01 Jul 2024
Transpower has decided to install new equipment at Haywards to increase the electricity flow between the North and South Islands, after consultation with the electricity sector and major electricity users confirmed support for the investment.
Acting Executive General Manager Grid Development Allen Keogh said Transpower appreciated the feedback on its new modelling of the investment’s benefits and looked forward to getting underway with the works at Haywards.
The new equipment will increase the amount of time that New Zealand’s high-voltage inter-island link – which includes an undersea cable – can operate close to its full capacity. The expected investment of $88 million includes a new static synchronous compensator (STATCOM) and other voltage stability equipment planned for installation in 2027.
“Transpower sees significant value for New Zealand in installing this new equipment at Haywards, as the updated modelling showed. We also highly value the time our industry colleagues put into reviewing and providing comment on our analysis,” Mr Keogh said.
Following the consultation feedback and the subsequent announcement that New Zealand Aluminium Smelter will stay in operation at Tiwai Point until 2044, Transpower has completed further analysis. This has confirmed the benefit to New Zealand remains positive, with a $7 million net benefit expected under a conservative future scenario.
“Electricity demand is growing and at the moment the market is moving quickly to meet that demand. We are regularly updating our information and making sure that there is good value in our investments,” Mr Keogh said.
“With the smelter now very likely to remain in service until 2044, we anticipate seeing significantly more new electricity generation being built in the South Island. If this happens, it could further boost the value New Zealand can gain from investment in the High Voltage Direct Current (HVDC) to bring South Island electricity north.”
Transpower will now progress work to procure the new equipment and install it at Haywards over the coming years.
To read the summary of submissions or view the submissions in full, see the Transpower website.
This investment was approved by the Commerce Commission in 2024 subject to further modelling to demonstrate the benefits of this work, which was published in May 2024. It is one of three linked projects under the Net Zero Grid Pathways programme of work to improve the national grid’s capacity.
Later in 2024 Transpower will provide an update 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 as the replacement is carried out.
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.
- 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.
ENDS
For further information, please contact:
Rachael Drummond, Senior Corporate Communications Advisor, 021 394 803.