Cable action plan kv grids March 2009

Transcription

1 Cable action plan kv grids March 2009

2 Table of contents 1. Summary of the cable action plan 3 2. Introduction 7 3. Planning scenarios 8 4. Existing overhead lines Economically optimal dismantling times for overhead lines Proximity to urban areas, natural areas and open countryside Overhead lines for immediate dismantling New cable-based transmission grid New grid map following the undergrounding of cables Partial undergrounding of the 400 kv grid Principles for the planning of undergrounding Overviews and economy Overview, kv basic plan kv basic plan, economy kv grid expansion, economy Accelerated dismantling of overhead lines in urban and natural areas, scenario Accelerated undergrounding and dismantling of overhead lines, scenario Breakdown of costs Implementation of the cable action plan Decision-making process 24 Appendix 1. New guidelines for undergrounding and expansion of transmission grid 28 Appendix 2. Preparation of the plan (organisation) 30 2 Doc /09

3 1. Summary of the cable action plan On 4 November 2008, the political parties in the Danish parliament behind the energy agreement of 21 February 2008 entered into an agreement on the guidelines for the future expansion of the main electricity transmission grid in Denmark. According to the guidelines, new kv power lines will be installed as underground cables, and the existing kv overhead lines will be undergrounded in accordance with a coherent cable action plan, which is summarised below. The cable action plan is the result of the joint efforts of the regional transmission companies and Energinet.dk with contributions from the environmental centres. A plan has been prepared for the undergrounding of the entire kv grids. The fact that a cable action plan has been prepared does not imply that the individual regional transmission companies have decided to implement the plan. This decision will subsequently be made by the supervisory boards of these companies. Calculations show that the conversion will amount to a gross total of DKK 14.5 billion. In this context, it should be noted that in order to implement the plan the transmission companies must have the necessary financial framework. In the basic plan described, the conversion of the kv grids from overhead lines to underground cables can be carried out over a period of approx. 30 years. The plan should be seen as the first step in a continuous planning process in which in-depth knowledge of the individual projects and changed priorities will influence the actual undergrounding of cables. In addition, it is important to note that the installation of underground cables and, in particular, the dismantling of existing overhead lines must be carried out in a way which ensures that security of supply is given top priority. The overall plan covers the dismantling of approx. 3,200 circuit kilometres 1 of kv overhead lines and the undergrounding of approx. 2,900 kilometres of new kv cables. The overhead lines will be dismantled in step with the grid being replaced by cables, but as the plan at the same time involves a restructuring of the transmission grid, the cables-to-overhead lines ratio will not be 1:1. In principle, the service life of the overhead line components can be extended or components replaced indefinitely, which means that the concept of service life is not unambiguous. The basic plan for the installation of underground cables is based on the economically optimal times for dismantling overhead lines. As a supplement to the basic plan, the consequences of partially accelerated undergrounding will be examined, where the undergrounding of overhead lines in major conurbations will be prioritised in the first ten years and overhead lines in natural areas and landscapes of national interest will be prioritised in the first 20 years (scenario 1), and general accelerated undergrounding (scenario 2), where all overhead lines will be dismantled by Dismantling of existing overhead lines The undergrounding of lines will generally be prioritised based on the economically optimal dismantling times for the overhead lines, defined as the time when the overhead lines will require extensive and costly renovation. The regional transmission companies have identified the economically optimal dismantling times for each individual section of overhead line, based on the residual life of the individual subcomponents. The results of this analysis have then been broken down into five-year periods as shown in the figure on the next page. The periods in the figure do not imply that the various sections will definitely be dismantled during those periods, as, in addition to these, other sections passing through both urban areas and natural areas of national interest have been singled out, the dismantling of which may be accelerated at the expense of other lines which can be postponed. 1 A 10-kilometre overhead line with two systems installed has 20 circuit kilometres. Doc.40206/09 3

