Completed in 1971, Manapōuri was built primarily to supply electricity for the Tiwai Point aluminium smelter near Bluff, some 160 km (99 mi) to the southeast.

The station utilises the 230-metre (750 ft) drop between the western arm of Lake Manapouri and the Deep Cove branch of the Doubtful Sound 10 km (6.2 mi) away to generate electricity.

Access to the power station is via a two-kilometre vehicle-access tunnel which spirals down from the surface, or a lift that drops 193 metres (633 ft) down from the control room above the lake.

Construction of a second tailrace tunnel in the late 1990s, 10-kilometre (6.2 mi) long and 10 metres in diameter, finally solved the problem and increased capacity to 850 megawatts (1,140,000 hp).

The first surveyors mapping out this corner of New Zealand noted the potential for hydro generation in the 178-metre drop from the lake to the Tasman Sea at Doubtful Sound.

The idea of building a power station was first formulated by Peter Hay, the Superintending Engineer of the Public Works Department, and Lemuel Morris Hancock, the Electrical Engineer and General Superintendent of the Transmission Department of the California Gas and Electric Company during their November 1903 inspection of Lakes Manapōuri and Te Anau.

Each of the 1904 reports by Hay and Hancock noted the hydraulic potential of the lake systems, being so high above sea level, and while the rugged isolation of the region meant that it would be neither practical nor economic to generate power for domestic consumption, the engineers realised that the location and scale of the project made it uniquely suited to electro-industrial developments such as electro-chemical or electro-metallurgical production.

In January 1926, a Wellington-based syndicate of ten businessmen headed by Joseph Orchiston and Arthur Leigh Hunt, New Zealand Sounds Hydro-Electric Concessions Limited, was granted by the government via an Order in Council the rights to develop the waters which discharged into Deep Cove, Doubtful Sound, and the waters of Lake Manapōuri, to generate in total some 300,000 horsepower (220,000 kW).

In 1955 the modern history of Manapōuri starts, when Harry Evans, a New Zealand geologist with Consolidated Zinc Proprietary Ltd identified a commercial deposit of bauxite in Australia on the west coast of Cape York Peninsula, near Weipa.

The company started investigating sources of large quantities of cheap electricity needed to reduce the alumina recovered from the bauxite into aluminium.

Five months later, Consolidated Zinc Proprietary Limited (later known as Comalco) formally approached the New Zealand government about acquiring a large amount of electricity for aluminium smelting.

The resulting period was tumultuous, with Labour's controversial ministers Roger Douglas and Richard Prebble driving rogernomics, a rapid introduction of "free market" reforms and privatisation of government assets.

The Campaign opposed selling off the power station to ensure that Comalco did not rehabilitate its plans to raise Lake Manapouri's waters.

[11] In July 2020, Rio Tinto announced that they would be closing the aluminium smelter in Bluff in August 2021,[12][13] triggering discussions on how to utilise the energy generated in Manapouri.

The Clutha Upper Waitaki Lines Project (CULWP) started construction as of September 2021[update] to relieve this constraint, allowing an extra 400 megawatts to be sent north.