A $1.6 billion Waitaki River hydro scheme is still being dubbed by energy company Meridian as ''New Zealand's best hydro opportunity'', even though the project has been mothballed during a nationwide slump in electricity demand, which power companies believe will last for at least five years.
Although it is understood Meridian has spent $13,642,874 acquiring land for its North Bank project on the lower Waitaki River, the company yesterday confirmed it had suspended land access negotiations.
A 34km combined tunnel-canal system connecting two powerhouses on the river was to have been built, generating enough power to supply 140,000 homes.
But company chief executive Mark Binns said a drop in electricity demand had meant land-use consent negotiations with landowners along the proposed route would now be put on hold.
''We've made a decision to suspend the land negotiations because of the current flat demand for electricity, which means fewer new generation projects will be required in the short- to medium-term.''
The company would closely monitor electricity demand and supply conditions, he said.
''North Bank is probably New Zealand's best hydro opportunity. We have got it to a stage where when we find new generation is required we can pick things up at a later time.''
Between 2001 and 2011, Meridian invested $8.9 million in the Project Hayes wind farm project on the Lammermoor Range and $95 million in its Project Aqua hydro-electric canal scheme on the Waitaki River before it cancelled both projects.
''The real issue'' was one of declining demand, Mr Binns said.
''Like other generators, we recognise that the demand outlook for the next five years is probably flat to slightly declining.''
Although the total spent on the project to date remained ''commercially sensitive'', the scheme was only in its preliminary stages and there would be ''work to do'' when the project was ''pulled back off the shelf''.
More than 1000ha of land had been bought for the project so far.
Waitaki Mayor Alex Familton said he was ''disappointed'' with the decision, but the Waitaki District Council viewed it as a ''delay rather than a cessation'' of the scheme.
''It is understandable that they have done this, because of the background economic circumstances. It would have been a boost for the district and we're disappointed, but we understand the project will eventually go ahead.''
Mr Familton said it was not known how much the scheme would have contributed to the district's economy, but it would have provided ''a further boost''.
Federated Farmers North Otago president Richard Strowger expected it would be ''business as usual'' for farmers. However, irrigators had expressed frustration with the lack of certainty surrounding the project's future.
Waitaki Irrigators Collective chairman Fraser McKenzie said some
members had been involved in land negotiations, which had caused ''a great deal of stress and indirect costs to their businesses''.
''The land use and water issues relating to the North Bank hydro project, and the earlier Project Aqua proposal, have required enormous investments of time, energy and millions of dollars from the irrigation, farming and wider community in the lower Waitaki catchment.''
Mr McKenzie said although the decision to shelve the North Bank scheme was ''unsurprising'', the lack of a decision on its future left the local community ''in something of a holding pattern''.
Opponents of the scheme, including environmental pressure group Waitaki First, have questioned whether a long delay would negate Meridian's original water-use consents.
Waitaki First spokeswoman Dr Helen Brookes said water consent conditions had stated all consent applications needed for the completion of the project would have to be lodged within a six-year period from November 2010. That would mean all consents, including those for land use, would have to be in place in just over three and a-half years' time.
She had opposed the scheme because the proposals to take 260cumecs of water from Lake Waitaki to generate electricity and to release an unvarying flow from the Waitaki dam would effectively ''flatline the river''.
''That's a huge issue. All the species that inhabit the aquatic environment there have evolved with a variable water flow. It would be a huge change to the environment.''
Meridian's proposal to create ''new'' wetlands to replace the 60% reduction in the river's riparian marginal wetlands resulting from the scheme was also a ''big concern'', she said.
Power plays
260MW North Bank scheme, Waitaki River, announced in 2004, put on hold January 2013.
Original tunnel-only design changed in 2010 to include tunnel-canal combination.
Estimated cost $1.6 billion.
520MW Waitaki River Project Aqua hydro-electric canal scheme, estimated total cost $1.2 billion, announced 2001, cancelled 2004.
630MW Project Hayes wind farm, Central Otago, estimated cost $2 billion, proposed 2006, cancelled May 2012.
360GW Mokihinui River hydro-scheme, West Coast, estimated cost $300 million, proposed 2007, cancelled May 2012.
