Canterbury irrigation company Central Plains Water has signed an agreement with TrustPower that will allow it to tap into water stored in Lake Coleridge when the Rakaia River's flow is low.
The government cleared the way for the agreement earlier in the year by altering a conservation order so that water stored in the hydro lake can be used to supplement irrigation.
The Central Plains scheme proposes to take water from the Rakaia and Waimakariri rivers to irrigate up to 60,000 hectares of farmland.
Central Plains turned to TrustPower and Lake Coleridge for a solution after plans for its own storage lake in the Malvern Hills were rejected during the consents process.
Central Plains chairman Doug Catherwood says the agreement with TrustPower will give a reliable water supply for the first stage of the scheme at least.
That will feed water to 20,000 hectares of farmland between the Rakaia and Hororata rivers.
"We book the water a year in advance and TrustPower will endeavour to store that water for us, and with a bit of telemetry and modern technology, with 24 hours notice, they will release water into the Rakaia River for our intake structures to be able to pick it up and deliver it to our farmer irrigators."
Mr Catherwood says Central Plains will be issuing a prospectus soon to the 100 farmer shareholders who will be connecting to the $144 million first stage of the scheme.
He says there is potential for more stored water to be available for further stages of the scheme.
Other irrigators are also planning to use water stored in Lake Coleridge.