The lake's original outflow was at its southern end, into the Tekapo River. In 1938 construction commenced on a power station, originally due to be finished in 1943 but halted by the war in 1942. At the same time, control gates were constructed to regulate outflows to the Waitaki Dam downstream. Work restarted in 1944, and the power station now known as "Tekapo A" came online in 1951.
Water from the lake is diverted through a 1.4-kilometre (4,600 ft) tunnel under the town to the power station, with the water originally being returned to the river. With development of the Upper Waitaki hydroelectric scheme in the 1970s, water is now fed into a 26-kilometre (16 mi) canal which leads to Tekapo B on the shores of Lake Pukaki.
Following a turbine failure in 1986, a new Kaplan turbine was installed, with a more efficient design and higher output (42 000 HP) than the original. Today, the power station produces an average of 160 GWh annually, from a 25.2 MW capacity generator. The net head of the station is 30.5 m.
In 2008 Tekapo A and Tekapo B hydro stations were refurbished following the upgrade of Benmore and Waitaki.
On 1 June 2011, Tekapo A and B hydro power stations were transferred from Meridian Energy to Genesis Energy after an instruction from the Government
