Second Stage Of $144m Grid Project Brought Forward In Response To Electricity Demand Increases

This week, Grid owner Transpower announced it will action stage two of its Waikato-Upper North Island Voltage Management Project.

A grid stability device, the second of the project, will be installed at Transpower’s Otahuhu substation, a major juncture of high-voltage electricity lines and other infrastructure, at a cost of $55m.

“Voltage management in this region has become an increasing challenge due to the retirement of fossil-fuelled generation over the last ten years and the real and projected growth in demand for electricity”, said General Manager Grid Development John Clarke.

“Since we began work on stage one of this project in 2021, the speed of change in the electricity landscape in the North Island has increased with greater electrification of industry and transport, new datacentres and major new residential developments, combining to trigger this investment sooner than originally anticipated.

“Without sufficient tools to ensure voltage management and power quality, issues may arise with grid stability that could affect electricity consumers across the country. We will prevent this by actioning stage two ahead of our original timeframe, ensuring New Zealand can continue its path towards greater reliance on renewable energy.”

Transpower began working on options to address the future issue of voltage management in the Waikato and Upper North Island back in 2016, seeking information from the industry by consulting on a longlist of options to manage the problem before it arose.

By 2020, the Commerce Commission had approved a two-stage major capital expenditure investment proposal at a total cost of $144m, providing Transpower with flexibility through an incentive scheme and extended delivery timeframe, enabling it to make efficient investment decisions.

“This approach ensures best value for all New Zealand electricity consumers”, Mr Clarke continued. “We are focused on avoiding unnecessary costs to our customers while ensuring we provide a transmission grid that delivers safe, reliable power supply to people up and down the country.”

Regarding the specific grid stability device, Mr Clarke commented that an RFP last year looked ahead at what possibilities there might be for non-transmission solutions in Auckland (such as batteries or demand response) to deliver the services Transpower required.

“However, this process indicated that an additional grid stability device is the most cost-effective approach to meet our requirements for this region at this time. We remain committed to continuing to consider alternative solutions for grid needs in future, and we thank those who participated in our RFP process.”

Transpower will partner with Hitachi Energy to manufacture, install and commission the device. Construction on-site is expected to start later in 2023 and the project is expected to be commissioned and in service by the end of 2025.

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