TRANSMISSION TO ENABLE RENEWABLES POTENTIAL NZ HYDRO SCHEMES INTERIM DRAFT REPORT

Transcription

1 Parsons Brinckerhoff Associates TRANSMISSION TO ENABLE RENEWABLES POTENTIAL NZ HYDRO SCHEMES INTERIM DRAFT REPORT Kapuni Energy Supply Facility, NZ A report prepared for November 2007

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3 Disclaimer Notice Report for the Benefit of Electricity Commission This Report has been prepared exclusively for the benefit of the Electricity Commission. Parsons Brinckerhoff Associates Ltd (PB Associates) will not be liable to any other persons or organisation and assumes no responsibility to any other person or organisation for or in relation to any matter dealt with or conclusions expressed in the Report, or for any loss or damage suffered by any other persons or organisations arising from matters dealt with or conclusions expressed in the Report (including without limitation matters arising from any negligent act or omission of PB Associates or for any loss or damage suffered by any other party relying upon the matters dealt with or conclusions expressed in the report). No person or organisation other than the Electricity Commission is entitled to reply upon the Report or the accuracy or completeness of any conclusion and such other parties should make their own enquiries and obtain independent advice in relation to such matters. Reliance on Data In preparing this Report, PB Associates has relied on information supplied by and gathered from a number of sources including public domain and proprietary data services, internet sites, news services as well as parties involved in the industry. We have not used any data which has been provided to the Electricity Commission or PB Associates under a confidentiality agreement or that which has been deemed confidential by the owner of the information. Any projections are estimates only and may not be realised in the future. No blame or responsibility should be attached to any of these sources for any factual errors or misinterpretation of data in this Report. PB Associates has not independently verified the accuracy of this information and has not audited any financial information presented in this Report. Limitations This Report covers technical data relating to hydro generating plants and is based on the facts known to PB Associates at the time of preparation. This Report does not purport to contain all relevant information for all plant. PB Associates has made a number of assumptive statements throughout the Report, and the Report is accordingly subject to and qualified by those assumptions. This Report provides a review of previously investigated hydro-electric resources and is based on the information available in the public domain from previous pre-feasibility investigations of specific sites and the facts known to PB Associates at the time of preparation. This report expresses no opinion as to whether resource consents for identified hydro-electric sites can be obtained. Parsons Brinckerhoff Associates Ltd. Level 3, Revera House Mulgrave Street Wellington Phone : Fax : i

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5 Table of Contents SECTIONS 1. INTRODUCTION Background Report objectives and scope Report methodology Information gathering and Generating Company meetings Shortlist production Design and cost estimation of selected schemes Structure of the report SHORT LIST POTENTIAL NZ HYDRO SCHEMES Available information Hydro-electric resource database Statement Of Opportunities Generating Company meeting outcomes Contact Energy Meridian Energy Mighty River Power Pioneer Generation TrustPower Identification of potential hydro schemes Selection of schemes for short list CONCEPTUAL DESIGN AND COST ESTIMATING METHODOLOGY Conceptual design Cost estimation Pre-development costs Preliminary and general Civil works Mechanical and electrical Engineering fees Effects mitigation Base cost, upper and lower bounds SCHEME COST ESTIMATES Wairau Valley scheme Scheme description Scheme parameters Cost estimates Discussion Arnold Valley Scheme...22 iii

6 4.2.1 Scheme description Scheme parameters Cost estimates Discussion North Bank Tunnel concept Scheme description Scheme parameters Cost estimates Discussion Mokihinui (TBC) Luggate (TBC) Queensbury (TBC) Beaumont (TBC) Tuapeka (TBC) SUMMARY...32 REFERENCES...33 Appendices: Appendix A: List of potential NZ hydro schemes following GC meetings. Glossary of Terms Term CCI CGPI cumec CVDC ECNZ FOB GJ GWh HV km kw LRMC LV m Definition Construction Cost Index Capital Goods Price Index Cubic metres per second Clutha Valley Development Commission Electricity Corporation of New Zealand Ltd Free on Board giga joules (10^9 joules) giga watt hours (1,000,000,000 watt hours) High voltage kilometre kilowatt Long Run Marginal Cost Low voltage metres iv

7 Term M MED MVA MW MWD MWh NIWA NZEM O&M PPI RCC SOO TBM Definition million Ministry of Economic Development Mega volt-amps megawatt (1,000,000 watts) Ministry of Works and Development Megawatt hour National Institute of Water and Atmosphere Research Ltd New Zealand Electricity Market Operating and maintenance Producer Price Index Roller Compacted Concrete Statement of Opportunities Tunnel boring machine Unless otherwise specified prices are in June 2007 real dollars v

