Substantial savings for electricity consumers identified through joint initiative

02 October 2015
Transpower said today that system functionality installed as part of its recent HVDC Pole 3 inter-island link upgrade will enable potential savings in the millions of dollars per year for New Zealand consumers.

The Reserves and Frequency Management (RFM) Programme, a joint initiative between Transpower and the Electricity Authority, will enable the power system to operate more efficiently and at a national level, rather than by separate arrangements for the South and North islands.

To enable a continuous electricity supply, Transpower as the System Operator procures ‘reserves’– essentially back-up sources that cover a situation where a large generator became suddenly unavailable. To ensure the power system frequency remains stable at 50 Hertz, ‘frequency keeping’ services are also procured. Both reserves and frequency keeping are currently contracted both in the North and the South Island to cover each island.

Transpower’s General Manager System Operations John Clarke said that Transpower had been running trials of nationally-procured reserves since March 2015 and the results to date have been positive.

“Electricity Authority analysis shows that running frequency keeping and reserve management on a national basis is substantially more efficient than procuring these services on two separate islands under the current arrangements.”

“With the upgrade of the HVDC Pole 3 link last year, functionality is now available to run a national market which would require reserve or frequency keeping to be procured nationally. Recent reports from the trials reveal potential industry savings of up to $25 million per annum – savings that could be passed directly to electricity consumers.

“We are working with our generation customers and the Electricity Authority towards implementation of a permanent national frequency keeping and reserve management market.  However we need to ensure that security and reliability of the power system is not compromised. We are close to being able to confirm this with some proven initiatives already being implemented permanently, with others due to become permanent by November 2016,” he said.

“We very much appreciate the support and feedback from our customers and the Electricity Authority throughout the trials. We continue to be focused on utilising the assets that we have invested in heavily over the last five years, and operating them to their full potential to ensure the capture of maximum benefits to our customers and the end electricity consumer. The initiatives under the RFM programme show how investing in good technology options while ensuring reliability and capacity in the grid, is producing real value for New Zealand.” he said.

For further information please contact: Rebecca Wilson, Corporate Communications Manager, 04 590 6695; 021 578 608

Background and context:

In 2013, Transpower upgraded the HVDC inter-island link by replacing one of two poles. This upgrade won ‘Energy Project of the Year’ at the 2014 Deloitte Energy Excellence Awards and was undertaken in a live power system and electricity market. This improvement, combined with an upgraded control system, created a “round power” system where the grid is able to send electricity north and south at the same time, allowing a more constant national frequency rather than varying frequencies in each island. The upgrade has directly resulted in being able to achieve the RFM programme and benefits.


Media release RFM Final.pdf [ pdf 37.05 KB ]