13 May 2024
New equipment at Transpower’s Haywards site will maximise the use of New Zealand’s interisland electricity link and deliver $56 million of value to New Zealanders over its lifetime, Transpower said today.
Executive General Manager Grid Development John Clarke said new Transpower modelling confirms the significant benefit of investing in the new equipment as part of the high voltage direct current (HVDC) link, which connects the North and South Islands, over the next three years.
“Electricity use in New Zealand is rising and will continue to rise in the future. Making sure the critical HVDC link is available to operate more often at its full capacity enables the supply of more electricity into the North Island from the South. Having the link more available to move lower cost renewable power to meet demand is ultimately positive for electricity consumers.”
The spend for this work was approved by the Commerce Commission in February this year, with an expectation that Transpower would provide updated analysis that demonstrates a clear benefit to consumers.
The updated modelling has been completed and takes account of increasing electricity demand as well as more certainty that new electricity generation like new wind and solar farms will be built in the South Island.
Mr Clarke said that the new modelling demonstrates that the HVDC equipment upgrade is expected to be good value for New Zealanders now and in the future under a range of scenarios. This is regardless of any future uncertainty about the operation of the New Zealand Aluminium Smelter at Tiwai Point to 2034 and beyond. The aluminium smelter uses approximately 14% of New Zealand’s electricity generation.
The new equipment is currently scheduled to be installed in 2027. It includes a new static synchronous compensator (STATCOM) and other equipment that provides additional voltage stability for the HVDC link and increases the amount of time it can operate close to its full capacity of 1200 MW. Currently the link provides an average of 1070 MW of available transfer capacity, largely due to the need to take other, older, equipment out of service for regular maintenance.
The new modelling is available on the Transpower website and feedback on the analysis is welcome until Tuesday 28 May.
Transpower is committed to future-proofing our HVDC link so it can continue to deliver its essential function. Later in 2024 Transpower will engage on work to replace the three undersea cables across Cook Strait. The existing cables will be near the end of their 40-year life by the early 2030s. As part of this future cable replacement work, we will outline the case to increase the overall maximum capacity of the link by a further 17% to 1400 MW at the same time, through the addition of a fourth cable when the other three are replaced.
Background
As the sole provider of transmission services in New Zealand, Transpower's spending on transmission assets is regulated by the Commerce Commission. Projects estimated to cost over $20 million must be approved through a major capex proposal process, for Transpower to be able to recover those costs. Transpower included the HVDC equipment upgrade, the “HVDC Stage 1 works” in its Net Zero Grid Pathways 1 Stage 1 Major Capex Proposal to the Commerce Commission in 2022. The investment was approved by the Commerce Commission in February 2024 on the basis that further analysis of the benefits of the HVDC Stage 1 works would be published.
Transpower’s updated analysis has calculated an average net electricity market benefit of $56 million over the expected life of the assets if the HVDC Stage 1 works are commissioned in 2027. The cost of the HVDC Stage 1 works is estimated to be $88 million and the total benefit to New Zealand is estimated to be $144 million over the expected life of the assets. The net average net benefit of $56 million is the difference between these two figures.
Net Zero Grid Pathways (NZGP) is Transpower’s multi-year programme of work to investigate, plan, consult on and seek investment approval for the large-scale transmission projects needed to enable electrification – the growing use of electricity as New Zealand works to achieve net zero carbon emissions by 2050.
For further information, please contact:
Rachael Drummond, Senior Corporate Communications Advisor, 021 394 803.