8 1. INTRODUCTION 1.1 BACKGROUND The Electricity Commission (Commission) is undertaking an investigation into possible transmission barriers to the further development of renewable generation in New Zealand. To this end, the Commission is constructing a resource map of possible wind, hydro and geothermal projects. Following the identification of these resources, they will investigate if there are likely to be economic transmission investments that Transpower could progress through Part F of the Electricity Governance Rules (2003) to promote the development of renewable generation. PBA were retained by the Commission to identify the hydro component of the investigation. 1.2 REPORT OBJECTIVES AND SCOPE PBA was asked to provide pre-feasibility or conceptual level capital cost estimates of the 5-10 most economic and most feasible hydro schemes in New Zealand. The target accuracy range for pre-feasibility or conceptual level costs was +/- 30%. Selected schemes should be considered to be part of a Generating Company (GC) planning horizon. No consideration has been given to possible transmission constraints or associated issues when assessing the economics or viability of schemes. 1.3 REPORT METHODOLOGY In order to achieve the report s objectives there were three main activities: Information gathering and GC meetings Short list production Conceptual design and cost estimation of the short-listed schemes Information gathering and Generating Company meetings In order to identify the potential short list of schemes, PB Associates has relied on: information and data available in the public domain; November

9 information freely provided by the NZ GCs; and In-house knowledge and experience. Cost estimates have been derived from local and international sources and from PB's in-house data including those of PB Power. A complete list of references is included at the end of this report. We have discussed potential hydroelectric schemes with senior representatives from Contact Energy, Meridian Energy, Mighty River Power, Pioneer Generation and TrustPower. Our discussion with each company included an outline of the study being undertaken for the Electricity Commission, the identification of hydroelectric opportunities included in their development portfolios, and our information requirements for each identified opportunity. Information requested from each generation company included: Scheme layouts and topographical data Generation parameters including installed capacity and annual generation Civil works quantities Land purchase requirements and estimated costs An outline of the investigation work completed An outline of any significant environmental issues that could affect scheme development An outline of the results of our meeting with each generation company is provided in Section Shortlist production The objective of the investigation was to determine cost estimates for the 5 to 10 most economic and most viable schemes. In order to facilitate the production of the short list of schemes the following selection criteria were identified: Only new greenfield schemes or major new developments around existing schemes. PB did not consider minor upgrades or efficiency gains for existing assets (e.g. Hawea Gates). Greater than 20 MW capacity. Priority given to larger scheme sizes. November

10 Less than NZ$100/MWh LRMC of production. Priority given to schemes indicating lower LRMC of production. Priority given to schemes demonstrating favourable constructability criteria including: Schemes should be reasonably likely to secure RMA approval No known major property rights issues No known access issues e.g. outstanding treaty claims Design and cost estimation of selected schemes Following the identification of the most economic and most viable schemes, with agreement from the Commission, PB developed conceptual level designs (where necessary) and estimated development costs for each short listed scheme to the target level of accuracy. Further information gathering was performed where necessary to permit cost estimation of the selected schemes to the required level of accuracy. Detailed discussion of the cost estimation methodology is contained in Section STRUCTURE OF THE REPORT This report has been structured into 5 sections, followed by references and relevant appendices. Section 1 Section 2 Section 3 Section 4 Section 5 Introduction, report scope and methodology. Shortlist production Cost estimating methodology Cost estimates of selected schemes Results summary References Appendices November

11 2. SHORT LIST POTENTIAL NZ HYDRO SCHEMES PB formed its own impressions of the best potential NZ hydro schemes based on existing public domain information and experience. This was then discussed with each of the GCs to form a consensus opinion wherever possible about the most likely schemes. From here PB reviewed the selection of schemes from all GCs and based on available information formed the shortlist of most economic and viable schemes according to the criteria outlined below. 2.1 AVAILABLE INFORMATION Important sources of information regarding the potential hydro schemes within NZ are as follows: Hydro-electric resource database PB Associates reviewed a series of reports prepared by consultants during the 1970s and 1980s assessing the hydro-electric resource potential in New Zealand and prepared a database of the potential hydro-electric resource, including estimates of construction costs to a common base of September These are described in Parsons Brinckerhoff Associates Report titled Hydro-electric potential in New Zealand: A hydro-electric resource data base, dated February 2005 and prepared for the Commission. The review encompassed both regional assessments of small hydro-electric potential and a national assessment of the larger hydro-electric potential (> 20MW). PB Associates reported that following the corporatisation of the Electricity Corporation of New Zealand Ltd (ECNZ) in 1987, the majority of investigations of specific opportunities for hydro-electric power generation have been undertaken under confidentiality agreements with the generation or development company funding the particular study and as a result the findings of these investigations are not generally publicly available. In April 2005, PB Associates also provided indicative costs estimates for selected potential hydro-electric, thermal and geothermal generation projects to assist the Commission in its scenario planning. November

