The Government is exploring multiple options after the estimated cost of a proposed new hydro power plant quadrupled from around $4 billion to nearly $16 billion.
The plant would be remote, located at Central Otago's Lake Onslow, near Roxburgh — and proposes a solution to dependence on fossil fuels to cover electricity shortfalls.
"In order to get the required amount, the government has recommended somewhere between 3 and 5 terawatt hours of energy storage and Onslow can go up to 5 terawatt hours of energy storage," said researcher Earl Bardsley, who originally proposed pumped storage at the location.
"There's nowhere else in New Zealand you can get 5 terrawatt hours in one location," Bardsley said.
Energy and Resources Minister Megan Woods said Cabinet has decided to go ahead and keep looking at a range of alternatives for the project.
Water from the nearby Clutha River would be pumped up to the lake and pushed through turbines when electricity runs low.
"Onslow will wipe out the more expensive energy generation options... that means we can actually have cheaper power," Bardsley said.
Some are concerned the Lake Oslow plant could take up to a decade to build, wanting a more staggered transition to renewable energy.
However, the Opposition opposes the project completely, and said they would scrap it if they won the next election.
"It's a waste of 16 billion dollars at a time when we're in a cost-of-living crisis, I think it's absolutely turning a deaf ear to the concerns of the public," National MP Stuart Smith said.
"The electricity sector is decarbonising significantly, there's 4 gigawatts of generation proposed on an offshore wind coming, so that's 40% of the actual existing generation capacity... we've got plenty of renewable energy coming our way."