Meridian plans $900m Aqua alternative

State-owned power generator Meridian Energy will spend up to $900 million on its "environmentally sensitive" alternative to the controversial and now abandoned Project Aqua Waitaki Valley hydro development.

The new scheme, which chief executive Keith Turner yesterday stressed was just a concept, would take water from Lake Waitaki into a single underground power station.

The water would then travel through a 36km tunnel underneath hills on the north side of the Waitaki River to an outlet downstream.

The project, estimated to cost $650 million to $900 million, would be half the length of the canal-based Project Aqua, which was to have been built on the south side of the river. The new scheme would generate 210 to 260 megawatts (MW) of electricity, giving it an annual output of about 1400 gigawatt hours (GWh), half that of Project Aqua.

Turner gave details about the new scheme in a presentation of Meridian's annual results. The company, which generates about a third of New Zealand's electricity, made a record net profit of $218.2 million in the June year, up 64 per cent. Last year, the company took a $31 million hit in writing off Project Aqua, but even excluding that, its bottom line was up 33 per cent, chief financial officer Paul Smart said.

The result was even more credible as it occurred during a year of low lake inflows.

Despite that, Meridian was able to generate heavily from March through to June when there were significant outages in thermal generation stations.

"We had a strong financial performance through selling a lot of energy on the wholesale market to cover thermal outages," said Turner.

Milestones for the company in what Turner called "a fantasic year" included commissioning of the Te Apiti wind farm near Woodville and the Wattle Point wind farm in South Australia. The company also gained planning consents for the 58MW $120 million White Hill wind farm in Southland and launched plans for its 210MW $380 million West Wind project near Wellington.

Turner said Meridian was "delighted" the Waitaki Catchment Water Allocation Board had left an allowance for hydro development in the lower Waitaki in its recent report.

Meridian was still evaluating the report's flow regime to determine how feasible and economic its new plan would be.

Turner said the scheme was similar to the Manapouri scheme, which incorporated a 10km tunnel. The new scheme's tunnel was "the critical element" and would be "no mean engineering feat", but Meridian could draw on its Manapouri experience.

Initial geological samples showed the greywacke rock through which the 12m diameter tunnel would be driven was ideal for the work and advances in technology meant it could be completed in about two years.

The new project had "very significant environmental advantages" over Project Aqua.

Taking water directly from Lake Waitaki was less costly and had less environmental impact than taking water from the river itself.

"Most importantly for the public, 30km of the river remains unchanged and remains at full flow.

"We thought Aqua was quite creative ... but this is another level."

He said "a great deal of consultation" had yet to be undertaken with the community to bring the project through to committal.

Meridian planned to spend between $2 billion and $3 billion on new renewable energy projects within the next 10 to 15 years, all funded through profits.

Turner believed consumers were now through the worst of the recent price hikes. He said renewable energy could meet New Zealand's growing medium-term energy needs "quite comfortably".

"We've actually seen quite a remarkable turnaround in the forecast for future energy supply. There are many projects being promoted by many players."