12 2.1.2 Statement Of Opportunities The Electricity Commission (Commission) is required to publish a Statement of Opportunities (SOO) to meet the requirements outlined in Part F of the Electricity Governance (2003) Rules, which sets out possible future scenarios for electricity supply and demand. This is designed to show the opportunities that may be available for investment in both transmission upgrades and transmission alternatives. During 2005, the Commission developed an initial SOO which was published in printed form in July As part of the work in developing this initial SOO, Parsons Brinckerhoff Associates (PB Associates) completed reports for the Commission that, amongst other things examined the hydro-electric potential in New Zealand. The Commission is updated its generation scenarios in publishing its SOO for PB Associates was commissioned to update the reports relating to the hydro-electric schemes prepared in The updated data and additional information are all contained in this single volume report. 2.2 GENERATING COMPANY MEETING OUTCOMES Contact Energy Contact Energy provided a listing of hydroelectric opportunities included in their development portfolio. The listing was limited to opportunities on the Clutha River and included schemes at Luggate, Queensberry Hills (two schemes), Dumbarton Rock (two schemes), Beaumont (three schemes) and Tuapeka, and included generation parameters and total costs Meridian Energy Meridian Energy Limited (MEL) is currently considering hydroelectric schemes on the Waitaki River (the North Bank Tunnel Concept), the Mokihinui River on the West Coast and the Mohaka River north of Napier Mighty River Power Mighty River Power indicated that their development portfolio included a six step, in-river cascade in the Kaituna River, in the Bay of Plenty. The scheme November

13 incorporates six dams in the central section of the river and has a total installed capacity of 48MW. The company indicated that the scheme has a number of unresolved technical and resource consent issues, and that the present economics of development are not encouraging Pioneer Generation Pioneer Generation advised us that they were considering a potential scheme on the Nevis River in Central Otago. On the Ministry of Environment website titled Water Conservation orders, there is currently a water conservation order on the Kawarau River. However in that conservation order there is a provision for Hydro-electric development on the Nevis. Currently Fish and Game New Zealand is seeking amendment to this water conservation order, which if granted, will make any hydro-electric development on the Nevis River very difficult TrustPower TrustPower provided PB a copy of their consent application documents for their proposed hydroelectric scheme on the Arnold River, inland from Greymouth. They also directed us to their website to access similar documents for their proposed hydroelectric scheme on the Wairau River, in Marlborough. 2.3 IDENTIFICATION OF POTENTIAL HYDRO SCHEMES Our discussion with the generation companies combined with existing knowledge of potential NZ hydro opportunities resulted in the identification of eighteen schemes. The characteristics of the schemes are summarised in Appendix A. Where scheme generation parameters have not been provided by the generation companies, we have endeavoured to fill in the gaps utilising our records and information available in the public domain. All identified schemes have been ranked to develop a short-list of schemes that appear to be more desirable than the others and warrant more detailed consideration. Desirable schemes could be considered to be those that are more likely to result in lower unit development costs, fewer engineering uncertainties, fewer adverse environmental effects, and fewer opponents to any resource consent application. All identified schemes have been measured against the following criteria: November

14 Information quality - a measure of the quality of the information available for the scheme - H (high) good information readily available - M (medium) reasonable information with some data gaps - L (low) little if any information available Technical merit - a measure of the engineering issues and uncertainties associated with the scheme and their possible effects on the feasibility of development - H few engineering issues and uncertainties - M some engineering issues and uncertainties - L significant engineering issues and uncertainties Transmission connection - a measure of the ease with which the scheme could be connected to the existing transmission network - H easily connected to existing network - M a little difficult to connect to existing network - L difficult to connect to existing network Environmental merit - a measure of the environmental issues and uncertainties associated with the scheme and their possible effects on the feasibility of development - H few environmental issues and uncertainties - M some environmental issues and uncertainties - L significant environmental issues and uncertainties Likely cost - a measure of the likelihood that the scheme will be cost-effective - H likely to be cost-effective - M could be cost-effective - L unlikely to be cost-effective November

15 Resource consents - a measure of the likelihood of obtaining resource consents for the scheme - H no obvious constraints to obtaining consents - M some possible constraints to obtaining consents - L likely constraints to obtaining consents Land ownership - a measure of the likelihood of being able to obtain all necessary land for the development and operation of the scheme - H large majority of land in private ownership - M some DOC and/or scenic reserve land - L significant DOC and/or scenic reserve land PB ranked all identified schemes according to the above criteria and also provided all schemes with an overall ranking that subjectively reflects their costeffectiveness and the possibility of securing resource consents for their development. The results of our ranking exercise are detailed in the table in Appendix A. 2.4 SELECTION OF SCHEMES FOR SHORT LIST Of the eighteen schemes identified, nine are considered to be more desirable in terms of the economic and viability criteria than the others. The nine schemes are as follows: Luggate Queensberry Hills, Option1 Queensberry Hills, Option 2 Beaumont, High Dam Tuapeka North Bank Tunnel Concept Mokihinui November

