Upper South Island Reliability Stage 2

Non-Transmission Solution RFIAnd Long List of Options

March 2013

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WELCOME AND INTRODUCTION

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Purpose of Today• We’re seeking your input• Consultation

– Explain the upcoming need– Introduce and discuss current long list options– Discuss key areas for you to provide input

• Request for Information (RFI) on Non-Transmission Solutions

• Your input will – Ensure our assumptions are robust– Help us benefit from local knowledge and information– Ensure grid meets future needs of stakeholders

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Agenda• Purpose, investment process overview• The story so far• System overview and need• Demand & generation assumptions• Lines company and other Stakeholder input• Long list Options

– Transmission– Non-transmission

• Input to Consultation• Discussion• Close

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NZ Electricity and Transpower

• Transpower is responsible for the interconnected power grid between – major power stations, and – where electricity supplies large users direct, or – goes into the local distribution networks (owned by

lines companies) • This grid forms the “backbone” of the power

system

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NZ Electricity and Transpower

Generation

Transmission

Major IndustriesSubstations

Distribution

Retail

End Users

Transpower

Lines Compaines

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INVESTMENT PROCESS

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Overall Investment Process• Transpower identifies investment needs & develops

proposals to resolve need• Submission to regulator for approval (Commerce

Commission)• If approved Transpower can recover investment through

charges on all grid users• Customers can ask Transpower to invest for their benefit

– in which case they meet the cost directly

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Developing an Investment Proposal

• Confirm need• Non- Transmission Solution RFI and Long list

Consultation with Stakeholders– Need– Demand and generation– Investment test technicalities:

• VoLL, discount rate, calculation period– Long list, especially including request for non-

transmission solutions– other questions

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Developing an Investment Proposal (2)

• Consider feedback• Do cost-benefit analysis (Investment Test) choice of

proposal• Short list consultation

– Investment test assumptions especially any changes– Investment test results– Proposal– Implications for charges and market effects (construction

outages, etc.)

• Submit for approval to Commerce Commission• Comcom publish intention, consult, approve (hopefully)

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• Reliability – to reduce chances of outage• Economic – when the benefits of enabling additional

generation are greater than the cost of building new grid• Focus for this investment is reliability • The Waitaki Valley to Islington circuits are part of the

Core Grid– We invest to guard against single failures

• n-1

– Evaluate various options that meet the need– Choose the one with the greatest net market benefit

or least net market cost

Types of Investments

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SYSTEM OVERVIEW AND NEED

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Upper South Island 220kV transmission system

Upper South Island

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History of the Issue• The Upper South Island region does not have enough local generation to

meet demand. • As the load increases, Transpower needs to ensure the capacity of the

transmission system increases to keep ahead of demand• Over recent years, we have improved reliability and capacity to the area

with a range of investments, mostly related to voltage stability:– 2006: a third Islington-Kikiwa 220kV circuit– 2007: an upgrade of the Kikiwa bus security– 2008: duplexing the Islington-Livingstone circuit, and bussing the second circuit at Ashburton– 2009: a fifth bus coupler at Islington, and a STATCOM at Kikiwa– 2005 -2011: Upgrade the transmission system between Inangahua and Dobson, install a

new Kikiwa 220/110kV transformer, install capacitors at Hokitika

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This Investigation• Our most recent investigation began in 2010, with a proposal

submitted to the Commerce Commission in 2012 • We split the investigation into two stages

– Stage 1, a low-cost but short-term (until 2018) Islington bus coupler– Stage 2, the second (and potentially much larger) investment

• The Commission approved our Stage 1 proposal on 11 February 2013

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To highlight today’s issue…

Ashburton

Tekapo B

Waitaki Valley generation

Timaru

Upper South Island load

230 km

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Voltage Stability LimitVoltage stability: the ability of the transmission system to control the voltage after a disturbance, avoiding either an uncontrolled voltage drop (leading to a blackout) or uncontrolled high voltages (damaging equipment).

