Talla Burn Generation Ltd - established by the Hore and Wilson families - has teamed up with Auckland-based Pulse Energy to supply cheaper electricity to consumers from Clyde through to Raes Junction.
The run-of-river hydro-electric scheme, located on the Talla Burn on Beaumont Station, 20km from Millers Flat, is expected to generate 2.6MW of electricity.
It should be enough to supply about 2000 average households at a cost estimated to save consumers hundreds of dollars annually.
Pulse Energy chief executive Dene Biddlecombe said the electricity generated by Talla Burn would be retailed around the closest grid exit point at Clyde, so local consumers would benefit directly.
Based on the average annual household electricity consumption and existing power retail company prices, people connected to the scheme through Pulse would save about $300 a year, Mr Biddlecombe said.
"Our model allows us to offer time-based discounts with smart meters so people can choose to save even more during off-peak times. Pulse works with small, locally-based generation companies throughout the country to supply nearby residents with cheaper power and benefit the economy of small communities."
The deal provided Central Otago residents with a fifth electricity retail option.
Although Talla Burn-generated electricity would not be available for about nine months, people could sign up now to ensure their involvement, Mr Biddlecombe said.
The limited amount of power would be available on a first-in, first-served basis.
Mr Biddlecombe, of Auckland, travelled to the generation site yesterday with members of the Hore and Wilson families involved.
They saw workers pour the first batches of concrete on the powerhouse site.
Central Otago mayor Malcolm Macpherson yesterday said the scheme tied in with his crusade for cheaper Central Otago power.
"It gives people in the area another option and seems to be very competitive. It's also reliable, locally-generated electricity, which is what we had before the [Max] Bradford reforms," he said.
Yesterday he met Mr Biddlecombe and members of the Wilson and Hore families.
Dr Macpherson said the scheme could mean Central Otago residents got a respite from excessive power bills, particularly in winter.
Pulse Energy offered off-peak discounts and the use of smart meters to give consumers control over their power use.
Smart meters could also tie in with a planned relief fund being established to help Central Otago residents pay electricity bills, Dr Macpherson said.
"Maybe we could provide relief packages where part of the deal is households get smart meters," he said.