4 The final decision on when to decommission specific sections of overhead lines, and thus their dismantling, will be made by the company owning the various sections, subject to agreement with Energinet.dk. Practical issues may lead to changes in the order of dismantling, for example because the overhead lines must make room for other infrastructure such as roads or railroads, due to the changed grid structure resulting from the undergrounding of lines or because current developments in terms of increased electricity consumption and wind-power expansion etc. make it necessary to change the priorities. New cable-based transmission grid The structure of the existing electricity transmission grid was originally based on the location of the power stations in relation to the consumers in urban and industrial areas. The transmission grid has essentially been capable of integrating the considerable expansion with local CHP and wind power, but the undergrounding of lines offers a unique opportunity to redesign the entire transmission grid and optimise it to accommodate, among other things, the future expected massive renewable energy expansion, the location of future offshore wind farms as well as increases in electricity consumption, including the expected increased use of electricity for heating and electric vehicles. The figure on the next page shows the planned future restructured underground kv grids and the reinforced 400 kv grid. The underground kv grids have been designed in accordance with all applicable grid dimensioning principles and on the basis of the assumed development in electricity consumption, electricity generation and international exchange in the period up to 2025 and towards The year 2040 has been chosen because the most recently installed kv overhead lines have a residual life without reinvestments that extends to around The grid has been designed on 4 Doc /09

5 the basis of load analyses which show the strength of the current in the individual lines in the different dimensioning scenarios, including in case of potential grid faults. It should be emphasised that the structure of the planned future transmission grid with kv cables must be updated regularly and adjusted in accordance with future developments and specific plans in terms of electricity consumption, electricity generation and international exchange etc. This applies to both the 400 kv and the kv grids. It is also assumed that the kv grids will be planned in an integrated manner taking account of the kv grids, including the possible restructuring and undergrounding of these grids. Cable connections must be installed before the overhead lines can be dismantled, and so for a number of years the cables placed underground will outnumber the number of overhead lines dismantled. The figure below shows the expected installation of underground cables in kilometres in various periods and the expected dismantling of overhead lines according to the basic plan. Undergrounding and dismantling of overhead lines km Undergrounding System km Track km Before After 2040 Doc.40206/09 5

6 Economy and acceleration Calculations show that the total costs of implementing the basic plan, according to which the undergrounding of cables is planned based on the economically optimal dismantling times for overhead lines, would be DKK 14.5 billion if all the investments were made now. The calculated price includes all costs related to planning/projecting, contractor s work and the procurement of materials/components. Labour accounts for approx. 45% of the costs of a cable project. It is expected that the undergrounding of cables in major urban areas by 2020 and natural areas of national interest by 2030 (scenario 1) can be prioritised without incurring any significant extra costs, provided that the dismantling of other lines is postponed. By accelerating the undergrounding of cables to a 20-year period in which 100% of the overhead lines will be dismantled by 2030 (scenario 2), the payment of approx. 10%, or approx. DKK 1.5 billion, of the total costs will have to be advanced by approx. 10 years. 6 Doc /09

7 2. Introduction On 4 November 2008, the political parties in the Danish parliament behind the energy agreement of 21 February 2008 entered into an agreement on the guidelines for the future expansion of the main electricity transmission grid in Denmark (Appendix 1). According to the guidelines, new kv power lines must be installed as underground cables, and the existing kv overhead lines will be undergrounded in accordance with a coherent cable action plan. This report summarises the main conclusions of the cable action plan, which has been prepared jointly by the regional transmission companies, the Danish Energy Association and Energinet.dk with contributions from the environmental centres. A plan has been prepared for the undergrounding of the entire kv grids. The fact that a cable action plan has been prepared does not imply that the individual regional transmission companies have decided to implement the plan. This decision will subsequently be made by the supervisory boards of these companies. Calculations show that the conversion will amount to a gross total of DKK 14.5 billion. In this context, it should be noted that in order to implement the plan the transmission companies must have the necessary financial framework. The plan is for the conversion of the kv grids from overhead lines to cables to take place over a period of approx. 30 years up until The year 2040 has been chosen because the most recently installed kv overhead lines have a residual life without reinvestments that extends to around The plan outlined should be seen as the first step in a continuous planning process in which indepth knowledge of the individual projects and changed priorities will influence the actual undergrounding of cables. In addition, it is important to note that the installation of underground cables and, in particular, the dismantling of existing overhead lines must be carried out in a way which ensures that security of supply is given top priority at all times. The overall plan covers the dismantling of approx. 3,200 circuit kilometres of kv overhead lines and the undergrounding of approx. 2,900 kilometres of new kv cables. The overhead lines can be dismantled in step with the grid being replaced by cables, but as the plan at the same time involves a restructuring of the transmission grid, the cables-to-overhead lines ratio will not be 1:1. The restructuring is planned to ensure that a balance is struck between the considerations in terms of security of supply, renewable energy expansion, economy, the environment and the functioning of the electricity market. In several places in the report, reference is made to the concepts of circuit kilometres and kilometres of track. Circuit kilometres are the same as kilometres of cable. If two overhead line systems share the same towers, they count as one line in the calculation of kilometres of track. The definition of circuit kilometres and kilometres of track is illustrated below. Figure 2.1. Definition of circuit kilometres and kilometres of track. More than 30 employees of the parties involved have contributed to the contents of the cable action plan. The plan has been prepared over a period of three and a half months. The work was Doc.40206/09 7

