So, no surprises, the Government has officially pulled the plug on the $16 billion Lake Onslow hydro project in Central Otago.

Work stopped on Friday. Because the Government thinks it’s money down the drain; says it would be wasteful spending if it allowed it to continue; and reckons it would be a long time before we saw any benefits.

Instead, it’s going to focus on things like wind, solar and geothermal energy. There’s a catch to that, though. Which I’ll get to shortly.

The reason more than $20 million has been spent on this project already on what they describe in the industry as “investigative work”, is because Lake Onslow was seen by some as a potential solution to the problem we have when things are dry, lake levels are low, and fossil fuels have to be used more to generate electricity. To make sure we have enough.

If it had gone ahead, what would have happened was water from the Clutha River would have been pumped up to the lake and released through turbines when the hydro-electric lakes were running low.

But that was too much of a pipedream for the new government, with Energy Minister Simeon Brown going all energiser-battery on it and, just days after being sworn-in, he was on the blower telling them “don’t come Monday”.

Well, not quite. Because they will be back there today - decommissioning whatever’s in place already.

Not that the problem has gone away. How about this for a stat? Simeon Brown says demand for electricity between now and 2050 is expected to increase by two-thirds. So a massive jump in just over 25 years.

Which is why the Green Party and the scientist who came up with the idea in the first place are furious about Lake Onslow being given the flick. Because they reckon Lake Onslow would have been great for storing power and they reckon it would have stabilised power prices for 100 years.

Now that hundred-year bit, I reckon that’s pretty far-fetched. Because it was only 25 years ago when Max Bradford stood up and said that his electricity reforms would mean cheaper power. Do you remember? I’ll never forget it.

He said: “This will mean cheaper power”. So I think the claim that Onslow would have stabilised power prices for 100 is pretty fanciful.

So, instead of pouring billions of dollars of taxpayer money into another hydro lake, the Government is going to make it easier for the power companies to get consent for their projects and it’s going to rely on them to deliver this key infrastructure. And for me, this is the rub of the whole thing.

Because 25 years ago, Max Bradford said privatising the electricity sector was going to mean cheaper power. That never happened. And now, we’ve got the new government saying it’s going to rely on the power companies to invest in wind, solar and geothermal.

As Christopher Luxon said, the power companies are up for it and want to spend billions of dollars of their own money on wind, solar and thermal generation because “they’ve got great returns”. So the Government’s going to get rid of some of the consenting red tape so the power companies can get on with it.

I think ditching Lake Onslow is the right thing to do. Because this idea of generating power a million miles away from where it’s needed is so old-hat. Because, when you do that, some of that power is lost during the distribution process.

But if history is what teaches us about the future, I think we need to be very wary of the Government’s enthusiasm for relying on these private power companies for future investment in critical infrastructure.

Because if the “great returns” dry-up, these companies will have no obligation at all to keep pouring their money into power generation infrastructure. And I reckon it is a very slippery slope

 

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