Mon, 16 Apr 2018
A dam planned near Nelson is a step closer to accessing Government funding after raising $16.5 million in an initial public offering.
The Waimea Community Dam aims to support irrigation and urban water supplies in the region, Tasman District Council says.The council is also considering the potential for hydro generation to be included in the project.
Landowners in the area had purchased more than 3,000 shares in the project by last Thursday, Waimea Irrigators chair Murray King says.
Although the firm extended the offer three weeks until April 12, King says the vast majority of applications came in before the original March closing date.
The capital raising is one “major hurdle” the firm has overcome ahead of accessing low-cost Government loans to build the Waimea Community Dam – currently expected to cost about $82.5 million. King says that, having the Government’s funding commitment confirmed earlier this month, the landowners’ support is a “clear indicator that we were going to succeed”.
The project, which aims to address rural and urban water security on the Waimea Plains, is “starting to feel very real”, but several steps remain before the project can proceed.
The Tasman District and Nelson City councils need to finalise their proposed funding for the dam in their long-term plans by the end of June.
An early contractor involvement process is also underway to determine a final project estimate before then, King says.
Generation business case
The planned 52-metre-high dam in the Lee Valley south of Richmond will provide 13 million cubic metres of water storage. That will help maintain the Waimea River’s flows to meet ecological and environmental needs.
It will also support existing irrigation in a prime horticultural area and reduce the likelihood of future water rationing for the region’s growing urban population.
Tasman District Council also proposes to complete a business case for including generation in the scheme. The initial consent for the project in 2015 included up to 1 MW of generation, possibly installed at a later date.
“Early indications suggest a viable business case around a $5 million investment is likely. Whether this can be achieved and the timing of any investment in hydro power is still to be confirmed.”
The council notes concerns about the lack of a strong business case at present. Other issues around generation also include that installing hydro-units in the project would cause construction delays and, later on, conflicting water release priorities.
New Government priorities
The Waimea project is one of three projects to retain access to Crown Irrigation funding following an announcement earlier this month that Government is winding back previous support for large-scale irrigation.
Finance Minister Grant Robertson announced two weeks ago that Crown Irrigation Investments has committed up to $35 million to that scheme. Crown Irrigation is also contractually obliged to provide a $65 million loan facility to the Central Plains water project in Canterbury, and has signed a construction funding term sheet with the Kurow-Duntroon scheme in North Otago.
But the Government won’t support South Canterbury’s Hunter Downs, North Canterbury’s Hurunui Water and Marlborough’s Flaxbourne schemes as part of the Labour Party’s confidence and supply agreement with the Green Party. Robertson said large-scale private irrigation schemes need to be economically viable “in their own right”.
Hunter Downs – initially developed in a partnership between Hunter Downs Water and Meridian Energy – is expected to be completed, being well advanced and having gained requiring authority status last year under former Environment Minister Nick Smith. Meridian exited the project in 2016, but Alpine Energy holds an 8.3 per cent stake in the scheme and chief executive Andrew Tombs is on the Hunter Downs board. The Timaru-based distributor has said the scheme could increase its peak load by up to 30 per cent.
Rangiora-based distributor MainPower has a 17 per cent stake in the Hurunui Water proposal which initially secured Crown irrigation funding in 2016. Hurunui Water chief executive Chris Pile has told Stuff that, while the Government’s decision to pull out of that would constrain the project, it would still proceed.
Credits: The Article “Waimea dam project gains investor, Govt support”, written by Felicity Wolfe was originally published on ENERGY NEWS on Monday 16 April 2018.