Dam hydroelectric plan powers on
Adding a hydroelectric power plant to the proposed Waimea dam, near Nelson, could increase the cost of the project by $6.5 million.
The figure, contained in a report by Tasman District Council engineering services manager Richard Kirby, is based on an indicative business case prepared by PwC and Tonkin and Taylor.
Kirby says the key finding is that the hydro returns ‘‘compare reasonably’’ to industry benchmarks. However, some cost and commercial items have been identified for further investigation.
‘‘It is recommended that these be progressed to provide more certainty on the viability of the hydro generation option,’’ Kirby says.
The design for the proposed dam in the Lee Valley includes ‘‘futureproofing’’ for power generation to be added at a later date. ‘‘Therefore any decision around the hydro option does not need to be made as part of the current construction programme for the Waimea dam.’’
However, waiting would likely increase the cost by up to $500,000, Kirby says.
The estimated cost of constructing a hydro power station as part of the construction contract for the dam is $5.68m to $6.54m with an additional $200,000 to $500,000 if the hydro option is added at a later date.
Kirby says the funding required and who would make the investment is still to be determined.
‘‘Although the council could choose to invest in the hydro generation and receive the revenue, there may be other entities willing to invest instead.’’
The business case assumes a 22kV power line is installed as part of the construction of the dam although the dam needs an 11kV line only.
Councillors on Thursday approved up to $80,000 to install a 22Kv line as part of the construction of the dam. They heard it would cost an estimated $700,000 to $800,000 to replace the line at a later date.
They also noted the council did not expect there to be any compensation or facilitation payments to its joint-venture partners or any adjustment to the previously agreed allocation of operating costs as a result of any agreement on the provision of hydro generation.
Detailed design and marketing scenario assessments for the hydro generation option are to be delayed until the dam project is approaching ‘‘financial close’’ – when the project’s finances are finalised.
‘‘Although the council could choose to invest in the hydro generation and receive the revenue, there may be other entities willing to invest instead.’’
Tasman District Council engineering services manager Richard Kirby