Lake Onslow pumped storage
Comment by Earl Bardsley, University of Waikato (formerly Associate Professor in hydrology and Meridian Energy Senior Research Fellow in Applied Hydrology).
April 2026
Fig.1. The 8 square kilometre Lake Onslow reservoir on February 21, 2023 (Earl Bardsley). Energy storage would be achieved by raising the lake to a maximum of 80 metres above its current level. The expanded lake would become the upper reservoir of a pumped storage system with a 16 km tunnel link to the Clutha River (lower reservoir). The enlarged lake would have a minimum surface area of about 45 square kilometres (at maximum drawdown). The expanded lake’s energy storage capacity would create the world’s largest pumped storage scheme by energy storage measure, almost doubling New Zealand’s total hydro storage capacity and thus serving as insurance against dry years.
The concept of pumped storage at Lake Onslow pumped originated at the University of Waikato and was selected as a possible dry year option by the previous government, but then rejected by the new government after the 2023 election. However, a private consortium is now looking to construct the scheme as a purely commercial project (independent of taxpayer support) for an estimated cost of $8-10 billion. On March 18 (2026) the consortium’s proposal was accepted for evaluation via the fast-track process, on the basis of national significance.
An advantage of private construction is that the risk of cost blowouts during the build is removed from the taxpayer. That is, any subsequent power generated from the Onslow Scheme cannot be sold at higher price to offset unexpected costs along the way. This is because any higher-priced Onslow power could not compete in the electricity wholesale market. Rather, unexpected cost factors would mean selling cheaper power for a longer time before break-even was achieved (Onslow’s operating lifetime time would be at least 100 years).
The extent to which income from the Onslow scheme would go overseas depends on the investment source. For example, the financial returns would remain in New Zealand if its construction was funded from the New Zealand Superannuation Fund.
Details of the consortium’s initial fast track proposal can be found here. This will next be expanded into a large substantive proposal for review by an expert panel. The substantive proposal may or may not be competed before the election and may differ somewhat in content from the initial proposal. A key moment will be finding whether the necessary consents are gained, so funding for the scheme can then be sought.
The present situation for the Lake Onslow Scheme is described in this RNZ April item. Current estimation is that the scheme could be completed in 2034. The scheme does not have to wait until it “fills” to become operative, however. As soon as the rising water level goes above the minimum 730 metres asl, that increment of water volume can generate income by selling into the market when prices are high. In this way, the lake would be raised to its mean operating level (not to its maximum level) in a rising saw-tooth way, generating income as it fills.
The Onslow Scheme also has implications for LNG importing. The New Zealand government is presently discussing whether to import LNG as a response to the risk of a “dry year” when hydro power output declines because of a period of reduced river inflows into the hydro lakes. The potential for dry year impact on the economy is presently exacerbated by the declining availability of existing New Zealand gas supply. The impact was most recently seen in the high wholesale power prices in the 2024 dry winter. With the Onslow Scheme anticipated to be completed in 2034 (replacing the Huntly power station), it may be seen as a better dry-year alternative to LNG importing because its power would be cheaper and not involve imported fossil fuels subject to price variations from geopolitical events. If the Onslow Scheme construction proceeds without concurrent importing of LNG, it will be necessary to find an interim dry year strategy until the scheme becomes operational.
Fig. 2. Water volume and lake water level relations in the Lake Onslow pumped storage scheme as inferred from the current specs listed by the private consortium looking to construct pumped storage at Lake Onslow.
Fig.3. The buffer pond at the intake-exit point of the tunnel to Lake Onslow is currently specified to be in the vicinity of Craig Hill, upriver from Beaumont (from NZ topo map).
One common misconception about the Lake Onslow Scheme is that it is “far away from Auckland where its power is needed” or “at the wrong end of the transmission grid”. Pumped storage schemes are not power schemes – they are net energy consumers. Onslow would generate no new South Island electrons that have to go all the way to Auckland. Rather, it would store South Island electrons (from existing South Island hydro, wind, and solar) until they are needed in a dry year when they are then sent north from Onslow generating, to make up for the reduction in South Island hydro power output. One advantage is that there would be some reduction in transmission loss in dry years because there would no longer be a need to send North Island power to the South Island at such times – as happened, for example, in the 2024 dry winter.
From the perspective of climate change, the Onslow Scheme provides mitigation because it would reduce carbon emissions. This is both directly from reduced fossil fuel use for power generation, and indirectly by providing the dry year security and reduced power prices needed for the green transition generally.
In addition, the scheme also has potential for providing regional adaptation to climate change. In particular, a narrow-diameter 17 km rock tunnel could connect the expanded Lake Onslow with the Deep Creek water intake point for Dunedin city. This would provide emergency gravity-flow water that could maintain Dunedin’s water supply against the worst drought from climate change. Even if Lake Onslow by itself provided all of Dunedin’s water for a year, that would only translate to a water level fall in the lake measured in cm.