8 organised as shown in Appendix 2. All assumptions and the results of the analyses performed are summarised in an appendix report. 3. Planning scenarios The cable action plan sets out the following undergrounding scenarios: The basic plan, according to which the installation of underground cables is based on the economically optimal dismantling times for the overhead lines, defined as the time when the individual overhead lines will require extensive renovation. This minimises the costs of maintaining existing overhead lines, and the dismantling of lines can be carried out over a period of approx. 30 years. Scenario 1, Partially accelerated undergrounding, where the undergrounding of overhead lines in major conurbations will be prioritised in the first ten years, and overhead lines in the open countryside and natural areas of national interest will be prioritised in the first 20 years. Scenario 2, Accelerated undergrounding, where all overhead lines will be dismantled over a 20- year period. The degree of acceleration in the last two scenarios is determined in relation to the basic plan. The economic analysis thus primarily focuses on the basic plan, and the required additional investments related to accelerated undergrounding are assessed on the basis of this. 4. Existing overhead lines Out of consideration for the overall economy, the dismantling of the overhead lines must be based on their residual lives. In addition, lines passing through areas of natural beauty and urban areas may be given higher priority. This section describes the existing overhead line network based on service life, the countryside, the environment and proximity to urban areas. 4.1 Economically optimal dismantling times for overhead lines In principle, the service life of the overhead line components can be extended indefinitely, which means that the concept of service life is not unambiguous. Instead, the analysis has focused on the economically optimal dismantling times for the overhead lines, defined as the time when the individual overhead lines will require extensive and costly renovation. The analysis of the optimal dismantling times takes into account any minor line investments required. Account has, for example, been taken of the fact that the replacement of an earth wire on a given line, at a relatively modest cost, may extend the residual life of the line up to the time of re-galvanisation of the towers which will be very costly. Each regional transmission company has identified the economically optimal dismantling times for each individual section of overhead line based on an assessment of the residual life of the individual subcomponents of an overhead line system. The result of the assessments is shown in Figure 4.1.1, which also serves as the basis for the basic plan for undergrounding. 8 Doc /09

9 Figure Optimal dismantling times If overhead lines are dismantled at the optimal times, only minor investments are required for one third of the grid, corresponding to DKK 150 million or approx. DKK 150,000 per kilometre. If the dismantling of the lines whose optimal dismantling times lie before 2030 is postponed to 2030, the investments required will be four times higher, approx. DKK 600 million. The periods indicated in the figure do not imply that the various sections will definitely be dismantled in those periods. Practical issues may lead to changes in the order of dismantling, for example because the overhead lines must make room for other infrastructure such as roads or railroads, due to the changed grid structure resulting from the undergrounding of lines or because current developments in terms of increased electricity consumption and wind-power expansion etc. make is necessary to change the priorities kv generator overhead lines (overhead lines from power stations to the transmission grid) approx. 20 kilometres of track are not covered by the basic plan as these lines do not form part of the transmission grid. If the undergrounding of these kv overhead lines is agreed with the power stations, it can be done without impacting the transmission grid kv overhead lines designed for kv approx. 100 kilometres of track are not covered by the basic plan either as these lines do not form part of the transmission grid. The undergrounding of these lines will take place in accordance with the guidelines for systems below 100 kv. Doc.40206/09 9

