In its latest Onslow update released yesterday, Cabinet has decided on the next steps for the project and also ruled out a couple of options.
Hydrogen is out and pumped hydro storage in the North Island has also been rejected.
The other option is called the portfolio approach, which draws on using logs and ramping up geothermal energy.
A decision on what option is favoured will be made in the middle of next year.
The battery project was set up by the Labour government to explore ways to solve the dry year problem in New Zealand without using fossil fuels and support a path to 100% renewable electricity generation.
The Lake Onslow approach, which was costed at $16 billion earlier this year, had been described as technically feasible and could resolve the dry year problem on its own, the update said.
It involves significantly expanding Lake Onslow by storing water from the Clutha River.
Lake Onslow will store water to be used when other power suppliers are running low.
The report mentioned positives and negatives.
“But as with all large infrastructure projects, it would have some negative effects on the local environment, as well as cultural and social values and heritage and archaeological sites,” it said.
“There are also some likely benefits beyond the electricity system, such as increased economic opportunities for the local community and potentially new recreational opportunities.
“The NZ Battery Project will continue to investigate the optimal design of the scheme, and potentially further field work.”
The North Island portfolio approach involves using exotic logs and tapping into more geothermal power.
Other options could be added to this approach.
In a dry year, it would take about 560,000 tonnes of sustainably managed logs out of circulation, which is about 1.5% of New Zealand’s annual exotic log harvest.
A single power plant would have a generation capacity of about 500MW with the wood.
Clyde Dam produces 320MW.
Geothermal energy would be used in a a dry year and reservoirs to be constructed could be “turned down”, and then “turned up” as needed.
In a normal year, a geothermal plant would run at 25% capacity, but then ramp up to 100% during a dry year.
It would produce some carbon dioxide, but much less than gas or coal.
The Cabinet ruled out hydrogen for dry year generation due to technology and market development uncertainties.