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Stage 1 – Islington bus coupler

• 6th Islington 220 kV bus coupler (The worst credible contingency is an outage of an Islington 220 kV bus section)

• Reduces the impact of a bus section outage at Islington

• Due to be commissioned mid-2014

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Stage 1 - Load monitoring• Monitor 10 sites in the Upper South Island with Power

Quality meters. Measure• System dynamic behaviour during and after a fault• Baseline harmonics, unbalance and flicker• Compliance

• Validate our assumptions of load characteristics.

• More accurate calculation of the voltage stability limit –help to ensure investments are made at the right time

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Stage 1 - Orari preliminary development

• An allowance was made to progress the Orari bussing option, to ensure this could be commissioned in time if it proved to be the preferred option

• Work includes refining the design of the new switching station, and preliminary processes to obtain consents and easements

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Orari bussing option

Ashburton

Tekapo B

Waitaki Valley generation

Timaru

Upper South Island load

230 kmOrari

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Stage 2: 2018

• Again, the need is driven by voltage stability• The need date is 2018 • A number of contingencies cause voltage

problems at about the same peak load (generally related to Christchurch-Waitaki circuit outages)

• We are presently consulting on the long list of options

Questions?

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TRANSPOWER DEMAND AND GENERATION FORECASTS

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Demand• Reminder: All Grid Exit

Points (GXPs) from Timaru north

• Wide range of uncertainty• Focus on Prudent Peak

ForecastOur best estimate of the value that annual peak should exceed 1 year in 10 = winter weekday extreme cold over entire region

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Uncertainty• Caution: forecasting is uncertain

– the worst and easiest mistake to make is to close our minds to possibilities

– “We don’t know what we don’t know” applies, especially beyond 10 years out

• Timeframe is difficult– Transmission investments last for 40+ years

• We don’t want to overspend industry and public money• We don’t want to hold back growth or have rolling

blackouts on very cold days

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Drivers• For each of the drivers on the next few slides:

– Will it happen? When?– How much will it affect peak USI net demand?– Will it still be an issue in 10 years? In 40 years?– Will it give Transpower flexibility to handle sudden

growth?

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National / International Drivers• Recession / Financial crisis• Structural changes to economy - shift from

manufacturing to services• Efficiency gains – light bulbs, home insulation, energy-

smart buildings• Micro-generation – solar-assisted water heating,

photovoltaic• Elasticity: higher prices lower demand• Demand-side management (DSM)

– USI lines companies’ system – Other ways in which consumers will progressively be able to

respond to price

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National / International Drivers• Electric vehicles

– How/when/where (home/work/shopping areas)

• Fuel shifting– Coal or gas to electric– electric to wood burners

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Regional Drivers• Christchurch post-earthquake recovery

– What will population stabilise at?– Energy efficient new housing and commercial buildings?– Early adopter of electric vehicles?

• Irrigation– More dairy– What if dairy boom ends? Will intensive agriculture remain?– Current drought – climate change? – Canterbury water in

general

• Mining– Electricity needs vary greatly between ores, technologies

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Demand Side Response

• Upper South Island Load Manager – has already given us 3 years’ delay– Transpower helped fund this through the Electricity

Commission and continue to fund it• We are grateful for anything that helps with

active control of winter peaks

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DSR Security

• Will demand side initiatives give us security against being caught short by high growth?– Meaning we could reduce our prudent level

• Previously held trial and pilot in USI• National market pilot running at the moment

– To facilitate DSR development in general– To help bring in non-traditional electricity industry

players– To help us answer the security question

• More from Quintin later

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Forecast Uncertainty

+4% p.a.

-1% p.a.

Reasonablypossible

Would take major shift

Would take major shift

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Prudent Forecast has Reduced

( )( )

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Generation: Existing and New

• Other side of net demand• Similar to stage 1 assumptions• We want the generation at time of peak demand

for market and larger embedded generation– Smaller embedded generation included as negative

demand at relevant grid exit point• Summer 62 / 152 MW, Winter 94 / 152 MW• RFI has 17 new generation projects• Do we have the status of these correct?

