The Government is funding a $30 million study to tackle New Zealand's 'dry year problem' by introducing a renewable electricity grid.
The dry year electricity problem refers to when hydro-power catchments don't receive enough rainfall and water storage runs low.
The NZ Battery project will provide advice to the Government on possible dry year solutions, with focus on introducing pumped water storage at Lake Onslow in Central Otago.
This pumped storage 'battery' will store and use water independently from water flows, so energy can be set aside to meet daily demand peaks and dry year periods.
When water levels can't meet energy demands, back-up schemes are needed, which fossil fuels currently offer.
But with the proposed plan, the stored water works like a battery - it can move to the upper reservoir when electricity is in high demand, and in low demand, be pumped uphill for storage.
Energy and Resources Minister Megan Woods says pumped hydro will "decarbonise the grid" and make wholesale electricity cheaper.
"Pumped hydro would be a game-changer for securing sustainable, cheaper, low-emissions electricity for the long term."
Woods says the infrastructure plan, set to take four to five years to build, will create more than 3500 jobs and deliver more affordable power to Kiwis.
When the investigation is complete, a business case will decide whether to proceed to stage two, where engineering design and fieldwork will be carried out - costing a further $70 million.
The Interim Climate Change Committee said a pumped storage solution "shows promise" in a 2019 report, recommending further investigation.
Woods says a pumped hydro solution will open new opportunities to transport and industrial heat sectors, as the cheaper electricity price will make a strong competitor to fossil fuels.
"[It's] a game-changing, long-life asset for many New Zealand generations to come."
The $30m study will likely include:
- initial assessment of Onslow and other potential projects
- a detailed feasibility project design
- developing plans for consenting and assessing implications on the electricity network
- investigating environmental impacts and options for project to generate net ecological gains
- analysing commercial feasibility and designing procurement methodology
- early engagement with iwi
- securing land access for geotechnical investigation and potential project use.
Australia is currently building a pumped storage project, and Scotland has two running pumped-storage hydro-electric power stations.