Transpower Proposes Up To $1.4 Billion Investment In Cook Strait Electricity Link

Transpower is seeking views on a proposed investment of up to $1.4 billion in Aotearoa New Zealand’s Cook Strait electricity link to ensure it can deliver an affordable and reliable electricity supply to the country as the economy electrifies over the next 40 years. 

In a consultation paper released today, Transpower set out its proposal to replace key components of the critical High Voltage Direct Current (HVDC) link between the North and South Islands in a suite of projects to upgrade, enhance and protect the system. 

Transpower Chief Executive James Kilty said the existing undersea cables were installed in 1991 and will reach the end of their expected life in the early 2030s, meaning they must be replaced. 

“Connecting the electricity system across both main islands is critical for delivering the lowest cost source of electricity to New Zealanders now and into the future. The HVDC link also adds resilience to our electricity system as the connection between the North and South Islands means the market can take greater advantage of the electricity generation available across both islands,” Mr Kilty said. 

“When we replace the cables, there’s also a strong case for installing an additional cable. This will transfer more electricity as well as providing more back-up in the case of an unplanned outage. It will set New Zealand up for an affordable and resilient electricity supply for the long term. 

“We believe this is a prudent and cost-effective investment to future-proof New Zealand’s electricity supply. We only get one shot at this every 40 years and we’re keen to hear from stakeholders before we proceed.” 

The HVDC link can currently transfer up to 15% of New Zealand’s total electricity use between the two islands. It ensures the lowest-cost electricity generation can be dispatched to customers and helps the power supply remain reliable by linking communities with many different electricity generators across the country. 

The original HVDC link was put into service in 1965 and the undersea cables have been replaced once before, in 1991. Underwater surveys have shown the cables are beginning to deteriorate as expected, in line with their 40-year asset life. 

Other parts of the link requiring upgrades in the early-to-mid-2030s include the cable termination stations that connect the undersea and overland parts of the HVDC link and the control system that manages power transfer. Transpower is proposing to deliver these at the same time as the cable replacement as a suite of HVDC link upgrades to be completed in 2030 and 2031. 

Mr Kilty said planning and delivering the projects together will minimise the impact on the electricity system while the work is done, deliver cost efficiencies for New Zealand, and help Transpower confirm contracts with suppliers of undersea cables and other HVDC equipment. 

“The equipment we need, as well as the expertise to install it, is in high demand globally. A large part of this is driven by the world electrifying at pace and building more renewable electricity generation to meet that electrification demand,” Mr Kilty said. 

“We’ve already moved early to secure New Zealand’s place in the queue for undersea cables, a cable laying ship and the experts to install them. It’s critical we firm up our plans for the proposed investments so we can move ahead and lock in the necessary contracts.” 

Mr Kilty said the construction work would begin in 2030, with the new equipment up and running in 2031. Transpower expects there would be no impact on electricity supply to consumers while the upgrades happen. 

Feedback on Transpower’s HVDC investment proposal is due by Friday 20 June 2025. After considering the feedback Transpower will review its proposal, make any necessary adjustments, and submit a Major Capex Proposal to the Commerce Commission. This will seek approval to recover costs of the work programme through Transpower transmission charges, spread over the expected life of the assets. In addition to the usual scrutiny process, Transpower is also contracting an independent review of the proposal given its significant cost and impacts. 

Transmission charges make up under 8% of consumer’s electricity bills. 

Further information, including information on a webinar on the short-list consultation and details on how to submit, is on Transpower’s website at www.transpower.co.nz/hvdc-upgrade.

Notes

The full suite of projects that Transpower proposes to deliver in the HVDC Link Upgrade Programme is:

• Replace the three undersea high-voltage power cables in the cable protection zone between the North and South Islands
• Install a fourth cable
• Build cable termination stations where the undersea cables connect to overhead power lines (upgrades will address operational needs and seismic and climate change risks)
• Upgrade the control system that runs the HVDC link
• Maximise electricity transfer volume with new equipment at Benmore substation
• Upgrade the smaller of the link’s two convertor systems (“Pole 2”) to reduce risk to the electricity system if the other larger convertor (“Pole 3”) experiences a fault
• Secure a facility to store spare cable
• Remove the existing cables from the seafloor.

The costs that Transpower is seeking approval for cover the projects listed above, project investigation costs, inflation and interest during construction.

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