The government says its proposed "pumped storage battery" at Lake Onslow in Central Otago could mean New Zealand would be among the few countries in the world with a fully renewable electricity system.
So-called "pumped hydro" systems see water pumped back up to the top of a reservoir when energy demand is low, so that the water can be released when demand is high.
The government has set aside $30 million to develop a business case for the system, which it is touting as the "single biggest infrastructure project since the 1980s".
Corin Dann speaks to Energy Minister Megan Woods.