16 Arnold Wairau The nine schemes incorporate a number of similar characteristics that have significantly affected their selection: The available information for each scheme should be sufficient to enable the objectives of this report to be achieved. Apart from the Queensberry Hills Option 2 scheme, which incorporates a high residual flow, all schemes are likely to be cost-effective. The Queensberry Hills Option 2 scheme could be cost-effective. Apart from the North Bank Tunnel concept on the Waitaki River, where the tunnel alignment closely parallels a major fault system and could intercept difficult tunnelling conditions, no significant engineering issues and uncertainties have been identified that could affect the feasibility of scheme development. Apart from the Tuapeka scheme, where development of the scheme would inundate known environmental values and the Beaumont flats, no significant environmental issues or uncertainties have been identified that could represent constraints to scheme development. The Queensberry Hills Option 2 scheme is a variation on the Queensberry Hills Option 1 scheme, the only difference being an increase in residual flow from 60 cumecs to 100 cumecs. We understand that all other components of both schemes are identical and, as such, there appears to be little merit in including the Queensberry Hills Option 2 scheme in the remainder of the project. In recognition of the above conclusions the schemes identified in Table 2-1 were adopted for development of the pre-feasibility cost estimates: Table 2-1 : Short list of potential hydro-electric projects Potential hydro-electric schemes Capacity (MW) Connection Region Wairau 72 Arnold 46 Lower Waitaki: North Bank Tunnel 200 to 280 Kikiwa-Blenheim circuit (Larkins Rd) Dobson-Reefton circuit Islington- Livingston circuit Marlborough West Coast South Canterbury November

17 Potential hydro-electric schemes Capacity (MW) Connection Region Mokihinui 65 to 85 Clutha: Luggate 90 Clutha: Queensberry Hills option Inangahua- Waimangaroa circuit Roxburgh-Twizel circuit Roxburgh-Twizel circuit Clutha: Tuapeka 340 Roxburgh Clutha: Beaumont 190 Roxburgh West Coast Otago/ Southland Otago/ Southland Otago/ Southland Otago/ Southland November

18 3. CONCEPTUAL DESIGN AND COST ESTIMATING METHODOLOGY 3.1 CONCEPTUAL DESIGN The conceptual design adopted for each short-listed scheme reflects the level of information available in the public domain. For the Arnold and Wairau schemes, the existing consent documentation includes general arrangement drawings and drawings showing proposed concepts for all canals, hydraulic structures and power stations. The available information is sufficient to meet the objectives of this study and has been adopted for the completion of the cost estimates. For the Luggate and Queensberry Hills schemes, indicative layouts are provided in two documents Clutha Valley Development, Environmental Impact Report, Luggate and Queensberry Hydro Power Stations, published by New Zealand Electricity and the Ministry of Works and Development in April 1982, and Clutha Valley Development, Environmental Statement, Luggate Hydro Power Station published by New Zealand Electricity and the Ministry of Works and Development in November The conceptual layouts included in both documents have been adopted for the completion of the cost estimates. For the remaining short-listed schemes, little information on the development proposals is available in the public domain. As a result, conceptual layouts have been developed by PB for the completion of the cost estimates utilising information included in the following documents: Tuapeka and Beaumont The Hydroelectric Potential of the Lower Clutha, a Comprehensive Report of the issues raised by the possibility of development, published by the Electricity Division of the Ministry of Energy and the Ministry of Works and Development in June Mokihinui Mokihinui Hydro Proposal, a data sheet published by Meridian Energy in October North Bank Tunnel Concept Water Consents for a North Bank Tunnel Concept, AEE, 2006 and a presentation by Meridian Energy to the Electricity Trusts of New Zealand on 4 May 2006 titled Renewable Energy Options for New Zealand. November

19 3.2 COST ESTIMATION The cost estimates include allowances for investigation and design, land purchase, project management and design supervision during construction, all construction activities, all equipment supply and installation, and all ancillary work associated with affected services (e.g. state highway and local authority roads and bridges). As agreed with the Commission transmission costs have been excluded. All prices are based on rates and conditions applying at June The following sub-sections provide an outline of items and assumptions incorporated within the cost estimates Pre-development costs An allowance has been included in all estimates for costs that will be incurred in addressing the feasibility of the scheme and obtaining all necessary land and consents for its development. The allowance includes provisions for engineering and environmental studies, land purchase, the preparation of consent documentation, and the securing of all necessary consents. The cost provisions for engineering and environmental studies, and the securing of all necessary consents, reflects the current status of the schemes. No provision has been included in the estimates for the Wairau and Arnold schemes as the consent applications have been lodged. For the other short-listed schemes the provision has been scaled to reflect the quantum of work considered to be necessary to address scheme feasibility and secure all necessary consents. The cost provisions for land purchase have been estimated utilising indicative land purchase requirements and a standard unit cost of $100,000 per hectare. For all schemes it has been assumed that all necessary land is in private ownership. While unit land purchase costs will undoubtedly vary between locations, it is considered that the estimated land purchase requirements and the $100,000 per hectare allowance provides a reasonable basis for the estimation of land purchase costs. November