The scale of the Lake Onslow Scheme
The gentle hill country around Lake Onslow makes it difficult to envisage the magnitudes involved with the scheme. A rough indication is to compare the Lake Onslow Scheme with four familiar components of South Island hydro schemes (shown below).
Fig.4. Selected hydro power components for Onslow comparisons.
Energy storage: the Onslow Scheme would have about twice the energy storage capacity of Lake Pukaki, which is New Zealand’s largest hydro storage lake.
Dam size: The new dam at the outflow of Lake Onslow would be more than twice as long as the Benmore Dam, but for most of its length would not be so high.
Electricity generation and usage: multiple pump/generation units would be set up in an underground machine hall. It would be similar in appearance to the Manapouri machine hall, which is New Zealand’s largest hydro power generator. When generating at maximum, the Onslow Scheme would have more power output than Manapouri. When pumping at maximum, Onslow would take in more electricity than the Tiwai Point smelter.
Water pressure: the Onslow Scheme would operate under high water pressure. Suppose the Clyde Dam on the Clutha River was enlarged to a massive structure with its height equivalent to seven Clyde Dams, one on top of the other (Wanaka township would be flooded beneath 500 metres of water). The water pressure on the turbines of this hypothetical dam would be the same as the water pressure on the pump/generation turbines of the Onslow Scheme. This means that the Onslow Scheme does not have to use a lot of water to produce significant electricity when needed.
Selected references and conference presentations
Bardsley, W.E. (2025). The hydrology of the lake Onslow pumped storage scheme. New Zealand Hydrological Society Annual Conference, Hamilton.
Karaminik, Y. (2024). Environmental offsets and water resource opportunities with Lake Onslow pumped storage (MSc).
Bardsley, W.E., Karaminik, Y., Majeed, M. (2022). Estimating Teviot River compensation flow to offset evaporation loss from Lake Onslow pumped storage. Journal of Hydrology (NZ), 61, p.179-182.
Kamarinik, Y., Bardsley, W. E. (2020). Onslow pumped hydro: environmental offsets and spinoffs. New Zealand Hydrological Society Annual Conference, Invercargill.
Majeed, M. (2019). Evaluating the potential for a multi-use seasonal pumped storage scheme in New Zealand’s South Island (PhD).
Bardsley, W.E., Majeed, M. (2015). A multi-functional large pumped storage scheme for New Zealand in support of renewable energy development? International Congress on Modelling and Simulation (MODSIM2015). Gold Coast.
Majeed, M., Bardsley, W. E. (2015). Assessment of economic and environmental advantages of a seasonal pumped storage scheme (Onslow, Central Otago). New Zealand Hydrological Society Annual Conference, Hamilton.
Majeed, M., Bardsley, W. E. (2014). Simulation models to evaluate economic feasibility of a possible seasonal pumped storage scheme at Onslow, Central Otago. Electricity Engineers Association Conference Wellington.
Majeed, K. M., Bardsley, W. E. (2012). Prospects for pumped storage in Central Otago. New Zealand Hydrological Society Annual Conference, Nelson.
Bardsley, W. E. (2006). A pumped storage scheme for maintaining hydro electricity against climatic variations? (Invited paper) 8th Annual New Zealand Energy Summit, Wellington.
Bardsley, W. E. (2006). China and New Zealand: Large seasonal pumped storage schemes for an electricity future using wind power and small hydro systems? International East Asia Regional Workshop of the International Academy Panel (IAP) on Water Security with Climate Change and Human Activity, Beijing.
Bardsley, W. E., Leyland, B., Bear, S. F. (2006). A large pumped storage scheme for seasonal reliability of national power supply? Electricity Engineers Association Conference, Auckland.
Bardsley, W. E. (2006). The Onslow seasonal pumped storage scheme revisited: An alternative approach to water level management of the southern hydro lakes? New Zealand Hydrological Society Annual Conference, Christchurch.
Bardsley, W. E. (2005). Note on the pumped storage potential of the Onslow-Manorburn depression, New Zealand. Journal of Hydrology (NZ), 44, p.131-135.
Bear, S. (2005). Hydrological evaluation of pumped storage in the Onslow-Manorburn basin (MSc).
Bear, S. F., Bardsley, W. E. (2004). A large New Zealand pumped storage scheme for reliable power through dry years? New Zealand Hydrological Society Annual Conference, Queenstown.
Bear, S. F., Bardsley, W. E. (2003). A pumped storage/thermal station hybrid for maintaining New Zealand electricity supply through dry years. New Zealand Hydrological Society Annual Conference, Taupo.
Reports produced from the earlier MBIE NZ Battery investigations are currently listed under their heading “Lake Onslow pumped hydro”.
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