05 Nov 2020
Transpower has announced it will commence work on the first phase of its Waikato Upper-North Island Voltage Management (WUNIVM) project.
The project received Commerce Commission approval in late September 2020 allowing Transpower to recover up to $143m of investment to manage voltage stability in the Waikato and Upper North Island regions.
The work is needed to manage potential changes in either generation or demand in the region.
The first phase will see the installation of a grid stability device at Transpower’s Hamilton substation costing approximately $60m.
General Manager Grid Development John Clarke said the company’s decision to proceed with part of the approved investment despite uncertainty in the electricity market, was a complex one.
“The issue under debate is when to invest. The investment challenge is complex when considering both prospective generation changes from the Huntly Power Station, and demand growth in the region,” he says.
“Given these uncertainties, the potential for a significant reduction in generation at short notice, and the lead times for investment, we plan to proceed with the first phase, one grid stability device at Hamilton with a target commissioning date of winter 2023.
“This plan reduces risk by addressing voltage stability needs should regional thermal generation reduce, and demand increase as forecast.
“Transpower needs 30 months to install the equipment. By starting now with the first of two phases in our overall project, we can adequately manage risk to electricity supply by winter 2023 and the following one to two years.”
The need and timing of the subsequent second phase, a second device at Otahuhu, will be reviewed when there are confirmed changes to either the output from Huntly or demand for electricity in the wider Waikato and Auckland regions. It is unlikely to be required before winter 2025.
Mr Clarke says Transpower has also spent the past six months exploring “non transmission solutions” with interested parties. These are potentially lower-cost options to installing devices at Hamilton and Otahuhu.
“We have been unable to secure a lower-cost option that can also deliver the technical performance required for the first phase. The potential, however, remains for a non-transmission solution to be an option for the second phase, when it proceeds".
Questions and Answers
Why has this decision been taken?
- The work is required to ensure voltage stability on the transmission grid at a time when future changes in the Auckland and Waikato regions’ electricity supply and demand are inevitable, but as yet, unclear.
- In particular, this relates to the change in generation that would arise if Genesis Energy decide to significantly reduce the amount of generation capacity available at Huntly Power Station.
What did the Commerce Commission approve?
- The two-phase project received Commerce Commission approval in late September 2020, for two grid stability devices, one at each of Transpower’s substations at Otahuhu and Hamilton, along with other measures at a total cost of up to $143m.
What is Transpower planning?
- In the first phase or our work, we will install one device at Hamilton by winter 2023 along with other measures at a cost of around $65m to manage the risks posed by significant changes in generation and demand in the region and ensure a stable electricity supply for the future.
How long will the work take?
- Transpower needs 30 months to install the equipment. By starting now with the first of two phases in our overall project, we can adequately manage risk to electricity supply by winter 2023 and the following one to two years.
When will Phase Two occur?
- The need and timing of the subsequent second phase, a second device at Otahuhu, will be reviewed when there are confirmed changes to either the output from Huntly or demand for electricity in the wider Waikato and Auckland regions. It is unlikely to be required before winter 2025.
Has Transpower looked into alternatives to this investment?
- Transpower invited alternatives to the investment and subsequently worked with Mercury NZ Limited to explore the potential to convert its former generators at Southdown power station to synchronous condensers, as one such alternative.
- Unfortunately, it was agreed that the cost of providing the service and the risks of the service being interrupted if a proposed roadway is built across the Southdown power station site mean that installing a grid stability device at Otahuhu is preferred.
- Transpower also explored whether a large grid-scale battery might be viable, following an approach by Meridian and Contact Energy. Batteries of this size have been utilised to aid system stability in Australia.
- Technical analysis showed that while current technology grid-scale batteries would struggle to meet the high-performance standard required for managing voltage stability at Hamilton, these remain a potential option for the second phase at Otahuhu.
What is a Grid Stability device?
- These devices respond rapidly to manage and stabilise voltage during unexpected or severe events on the national transmission grid. Two of these devices are already installed in Northland and Auckland.