20 3.2.2 Preliminary and general The preliminary and general cost includes allowances for fixed overheads (establishment of site facilities), time based overheads (e.g. management and supervision personnel) and contractor profit. The overheads include the following: Site management the cost of management, supervision and administrative staff associated with the day to day running of the project. Site buildings, vehicles and services the cost of all temporary offices, sheds and buildings, vehicles associated with site management, and site services including power, air and water reticulation, communications, laboratory services, etc. General plant items the provision of construction plant and equipment for all construction activities. General expenses bonds, insurances, legal services, audits, and office equipment. Accommodation accommodation expenses for all project related staff, assuming a mix of rental and purpose-built accommodation. The cost has been calculated at 30% of the on-site cost of all civil works. Such an allowance is reasonably consistent with allowances included in earlier estimates for hydroelectric projects Civil works The civil works costs include allowances for the completion of all civil facilities including dams, canals, hydraulic structures (e.g. spillways, canal inlets, penstock intakes, etc), power stations, and ancillary works affected by the schemes (e.g. roads, bridges, farm access, etc). All civil works estimates have been completed using quantities, estimated from the conceptual layouts, and a combination of unit rates for standard work activities and parameter costs for power stations, bridges and culverts. The following assumptions were adopted during the completion of all civil works estimates: All embankment fill materials are able to be won from excavation works or nearby borrow areas. November

21 All concrete aggregate, filter and drainage materials are able to be produced from excavated local materials. All rock protection is able to be won from excavated materials, or is available from quarries within close proximity to the site Mechanical and electrical The hydro-mechanical plant (comprising screens, gates and hoists, stop logs and associated lifting apparatus) were in general sized from concept drawings provided by the GCs and using standard hydro-electric industry design methodology. The costs were developed from manufacture price/tonne basis and adjusted to 2007 steel price movement. This was then further escalated to include installation and other necessary work to make them operational. The main generating plant located in the powerhouse and comprising; inlet valves, turbines, generators and connections as well as their ancillary plant were individually priced from PB s in-house data base, previous similar projects and using standard industrial pro-rata methods to match the particular required plant hydraulic and / or power capacity. Costs were generally adjusted to 2007 values taking account of published movement in metal prices and producer price indices (PPI). A further 30% adjustment for shipping, erection and testing was in general added to the FOB value to provide the installed cost. Unless specified, generators are assumed to be rated to 0.9 power factor. A 40% adjustment of the summed main generating and transformer plant was used to cost for the auxiliary equipment that services the powerhouse for example, auxiliary and emergency power supplies, control and protection, cooling water, drainage and dewatering pump systems, fire detection and fighting, building security surveillance etc. Unless described in the GC s scheme description, the connections between generating units and the switchyard were configured without a specific consideration for optimising the capital cost or maximum operation flexibility. Installed transformer, switch-bay/switchyard and transmission circuit costs were taken from the Ministry of Economic Development (MOED) ODV handbook and adjusted for price escalation to account for the older ODV published cost and escalation in material cost. November

22 At the connection point to the line company or Transpower transmission circuits it is assumed that existing transmission networks have enough capacity to transmit the additional new generation. No power flow, fault studies, transmission constraint or stability analyses have been undertaken by PB Engineering fees A percentage allowance has been included in all estimates for civil investigation and design, mechanical and electrical design, and project management and supervision during construction. Apart from the North Bank Tunnel Concept, an allowance of 5% of the civil, mechanical and electrical costs has been included in all estimates to cover civil, mechanical and electrical engineering fees. For the North Bank Tunnel Concept a 1% allowance has been included for all engineering work associated with the tunnel and a 5% allowance for the remainder. While the scale of fees for design and project management contracts will ultimately be determined by tender and negotiation processes, it is believed that the above allowances provide a reasonable indication of likely costs Effects mitigation Earlier hydroelectric projects have included improvements to existing community facilities and the mitigation of adverse effects. Historical information indicates that such costs have approximated 0.5% of the total estimated project cost. A similar cost allowance has been included in all cost estimates Base cost, upper and lower bounds In order to reflect the uncertainty surrounding the cost estimation process PB has provided a base case, an upper bound and a lower bound for the estimated cost to complete each scheme. The upper and lower bound cost estimates reflect the current uncertainties associated with the conceptual designs, the scheme quantities and the assumed unit rates. Clearly, the available information for the Wairau and Arnold schemes is significantly greater than that for the other schemes and this is reflected in the margins incorporated in the upper and lower bound cost estimates for both November

23 schemes. The cost estimates incorporate the following margins for establishing upper and lower bound cost estimates: Wairau and Arnold schemes 120% and 85% of the estimated base case cost. North Bank Tunnel Concept 130% and 80% of the estimated base case cost. November

24 4. SCHEME COST ESTIMATES As a result of the short listing exercise outlined in Section 2.4, eight schemes were chosen for the development of pre-feasibility level cost estimates. These cost estimates are discussed below. 4.1 WAIRAU VALLEY SCHEME Information for the Wairau scheme has been sourced mainly from the TrustPower website 1. On the 14 th July 2005, TrustPower lodged a resource consent application with the Marlborough District Council which contains comprehensive information regarding the proposed scheme. Figure 4-1 illustrates the general location of the Wairau Valley, near Blenheim, Marlborough. Figure 4-1 Wairau Valley scheme location Scheme description The following is taken from the Executive Summary of the TrustPower Resource Consent Application (RCA): November