10 As a general rule, kv overhead lines installed on 400 kv towers will, like the existing 400 kv overhead lines, not be undergrounded. Alternative solutions are planned where the kv lines are undergrounded when this is deemed to be technically and socio-economically advantageous, and new projects to improve the visual appearance of the 400 kv grid may also result in the undergrounding of the kv lines. For combined /50-60 kv overhead lines a total of approx. 75 kilometres of track it is assumed that the grid companies will participate in the undergrounding of the kv lines. Figure shows how many kilometres of overhead lines can be dismantled in five-year intervals if dismantling is based on the optimal dismantling times. 900 Optimal years of dismantling System km Track km km Before After 2040 Figure Optimal dismantling times, kilometres per five-year period. 4.2 Proximity to urban areas, natural areas and open countryside In connection with the planning of new high-voltage systems, it has become clear that there is a strong public desire for undergrounding the systems. The main argument for installing the cables underground is the landscape, but concerns about house prices and electromagnetic fields also play an important role. The undergrounding of cables is by many regarded as an environmentally neutral solution compared to overhead lines. The environmental impact assessment is carried out within the framework of an overall assessment of the following themes Table Doc /09

11 Table Overview of themes which the undergrounding of an existing overhead line may have impacted positively. As previously, the following factors are given a particularly high priority: People: Built-up areas and urban areas Natural areas: International nature protection areas (Natura 2000), national parks (adopted and planned) Landscape: Coastal zone, protected areas and valuable landscapes. Doc.40206/09 11

12 Figure shows the proximity of existing overhead lines to prioritised major conurbations together with the optimal dismantling times for the overhead lines. It has been calculated that a total of approx. 189 circuit kilometres of overhead lines pass through major conurbations. Figure Proximity of kv overhead lines to prioritised major cities same legends as in Figure Doc /09

13 Figure maps the proximity to natural areas and the open countryside. It has been calculated that a total of approx. 245 circuit kilometres of overhead lines pass through natural areas of national interest. Figure Proximity of kv overhead lines to natural areas and open countryside. Table shows the circuit kilometres of overhead lines through the prioritised major cities and landscapes/natural areas of national interest and their optimal dismantling times. Table Circuit kilometres of overhead lines through urban, natural and other areas according to their optimal dismantling times. Doc.40206/09 13

14 The table shows that if the overhead lines in major conurbations are dismantled exclusively in accordance with their optimal dismantling times, 174 ( ) circuit kilometres out of a total of 189 circuit kilometres would, for example, be dismantled by the end of 2025 as a natural consequence of this. This table is the basis for any accelerated undergrounding of lines in urban and natural areas. It can also be seen from the table that if all overhead lines in urban areas are to be dismantled by 2020 at the latest, cf. scenario 1, the installation of underground cables must be advanced, possibly by undergrounding parts of the lines, to replace approx. 100 ( ) circuit kilometres of overhead lines in urban areas. The undergrounding must be brought forward by an average of approx. five years. In addition, the installation of underground cables must be advanced, possibly by undergrounding some of the lines, to replace approx. 64 (22+42) kilometres of overhead lines in natural areas of national interest if they are to be dismantled by 2030 at the latest, cf. scenario 1. The undergrounding must be brought forward by an average of approx. ten years. Where scenario 2 is concerned, which involves complete undergrounding by 2030, the laying of cables must be advanced to replace an additional 560 ( ) circuit kilometres of overhead lines primarily in open countryside. 4.3 Overhead lines for immediate dismantling The basic plan includes an assessment of whether some kv lines can be dispensed with altogether. This assessment is summarised below. The 132 kv overhead line from Borup to Frederikssund approx. 10 kilometres has been decommissioned. This line can be included in the plan for immediate dismantling. No 132 kv cable replacement is planned for the 132 kv overhead line from Kamstrup to Asnæs Power Station approx. 60 kilometres. Whether the line can be dismantled before the 400 kv cable from Asnæs Power Station to Kyndby Power Station has been established depends on the results of more detailed grid analyses. According to the plan, the 150 kv overhead line from Tyrstrup to Skærbæk Power Station approx. 20 kilometres will be dismantled in Once 60 kv supply is established to Tyrstrup, the 150 kv overhead line from Tyrstrup to Ensted Power Station approx. 40 kilometres can also be dismantled. The 150 kv overhead line from Ensted Power Station to Flensburg approx. 30 kilometres to the German border is not included in the basic plan. The overhead line will be undergrounded if the supply agreement with Flensburg is to be maintained. In addition, 150 kv cables have been established to replace the 150 kv Ådalen- Ferslev overhead lines approx. 2 x 10 kilometres which, according to the plan, will be dismantled in New cable-based transmission grid In connection with the laying of cables, extensive restructuring is planned so as to balance the considerations in terms of security of supply, RE expansion, economy, the environment and the functioning of the electricity market. The structure of the existing electricity transmission grid was originally based on the location of the power stations in relation to the consumers in urban and industrial areas. The installation of underground cables offers a unique opportunity to redesign the entire transmission grid and optimise it to accommodate, among other things, the future expected massive renewable energy 14 Doc /09