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Generation Scenarios• During Stage 1 we modified these several times

– Reflecting shrinking intentions for new build

• It’s the overall mix that matters, not which project is included

• Propose to use those from the Stage 1 Proposal– 2016: Stockton Plateau 8 MW, 5/5 scenarios– 2018: Arnold 46 MW, Hurunui 76 MW & Marlborough Wind 300

MW, all 1/5 – Nothing else before 2020

• Is this now about right? Too much? Too little?

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Demand Forecasting – earthquake impact

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Growth and relocation

Residential red zone – approx 8000 houses

Central city blueprint

ECAN – Chapter 12A future zoning

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Demand forecast - population uncertainty

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Household recovery – quick scenario

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Peak demand – network total

400

450

500

550

600

650

700

750

1980 1985 1990 1995 2000 2005 2010 2015 2020

Year ending 31st March

Measured system demand

Projection of system demand: using 10yrs of pre-quake history (1.1% p.a.)

Projection of system demand: using 30yrs of pre-quake history (1.1% p.a.)

Forecast system demand (excl electric vehicles)

Forecast system demand: with extreme cold snap

Forecast system demand

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Load forecasts similar• Consistent forecasts in the short term• Modest separation in the medium term perhaps

indicating a further delay may be possible

TP PrudentOrion Extreme Cold Snap

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Summer growth- expected to slow but still

steady

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Summer rural growth - irrigation

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Peak demand - rural

10

30

50

70

90

110

130

150

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Year ending 31st March

M easured to tal rural summer demand

Projected to tal rural summer demand: using 5yrs of history (2.0% p.a.)

Pro jected to tal rural summer demand: using 10yrs of history (3.4% p.a.)

Forecast to tal rural summer demand

M easured Hororata summer demand

Forecast Hororata summer demand

M easured Springston summer demand

Forecast Springston summer demand

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New USI 220kV grid exit points

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Orion new 220kV connections –others?

New Orion 220kV

connection

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Resiliency – top of the south

dependence on ISL

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Resiliency - post earthquake

Orion 33kV Substation

Orion 11kV Substation

Transpower GXP

Substation key

DALLINGTON

RAWHITI

BROMLEY GXP 

HEATHCOTE

BARNETT PARK

LANCASTER

MILTON

OXFORD-TUAM

FENDALTON

HOON HAY

ARMAGH

HALSWELL

MIDDLETON 

SHANDS

SOCKBURN

MOFFETT

HAWTHORNDEN

McFADDENSPAPANUI HAREWOOD

To Springston

& Rolleston

To Lincoln

ADDINGTON HORNBY

ISLINGTON GXP

630Cu

1000Cu

1600Cu

Proposed 2013‐2020Proposed >2025Existing U/GExisting O/H

Proposed Orion66kV Substation

Orion 66kV SubstationMARSHLAND 23MVA

BELFAST 40MVA

630Cu

1000Cu

630Cu

1000Cu

WAIMAKARIRI 40MVA2015

2013

YALDHURST 23MVA

AWATEA 40MVA

630Cu

1600Cu

Upgrade to2x90MVA

1000Cu

630Cu630Cu

2014

2016

2015

2015

2014

2018

2020

2025

2017

2020

630Cu

630Cu

↓open

2017

PREBBLETON

50oriongroup.co.nz

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LONG LIST OF OPTIONS

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A bit of Jargon• Long List of Options = many possible solutions

to a transmission need• Solutions are divided into

– Transmission solutions (lines, substations, transformers etc., mostly built by Transpower)

– Non-transmission solutions (NTS)• The long list (ideally) leads to perhaps five likely

contenders - the short list - that we analyse in detail

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Long List of Options• This is the long list from the

Stage 1 Major Capex Proposal

• The preliminary Stage 2 long list and the screening criteria are in Appendix C of theRequest for Information and long list consultation document

• Part of this current consultation process is to capture any further options appropriate for the long list

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Example from Stage 1 submissionb) Generation Grid Support Contract

Included in short-list: Reason: RFI submitters indicated a willingness to negotiate Grid Support Contracts around future developments. Specifically Mighty River Power highlighted early development plans for a wind farm proposal in the greater Cape Campbell area. However, no generation of sufficient capacity been offered which has not already been accounted for in the power system analysis.

c) Diesel Generation

Included in short-list: Reason: Orion offered installation of distribution network diesel generation as an alternative to transmission. The Belfast and Bromley diesel generation sites are both consented and could be implemented within 12 months. A demand-side response equivalent of up to two years of USI load growth (45 MW) is assumed available. Therefore a diesel generation is considered as a short-list option for stage one.

