Lake Onslow. Photo:
The new government has axed the $16 billion pumped hydro scheme at Lake Onslow, which had been championed by its Labour predecessors.
Energy Minister Simeon Brown said it was a wasteful project, and scrapping it was part of the new government's plan for its first 100 days.
"This hugely wasteful project was pouring money down the drain at a time when we need to be reining in spending and focussing on rebuilding the economy and improving the lives of New Zealanders," Brown said in a statement.
Energy Minister Simeon Brown. Photo: RNZ / Samuel Rillstone
Work ceased on Friday, and decommissioning is set to begin.
Nestled high up in the hills of Central Otago, Lake Onslow - a man-made reservoir - had been pitched as a potential solution to the country's dry year problem - when fossil fuels are burned to generate the power needed in an electricity shortfall, when hydro catchments are low.
More than $20 million had already been spent on investigating the project.
Brown said as electricity demand was forecast to increase by two-thirds by 2050, the country needed to increase energy generation by solar, wind and geothermal means.
"Our decision to cancel Lake Onslow, and our commitment to make it easier to consent wind, solar and geothermal energy projects, will give industry certainty in the direction the Government is heading and greater confidence to invest in more energy production in New Zealand."