Doubt over timeline of Transpower upgrade to electricity link from South Island to North

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The Commerce Commission is questioning the timing of Transpower’s proposed investment in the high voltage link between the North and South Islands.

The national electricity grid operator proposed a $393 million investment to help the system adapt to a more electrified economy last year.

It wanted to install a device to increase maximum electricity flow from the South to North Island on the High Voltage Direct Current (HVDC) link, and carry out upgrades to lines in the central North Island and the Wairakei area.

The commission said while it accepted the investments were necessary, it questioned the timing of the HVDC upgrade, which would cost $103 million.

The inter-island cable is a critical part of the country’s electricity infrastructure, that allows electricity to flow between the North and South Islands.

In its draft decision, the commission said the proposal did not have “immediate benefit to consumers”.

Commissioner Vhari McWha said there was uncertainty about where new investment in generation was likely to be and what demand would look like.

“It’s not clear when that investment is actually needing to be made,” she said.

She said there were some factors which would make the proposed HVDC upgrade necessary, such as new large wind generation in Otago.

But there was also the potential for new large wind generation in the North Island that might impact plans to improve south to north electricity flow.

“What we’re looking for is really for Transpower to manage that timing risk. They’ve assured us that they will do that and they will not move to undertake those investments until some of those timing risks resolve [sic].”

McWha said the wait time to import HVDC assets was another risk.

The commission is seeking feedback on its draft decision, with a final decision expected in February 2024.