pump water up into another lake (Onslow) at the top of another hill. In energy terms, the practicality of this apparent irresponsibility arises from the limited storage capacity of the present hydro lakes. From time to time, high water levels in the hydro lakes lead to spill losses when river floods pour into a hydro lake which has no further storage space. Such spill losses do not happen often but there can be considerable lost generation opportunity. This applies particularly for the Waitaki hydro scheme where there can be simultaneous spill at all power stations – as happened in December 2019.

If summer water is released from the Waitaki main hydro lakes so that their water levels remain more often near mid-range, there will be available lake storage capacity on hand when major inflow events occur. That inflow water is then available for later generation rather than being lost to spill. At the same time, there is the shoreline environmental advantage of reducing seasonal water level fluctuation in the hydro lakes. Also, the Waitaki River flows would revert more toward their pre-hydro state so more summer water is available for irrigation and recreation. There would also be some useful flood peak reduction in the lower Waitaki. It could be worth considering reducing the permitted water level operating ranges for the existing hydro lakes.

Equally important, in commercial terms this seasonal operation would work within the electricity market to generate income from purchasing cheaper power in spring/summer and releasing it in winter at times of higher prices.

Much of the PhD study was concerned with simulating the energy aspect of this seasonal mode of operation coupled with a large operating range at Onslow. It emerged from the simulations is that in any one year there was much less than the maximum range of water level variation. As far as we could estimate, the additional power yield from reduced spill resulted in a small net power gain, after allowing for inefficiencies in the Onslow pumping operation and evaporation loss. That is, the net effect of Onslow pumped storage in this mode of seasonal operation is to create a small power station as a long-term average, mostly arising from more power generated from the Waitaki power stations.

The prime value of Onslow pumped storage would be to provide energy reserve to buffer through dry periods like 2007-2008, for a future low-emission economy.  However, once constructed, it is highly probable that the Onslow turbines would be operational every day in support of wind power and also as part of seasonal operation. There could also be utilisation for frequency keeping, spinning reserve, and related ancilliary services. In this way Onslow is superior to coal-fired backup, where the thermal station would do nothing in normal years. Onslow pumped storage might also enable new irrigation schemes in the Ida valley, taking advantage of the pumping infrastructure. However, this would be subject to water quality requirements.

A particular advantage of the new Lake Onslow would be its operational longevity. The water pumped would be from either Lake Roxburgh or from a little downstream of Lake Roxburgh, thus carrying minimal silt load to the expanded Lake Onslow. Similarly, the natural water inflows to the expanded lake will be from streams draining small catchments of gentle relief, also carrying minimal sediment load. An expanded Lake Onslow should therefore remain operational almost indefinitely.

Transition to low-carbon

There has been a significant development in favour of pumped storage with New Zealand’s signing of the Paris Agreement, with a commitment to transition to a low-emission economy. In this regard, there is a surprising amount of confusion in the media over the potential role of Onslow pumped storage in emissions reduction via achieving 100% renewable electricity (presently aimed for 2030). Only a small percentage of New Zealand’s electricity is generated from fossil fuels, so buffering dry years with a $4b pumped storage scheme would seem a hugely expensive means to achieve minimal emissions reduction. However, Onslow is about carbon dioxide emissions reduction over the main emitters, not just the small amount from power generation. That is, the emissions reduction will come from conversions to EV’s, large vehicle conversions to green hydrogen, and conversion of industrial heating from fossil fuels to renewable electricity.

The reasoning behind the significant emissions reduction effect is as follows. With the addition of Manapouri power into the national grid, a large proportion of the electricity utilised by the new EV’s etc will come from hydro power generated in the southern South Island. This power in turn must be buffered against low rainfall if the green transformation is not to run the risk of collapse at its first dry year. The question then is – should the green transformation buffer be black (stand-by fossil fuel thermal stations) or green (pumped storage)? It is questionable if there is even a choice. There is limited gas available going into the future, given exploration restrictions. And the Huntly power station is nearing the end of its life for coal burning. Onslow pumped storage with its massive energy storage capacity is therefore the obvious enabler of significant national reduction of carbon dioxide emissions by sustainable enabling of the green transformation.

It is not that the transition to 100% renewable electricity is an end-goal in itself for emissions reduction. However, the 100% figure is still a useful consequence from constructing the pumped storage green buffer that will enable the new electrified economy that will achieve the big emission reductions.

Concluding comments

A wide range of scheme implications will be overviewed by the Government review panel that will evaluate the business case for the Onslow scheme. This will include community involvement and also consideration of other storage options. The results will probably be known before the end of 2021. If the business case is viewed favourably, a $70m investigation will consider if the site geotechnical conditions of the scheme will permit a large development. The decision will then be made whether Onslow pumped storage will be constructed.

I would like to recognise the climate protest movement for raising climate change issues to the level where the necessary dry year buffering is now considered seriously, enabling transformational change to a green economy. Coming from Otago, I would like to express a personal hope that the scheme can be adapted to a form acceptable to the people of Otago and Southland, having suffered significantly from tourism declines and the likely Tiwai Point closure. Hopefully, Tiwai can be negotiated to remain operational for a few more years so that its final closure coincides with the initiation of pumping to fill the expanded Lake Onslow, should the scheme proceed.

My thanks to my former research students Sarah Bear (MSc) and Mohammed Majeed (PhD). I would also like to thank Bryan Leyland and Malcolm Taylor for their continued interest over the years. My thanks also for the supportive comments from the audience at the New Zealand Electricity Engineers 2006 conference*.

*Bardsley, W.E., Leyland, B., and Bear, S. (2006). A large pumped storage scheme for seasonal reliability of national power supply? Electricity Engineers Association Conference, Auckland, June 16-17.

Earl Bardsley, University of Waikato, School of Science, October 2020.