16 Nov 2022

Lake Onslow not ideal for battery lake, cost 'vastly understated' - Contact Energy

2:27 pm on 16 November 2022
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Lake Onslow. Photo:

Contact Energy has warned the government against the development of the large-scale Lake Onslow scheme, which would provide some battery backup in dry years.

Chairperson Rob McDonald told shareholders at Contact's annual meeting this morning it would cost an estimated $42 billion to reach 100 percent renewable energy across all generation, transmission and distribution assets, according to an independent report by Boston Consulting Group (BCG).

Contact would play its part in the development, but the government must carefully consider how its potential interventions will impact investment in new generation, such as the Lake Onslow scheme, he said.

Contact had a direct interest in the specifics of the Otago region's Lake Onslow, with the proposed intake and outlet impacting water flows at its Roxburgh dam.

Photo: RNZ / Nate McKinnon

"The BCG report clearly identifies the significant progress already underway to address the dry year risk, and that there are lower cost and more effective ways to decarbonise New Zealand energy sector, including the use of smart technology and increased demand response," he said.

"While the government's evaluation of Lake Onslow is at early stages and ongoing, Onslow is a high risk and expensive option to address the final few per cent of renewable generation, when compared to other opportunities to decarbonise New Zealand," McDonald said.

As well, he said Lake Onslow was a less than ideal location for a battery lake and Contact feared estimated cost was vastly understated.

"If it proceeds it will have a chilling effect on the robust renewables' investment pipeline we now see," he said, adding that even much smaller projects had faced significant cost overruns and delay.

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