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Non-transmission optionsOption Comment

Non-Transmission Solutions

a) New generation

b) Existing generation grid support contract

Would need to be constrained on during peak demand

c) Diesel generation Belfast and Bromley consented

d) Upper SI load controller Already accounted for e) Special Protection Scheme

(SPS) Too slow to meet the voltage criteria

f) Fuel switching No information available

g) Energy efficiency May be difficult for scale required

h) Local network augmentation May be difficult for scale required

i) System Operation improvements Already achieved via RPC

j) Ancillary services See b) above

k) Demand response (pre-contingency load shedding) Economics and availability not clear

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Transmission optionsTransmission – Existing Assets

a) Tee 220kV circuit near Bromley

Only provides minor improvement

b) Reconductor existing transmission circuits

Expensive for marginal improvement in voltage stability

Transmission – New Assets

a) New bus coupler at Islington USI Stage 1 proposal b) Double breakering at

Islington Similar effect and cost to bus coupler, but

with less option valuec) Islington 220 kV bus tie

circuit Only helps during bus maintenance

d) Pound Rd switching station Only provides minor improvement in voltage stability

e) +/- 80 Mvar STATCOM at Islington (or Bromley)

Effective as increases voltage stability limit

f) +/- 40 Mvar STATCOM on Islington T6 and T7

Smaller STATCOM on 11 kV tertiary may be cost effective

g) SVC at Ashburton Reconfiguration of 220 kV bus required or 66 kV solution less useful

h) SVC at Islington (or Bromley) Effective as increases voltage stability limit

i) Refurbish SVC3 Effective as increases voltage stability limit

j) New synchronous condensers

Effective as provides inertia and modern condensers have fast controllers

k) STATCOMs on the West Coast

Not very effective as worst contingency is at Islington

l) SVCs/STATCOMs north of Christchurch

Not very effective as worst contingency is at Islington

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Transmission options

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DEMAND RESPONSE

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Consultation Questions• Payment structure?• Long & short? • Contract start?• Assumptions? • Generation scenarios? • $25,600/MWh• Anything else?

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WHAT WE ARE SEEKING

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Your Input Matters

• Especially about – Non-transmission solutions– Demand forecast– Generation, if you are a proponent

• Welcome to comment on other matters– Transmission solutions– Short-listing process– Economic analysis

• Full details in consultation document – Grid NZ website

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Submissions

• By 12 April 2013• We will give consideration to all submissions. • We prefer open submissions but will respect

confidentiality– Transparency is important in this process and we may

not be able to rely on confidential information to justify an investment proposal

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Your Feedback

How you can provide feedback:• Ideally Microsoft Word or PDF format • Email:

gridinvestmentprojects@transpower.co.nz

• Post:Angela Dalziel, Project Manager, Upper South Island Reliability

Stage 2Grid DevelopmentTranspower NZ Ltd.P O Box 1021Wellington

• Please provide feedback by 12 April 2013

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TimetableMar2013

Apr May Jun Jul -Aug

Sep Oct -Jan

Feb 2014

Mar

Consultation

RFP on NTS

Economic Analysis

Short List Consultation

MCP to CC

CC

Approval

Questions?

Thank you

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Single failuressingle credible contingency event means an individual credible contingency event comprising any of the following:a) a single transmission circuit interruptionb) the failure or removal from operational service of a single

generating unitc) an HVDC link single pole interruptiond) the failure or removal from service of a single bus sectione) a single inter-connecting transformer interruptionf) the failure or removal from service of a single shunt connected

reactive component