25 Wairau Valley Hydroelectric Power Scheme, a canal and power station development to be located within the middle reaches of the Wairau Valley, Marlborough From an Intake located within the Wairau River near the Branch River, some of the river flow (up to 40 m 3 /s), will be diverted through a series of canals to 6 new Power Stations. These new Power Stations utilise the fall between the Intake and the last Power Station to generate an annual new electricity output of 415 giga watt hour. The Canals, totalling some 45.5 kilometres in length and typically 30 m wide by 4 m deep, generally run along the southern side of the Wairau Valley through predominantly farm and pasture land, occasionally running alongside the Wairau River and State Highway 63. The majority of structures and activities associated with the Scheme are located on the southern side of the Wairau Valley, rather than within the river environment proper. The first of the new Power Stations will be located adjoining the existing Wairau Power Station, the other 5 Power Stations will be some distance away from the river environment and will all be located to the south of State Highway 63. The Power Stations will utilise proven and efficient turbine and power generation technology, and will be accommodated within small structures (around 250m2 to 300m2 of floor area), designed to appropriately fit within the form and scale expected in the surrounding rural environment. After passing through the sixth Power Station, the diverted flow is returned to the Wairau River via an outlet located at a point above the confluence of the Waihopai and Wairau Rivers. Significant environmental enhancement is included as part of the Scheme around the location of the outlet, including a new recreational area (providing new facilities for kayakers, boaties, bird-watchers, walkers and picnickers), and an important restoration and enhancement project for indigenous wetland habitat. The length of Wairau River with reduced flows resulting from the operation of the Scheme is approximately 49 km. Under normal operating conditions the Scheme will have no effect on the Wairau River downstream of the outlet. There are actual and potential effects on the environment arising from the Scheme within the area between the Intake and outlet, as well as on the broader surrounding catchment. Importantly however, in order to avoid the majority of actual or potential adverse effects on the environment that might arise and to remedy or mitigate any effects remaining, the November

26 Scheme incorporates an agreed minimum (or residual) flow regime which will be maintained at all times irrespective of its effect on the generation capability of the Scheme. This residual flow, to be measured at a point immediately below the intake, varies between 10 and 20 m3/s, according to identified seasonal and ecological requirements. As a result, power generation will occur all year round but will be weighted toward the late winter and spring months in response to naturally higher river flows Scheme parameters The primary parameters for the scheme are listed in Table 4-1. Table 4-1 : Wairau scheme parameters Parameter Value Capacity 83.8 MW (11 MW is existing) Energy production 471 GWh/annum (56 GWh/annum is existing) Maximum generation flow 60m 3 /s Total canal length 46 km Construction period 2-3 years The scheme is essentially a run-of-river scheme. While some minor storage reservoirs are located adjacent to the canal for short-term flow regulation, the scheme has little potential for the storage of water during periods of high river flows Cost estimates The existing documentation provides a good basis for the estimation of quantities and development costs. Table 4-2 presents a summary of the main component cost estimates for the Wairau scheme. The table includes a base cost estimate, and upper and lower bound cost estimates to reflect the current uncertainties associated with the final structure details, the estimated quantities and the assumed unit rates. The upper and lower bound cost estimates are 120% and 85% of the base cost estimate respectively. November

27 Table 4-2 : Wairau scheme cost estimate summary Item Amount (NZ $ 000) Pre-development costs 3,800 Preliminary & General 45,014 Access & roading 480 Structures 105,465 Earthworks 48,003 Powerplant and switchyard 139,165 Landscaping 2,000 Engineering fees 16,906 Effects mitigation 1,804 Total (Base case) 362,638 Upper cost 435,166 Lower cost 308,242 The total cost (base case) estimate for the scheme equates to $4,981 / kw Discussion The scope of the study has provided us with a limited appreciation of the characteristics of the scheme and, as a result, we are unable to provide informed comment on the proposed scheme details. However, we have made a number of observations during the course of the study and offer the following comments on issues that could significantly affect construction costs. The economics of development are heavily dependent on the availability of water for generation. Any additional downstream water demands for the residual river and irrigation that arise, as a result of the consenting process, could have a marked effect on the economics of development. We are unaware of the status of any land purchase negotiations being undertaken for the scheme, but note that difficulties and costs over land purchase played a role in the abandonment of Project Aqua (a canal scheme similar to the Wairau scheme). As outlined in the consents documentation, the Wairau Fault runs approximately parallel to the scheme over its total length and crosses the November

28 scheme alignment in the headworks area and towards the downstream end of the scheme. While not considered to be a constraint to development, the presence and known activity of the fault could result in unexpected ground conditions during construction and additional costs. We note that the canal inlet structure incorporates a fish screen with a screen bar opening of 5mm. We are unaware if the fish screen details have been accepted by other stakeholders, but note that openings for other recently proposed fish screens in New Zealand have been between 2 and 3mm. Screen requirements for the protection of fish can be significant and very expensive, and recent experience suggests that the proposed fish screen could cost in the vicinity of $6 million. A $6 million allowance has been included in the cost estimate for the fish screen. The canal alignment crosses a number of significant tributaries that could have a significant effect on canal construction costs. Finally, the estimated base cost for the scheme is $363 million, with upper and lower bounds of $435 million and $308 million respectively. Quantity and unit rate variations that could significantly affect the final cost of the scheme are primarily related to earthworks and concrete construction. November

