Construction has started on a 2 MW solar farm and battery storage system on Stewart Island that the government and Southland District Council say will cut the island’s diesel use by up to 75 percent and drop residential power prices by as much as 35 cents per unit.
Regional Development Minister Shane Jones and Associate Regional Development Minister Mark Patterson turned the first sod on 22 May at the site of the new array, which sits on a two hectare block on Rakiura, the Māori name for Stewart Island, and will host about 3,000 panels alongside a 4 MW battery capable of storing at least six hours of the island’s average energy needs.
The project is being built by Christchurch renewable specialist Infratec and will be owned and operated by the Stewart Island Electricity Supply Authority, the council-run lines and generation business that currently keeps the lights on with five diesel generators, 30 kilometres of overhead line, 10 kilometres of underground cable and 35 transformers.
It is funded by a 15.35 million dollar suspensory loan from the Regional Infrastructure Fund, made to Southland District Council. The loan was approved in 2025 and the council says it will draw down the money as construction milestones are met. Commissioning is scheduled for early 2027.
Stewart Island residents currently pay 89 cents per kilowatt hour for electricity, a price that rose from 85 cents in early May. By comparison, mainland households generally pay under 25 cents per unit. The island is not connected to the national grid and is wholly reliant on diesel shipped across Foveaux Strait, leaving it exposed to fuel-supply disruption. A diesel shortage scare in March this year underlined the risk.
In a statement on the Beehive website, Patterson said the project responded to the things Stewart Islanders had been asking the government to address for years. “The start of construction reflects strong community support and careful local planning. It responds directly to the challenges they have identified including high power costs, supply risk, and long-term resilience,” he said.
Jones, whose ministry oversees the Regional Infrastructure Fund, said the loan was designed to do two things at once. “The Regional Infrastructure Fund provided a 15.35 million dollar loan to Southland District Council to help strengthen the Island’s energy resilience and bring real cost relief to a remote community,” he said.
Southland Mayor Rob Scott told the sod-turning ceremony the solar farm was built on what the community had already done for itself. “This project isn’t about fixing something that’s broken. It’s about building on what’s already here,” he said.
Infratec general manager of development and delivery Chris Service, whose company has built micro-grid systems in New Zealand and Tonga, said his team was looking forward to taking residents on the journey through the build. “It’s a pretty exciting project for us. We’re really keen to take you on the journey,” he said.
Once it is running, the array is expected to displace about 200,000 litres of diesel a year. That equates to roughly three-quarters of the island’s annual demand of 1.93 GWh, with the diesel generators remaining in place as backup for cloudy stretches and the long nights of a southern winter. SIESA serves about 400 permanent residents plus tourists and fishing crews who pass through Halfmoon Bay.
Construction is expected to support around 40 full-time jobs over the duration of the build. The package also funds network upgrades and a rollout of smart meters across the island.
The Stewart Island scheme will not appear on Newswire’s NZ Grid Live map because the island sits outside Transpower’s transmission network. It does, however, illustrate a quiet trend in New Zealand energy policy, away from off-grid diesel and towards local solar-and-battery micro-grids in remote communities where extending the national grid would never pencil out. Similar schemes have been raised for parts of Northland and the West Coast.
The Regional Infrastructure Fund was set up in the 2024 budget with 1.2 billion dollars and is the New Zealand First-led replacement for the previous Provincial Growth Fund. Jones has been clear from the outset that he wants money pushed into projects that solve a concrete local problem rather than spread thinly across feasibility studies. Stewart Island fits that brief about as cleanly as a project can, with a defined community, a measurable diesel burn, and a price visible on every household bill.
Rakiura has been pushing for a renewable solution for more than a decade. Earlier feasibility work considered wind, tidal generation and a possible undersea cable from Bluff, all of which were ruled out on cost grounds. The solar-and-battery option emerged as the cheapest and most maintainable, helped along by the collapse in solar panel prices since the first community proposals were costed in the mid 2010s.
Whether the 35 cent price drop flows through to bills in full will depend on SIESA’s operating costs once the array is bedded in, and on what the council does with revenue freed up by burning less diesel. Officials have indicated that the immediate priority is paying down the loan and building a reserve for future generator replacement, rather than the steepest possible cut in the kilowatt-hour rate. Residents should expect a noticeable price drop from 2027 and a further drop once the loan is repaid.
No Labour, Green or Te Pāti Māori pushback has surfaced on the project, with all three parties’ Southland representatives publicly supportive of moving Rakiura off diesel. The political contest has been entirely about who claims the credit rather than whether the work should be done.
Voters who want to see how Stewart Island and other remote communities sit within each party’s energy and regional development policies before the 2026 general election can compare positions on Newswire’s voting tool.
What do you think about the Stewart Island solar farm and the Regional Infrastructure Fund’s focus on off-grid communities? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply