Solid Energy has applied for resource consents to build a hydro-electricity generation scheme using water from its Stockton Mine in Buller.
The plant would be capable of powering 22,000 houses and enable the West Coast region to become self-sufficient in electricity.
Solid Energy says the mine has enough water to generate 176 gigawatt hours of renewable electricity a year, but any scheme has to be properly integrated into its main coal mining business.
Solid Energy says it plans to get the required resource consents before comitting to a detailed design phase, but it estimates the scheme could take a year to plan for, and three years to build.
Meanwhile, a Westport group, Hydro Developments Ltd, has won resource consent for a scheme taking water from tributaries of the Ngakawau River, reducing chemical contamination, and sending it through tunnels to the ocean.
Solid Energy is appealing this and is seeking consents for its own hydro scheme.
It says it must be sure a hydro scheme in the area would be properly integrated into its coal mine.
Hydro Developments says it worked closely with Solid Energy and is well aware of its needs.