29 4.2 ARNOLD VALLEY SCHEME Information has been sourced from TrustPower. A CD containing the resource consent application, dated 29 th March 2006, from TrustPower to Grey District Council and supporting documents for the Arnold scheme was provided to PB. Figure 4-2 illustrates the general location of the Arnold River, near Greymouth on the West Cost of the South Island. Figure 4-2 Arnold scheme location Scheme description The following description was taken from the TrustPower resource consent application document: Water flowing in the Arnold River will be drawn into a canal at the location of the existing dam at the Arnold Reservoir. The minimum flow remaining in the Arnold River will be 12 cumecs. The canal will convey water to a storage pond, which in turn will feed a power station, before being discharged back to the Arnold River via a regulation pond. The Scheme will consist of a single power station, containing a number of turbines, fed by a canal. The proposed location of the power station along November

30 the canal route has been selected as the most efficient for the generation of electricity and of least social and environmental impact. Water flowing in the Arnold River will be drawn into a canal at the location of the existing dam at the Arnold reservoir, and discharged further downstream back to the river within any 24 hour period. A storage pond will be provided above the power station within the lower valley floor, closer to Arnold Valley Road. This pond allows water to be stored and released in greater volumes for generation, to meet daily demands when electricity demand is high (peaks). It also allows for the generation of electricity to be regulated, ensuring generation is the same as the demand. A regulation pond will be formed at the point where the Scheme discharges the flows back to the Arnold River. This pond will act as a buffer by capturing the flows discharged from the power station and slowing the velocity of the water. By doing this the pond will reduce the level of any flow fluctuations experienced within the Arnold River Scheme parameters The primary parameters of the scheme are listed in Table 4-3. Table 4-3 : Arnold scheme parameters Parameter Value Capacity 46MW Energy production 220 GWh/annum Maximum generation flow 100 m 3 /s Total canal length 7.1 km Construction period 2 3 years The scheme incorporates a storage facility to enable peak generation. However, the storage volume is limited and the scheme will only be able to regulate generation flows on a daily basis. Accordingly, the daily volume discharged from the scheme will closely match the daily inflow volume. November

31 4.2.3 Cost estimates The existing documentation, which includes conceptual layouts and indicative quantities, provides an excellent basis for the estimation of quantities and development costs. Table 4-4 presents a summary of the main component cost estimates for the Arnold scheme. Costs associated with the decommissioning of the existing Arnold scheme are excluded from the estimate. The table includes a base cost estimate, and upper and lower bound cost estimates to reflect the current uncertainties associated with the final structure details, the estimated quantities and the assumed unit rates. The upper and lower bound cost estimates are 120% and 85% of the base cost estimate respectively. Table 4-4 : Arnold scheme cost estimate summary Item Amount (NZ $ 000) Pre-development costs 1,500 Preliminary & General 35,522 Access & roading 300 Structures 50,072 Earthworks 72,000 Powerplant and switchyard 46,573 Landscaping 1,000 Engineering fees 10,223 Environmental mitigation 1,086 Total (Base case) 218,276 Upper cost 261,931 Lower cost 185,534 The total cost (base case) estimate for the scheme equates to $4,745 / kw Discussion The scope of the study has provided us with a limited appreciation of the characteristics of the scheme and, as a result, we are unable to provide informed comment on the proposed scheme details. However, we have made a number of observations during the course of the study and offer the following comments on November

32 issues that could significantly affect construction costs. Although smaller, the scheme is similar in concept to the Wairau scheme and, as a result, some of our comments are similar to those made for the Wairau scheme. The economics of development are heavily dependent on the availability of water for generation. Any additional downstream water demands for the residual river, which arise as a result of the consenting process, could have a marked effect on the economics of development. We are unaware of the status of any land purchase negotiations being undertaken for the scheme, but note that difficulties and costs over land purchase played a significant role in the abandonment of Project Aqua (a canal scheme similar to the Arnold scheme). We note that the project incorporates a fish screen, but no details are provided in the consent documentation. As outlined for the Wairau scheme, screen requirements for the protection of fish can be significant and very expensive, and recent experience suggests that the proposed fish screen could cost in the vicinity of $4 million. A $4 million allowance has been included in the cost estimate for the fish screen. The Arnold scheme is located in a much wetter environment than other canal schemes in New Zealand, and canal construction costs could be significantly affected by adverse weather conditions. Finally, the estimated base cost for the scheme is $218 million, with upper and lower bounds of $262 million and $186 million respectively. Quantity and unit rate variations that could significantly affect the final cost of the scheme are primarily related to earthworks and concrete construction. November

33 4.3 NORTH BANK TUNNEL CONCEPT Figure 4-3 illustrates the general location of the Waitaki River, north-west of Oamaru. Figure 4-3 NBT scheme location Scheme description Schemes developing the remaining 200 m of head over the 60 km length of the Waitaki River between the Waitaki Dam and the sea have been investigated several times over the past 50 years. WORKS (1990) described a scheme of 900 MW with an overall head of 180 m. In 2003, Meridian Energy proposed building a 520 MW hydro-electric power generation and irrigation scheme on the Lower Waitaki called Project Aqua, capable of an average annual energy production of 3,000 GWh per annum, implying a mean generation flow of around 200 cumecs (Meridian Energy, 2003). In March 2004 Meridian Energy announced the cancellation of Project Aqua, citing uncertainties around the nature of water rights and the ability to secure resource consents for the project and growing indirect costs. It was also reported that the latest geotechnical investigations had raised issues which would be likely to have an adverse impact on project costs. November

34 At a conference in May 2006, Meridian Energy revealed that it is investigating an alternative concept for developing the water resources on the Lower Waitaki which involves a tunnel on the north bank called the North Bank Tunnel Concept (Meridian, 2006). The proposed North Bank Tunnel Concept incorporates a tunnel intake immediately upstream of the left abutment of Waitaki Dam, a 34km long tunnel through greywacke rock on the left bank of the river, and a power station. Two options are currently being considered for the power station either an underground power station, towards the upstream end of the tunnel, or a downstream power station discharging to the Waitaki River upstream of Stonewall (Black Point). We understand that Meridian Energy has lodged an application for water consents for the scheme Scheme parameters The primary parameters for the scheme are listed in Table 4-5. Table 4-5 : North Bank Tunnel scheme parameters Parameter Capacity Energy production Maximum generation flow Tunnel Construction period 200 MW to 280 MW Value 1,100 GWh 1,400 GWh per annum Approx. 260 cumecs Diameter 10 to 12 m, 34 km long using two to three tunnel boring machines (TBMs) 4.5 to 6.5 years Meridian Energy has yet to optimise the tunnel diameter for the scheme and, as such, the final installed capacity and annual generation could vary between the limits included in Table 4-5. Meridian Energy state that the scheme would be operated as an integral part of the existing Waitaki chain of power stations and that, while the operation of the existing stations could change slightly to optimise generation at all stations, any operational changes should be minimal and remain within existing consent conditions. November

35 4.3.3 Cost estimates As outlined in section 3.1 there is little public information available on the proposed details for the scheme. We understand that Meridian Energy has not completed any detailed design work and that further work is dependent on securing water rights for the development of the scheme. As such, the existing documentation available for the estimation of quantities is limited to the conceptual layouts submitted with the water consent application. Our cost estimate has been developed assuming the final scheme incorporates the following features: A tunnel intake immediately upstream of the left abutment of Waitaki Dam, complete with vertical lift gates and bulkhead facilities. A 34km long, 10m diameter concrete lined tunnel excavated by two tunnel boring machines (TBMs) working from portals located in the Hakataramea Valley and at Stonewall. A peak generation flow of 260 cumecs which results in a peak flow velocity of 3.3 m/s. For Meridian Energy s proposed average annual offtake of 200 cumecs the average flow velocity would approximate 2.5 m/s. A 25m diameter by 90m deep surge chamber towards the downstream end of the tunnel for surge control and flow regulation. Two 6m diameter steel-lined penstocks extending between the surge chamber and an above-ground power station, located at Stonewall, with two 140MW generating units. An 80m wide tailrace channel, between the power station and the river, with a 270m long velocity barrier at its downstream end for the exclusion of fish from the tailrace area. Table 4-6 presents a summary of the main component cost estimates for the NBT scheme. The table includes a base cost estimate, and upper and lower bound cost estimates to reflect the current uncertainties associated with the final structure details, the estimated quantities and the assumed unit rates. The upper and lower bound cost estimates are 130% and 80% of the base cost estimate respectively. November

36 The summary cost estimates for the main components of the NBT scheme are contained in Table 4-6. Table 4-6 : North Bank Tunnel scheme cost estimate summary Item Amount (NZ $ 000) Pre-development costs 3,300 Preliminary & General 32,436 Access & roading 2,178 Structures 1,151,892 Earthworks - Turbomachinery and switchyard 130,596 Landscaping 1,000 Engineering fees 24,119 Environmental mitigation 6,728 Total (Base case) 1,352,249 Upper cost (+30%) 1,757,924 Lower cost (- 20%) 1,081,799 The total cost (base case) estimate for the scheme equates to $4,829 / kw Discussion While the existing documentation for the scheme is limited, we have made a number of observations during the course of the study and offer the following comments on issues that could significantly affect construction costs. As the scheme is an out-of-river development, some of our comments are similar to those made for the Wairau and Arnold schemes. The economics of development are heavily dependent on the availability of water for generation. Any additional downstream water demands for the residual river, that arise as a result of the consenting process, could have a marked effect on the economics of development. The proposed tunnel alignment crosses the Kirkliston fault system between Waitaki Dam and the Hakataramea Valley, and parallels the Dryburgh and Stonewall fault systems that trend along the northern bank of the river between the Hakataramea Valley and Stonewall (ref.5 A November