And the man who first mooted the idea says a lack of government investment would spell the end for the Central Otago project that could cost up to $8 billion.
National is leading in public polling ahead of this year’s election and yesterday party energy and resources spokesman Stuart Smith said National would rule out public sector investment in the project.
Mr Smith said he was not against pumped-hydro schemes, but government investment in this proposal was both "unnecessary and undesirable".
"There’s no good reason for it and I don’t think there’s many in the electricity sector that would think it’s a good idea," he said.
The creation of a large hydro-storage lake at Lake Onslow, east of Roxburgh, is being investigated as a possible solution to New Zealand’s dry year problem.
Electricity would be used to pump water uphill into a man-made lake, where it would be stored as a back-up for when the South Island’s other hydro-electric lake levels became low during dry years.
In this way, the coal-burning Huntly Power Station would not be required as a back-up.
A Cabinet decision on the first phase of investigations into solutions for the dry year problem, including a feasibility study for the Lake Onslow project, is due to be made early this year.
Mr Smith said many people believed Lake Onslow was in the wrong place and not close enough to where the main consumption of electricity occurred, at the top of the North Island.
"And there are other dry year solutions."
If Onslow was a great idea, he questioned why the private sector appeared unprepared to build it.
"The common refrain I have heard - ‘Oh, it’s very expensive. No-one will be able to do that’ — well, that’s nonsense.
"Huge projects are what large infrastructure companies do.
"If they thought it was a good investment, I’m sure they would find a way to fund it."
Moreover, he had not found any engineers who believed the scheme could be built for the widely reported cost of $4 billion, Mr Smith said.
Contact Energy chairman Rob McDonald, speaking at the company’s annual meeting in November last year, said the price tag for the proposal had been vastly understated.
University of Waikato school of science associate professor Earl Bardsley, who first mooted the plan, said the likely cost of the Lake Onslow project could well be in the order of $8 billion.
There was "no way" it would go ahead without government funding, Prof Bardsley said.
Given the multibillion-dollar cost of construction, it was no surprise there had been no private sector interest in building it, he said.
There was no financial reward for provision of dry year security of power supply.
The project could only gain income from buying power cheaply and selling later at a higher price.
It would take decades to recoup the cost.
However, the scheme would enable a transition to a renewable energy economy and it could bring down electricity prices generally.
There could also be regional benefits, including protecting Dunedin’s water supply in the case of severe drought.
A report by the Boston Consulting Group, commissioned by Contact, Genesis Energy, Mercury, Meridian Energy and several lines companies, last year said that to get to near 100% renewable electricity generation by 2030 would require a $42 billion investment before the end of the decade.
Energy and Resources Minister Dr Megan Woods was approached approached for comment.
