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Meridian Energy has applied for resource consents to construct and operate six new hydro power stations, collectively known as Project Aqua. The project would be commissioned in two stages between 2008 and 2011. Each stage would comprise a sequence of three power stations connected by canals. The proposed scheme would divert water from the lower Waitaki River through a series of canals with the ability to divert water back into the lower Waitaki River after Stage 1 and after Stage 2. The proposed project is a complex and major undertaking in the context of the New Zealand electricity supply system.

The Ministry of Economic Development (MED) has therefore asked Concept to evaluate the economic impact of the project within the electricity sector. In particular the task was to address the following questions:

• Is Aqua an economic development option, in a national context, relative to other alternatives?
• Is Aqua development likely to lead to a significantly lower path for the price in LRMC based wholesale electricity prices?

This evaluation is limited to the impact of Project Aqua on the electricity sector.¹ It does not consider the impact of the project or the pricing outcomes on the wider economy. This wider analysis is being undertaken by Sinclair Knight Mertz (SKM).

Associated with this evaluation, Concept has evaluated the likely impacts of the project on security of supply in the period to 2012. This evaluation was provided in a report to MED in December 2003.²

¹Apart from carbon emissions. Because the effect of likely carbon tax levels has been included in the commercial evaluation of projects, it is sensible to include this effect in the national benefit analysis.

²Project Aqua: Potential Security of Supply contribution in 2011/12.