TrustPower has confirmed it is looking at developing a wind farm at Lake Mahinerangi, south of Dunedin.
TrustPower said the project could have installed capacity of up to 300MW, at a potential cost of up to $500 million.
The company said the wind farm would probably be built in 100MWincrements.
It expected to apply for resource consents later this year, subject to results from various studies and reports.
Part of the land being investigated for the project included land owned by the Dunedin City Council, which has already approved TrustPower's initial investigations on this land.
The proposed location of the wind farm is close to TrustPower's largest hydro storage, Lake Mahinerangi, and the Waipori power stations.
TrustPower chief executive Keith Tempest said the wind farm would add security of electricity supply for consumers in Dunedin and surrounding areas.
"The ability to retain water when the wind is blowing for use when it is not, plus the availability of added peaking capacity provided when both resources are available, would give the best of both worlds in terms of sustainable generation," he said.
Shares in TrustPower were unchanged at $6.16 in early trading this morning, having ranged between $5.00 and $6.31 over the past 12 months.
In November fellow energy company Meridian Energy confirmed it was investigating a wind farm in Otago's Lammerlaw Ranges. Meridian's development could cost between $1.1 billion and $2 billion and be the world's largest wind farm.