15 expansion, the location of future offshore wind farms as well as the projections of the electricity consumption, including the expected increased use of electricity for heating and electric vehicles. 5.1 New grid map following the undergrounding of cables Figure shows the planned future restructured underground kv grids and the reinforced 400 kv grid. Figure Future transmission grid with kv cables. This grid has been designed in accordance with all applicable grid dimensioning principles and on the basis of the expected development in electricity consumption, electricity generation and international exchange in the period up to 2025 and towards The year 2040 has been chosen because the most recently installed kv overhead lines have a residual life without reinvestments that extends to around A number of design assumptions have been set up for the planning period, including: Projections of electricity consumption, including the consumption for heat pumps, electric boilers and electric vehicles Substation forecasts per kv substation electricity consumption, wind power and local CHP Assumptions for power station production Assumptions for offshore wind farms Assumptions for interconnections Doc.40206/09 15

16 Dimensioning scenarios in relation to security of supply, RE expansion and the functioning of the electricity market Function principle for the kv grids and further specification of the grid dimensioning principles. The grid has been designed on the basis of load analyses applying the above assumptions. The load analyses show the strength of the current in the individual lines in the different dimensioning scenarios, including in different cases of grid faults. When the cables have been placed underground, transmission grid losses will be at the same level as today. The cables will be dimensioned in accordance with socio-economic principles where the value of the grid losses is weighed up against the investment costs. Short-circuit analyses have been carried out to check whether the existing equipment (switches etc.) is dimensioned to be included in the future underground cable structure, but for the detailed design of the grid further system analyses are required, including dynamic and transient analyses. The design of the underground 132 kv grid in Eastern Denmark has been made taking account of the 50 kv grid. The analyses have shown that it will result in additional costs for society not to consider a new 50 kv grid structure and the consequent undergrounding of the 50 kv grid in the planning of the 132 kv grid. The new guidelines assume that the kv grids are installed as underground cables as previously. There are no specific plans for undergrounding the kv grid, and, as an example, it would not be possible to carry out the undergrounding of the 132 kv grid mentioned above in Eastern Denmark without taking account of the 50 kv grid as this grid, to a wide extent, functions in parallel with and as backup to the 132 kv supply. It is assumed that throughout Denmark the design of the 132 kv will be planned in a manner that takes account of the kv grids. It should be emphasised that the structure of the planned future transmission grid with kv cables must be updated regularly and adjusted in accordance with future developments and specific plans in terms of electricity consumption, electricity generation and international exchange etc. This applies to both the 400 kv, 220 kv and kv grids. The grid restructuring, shown in Figure 5.1.1, means that approx. 3,200 circuit kilometres of kv overhead lines will be dismantled and that approx. 2,900 kilometres of new kv cables will be laid. Table shows the total number of kilometres of cables and overhead lines in the existing and future planned transmission grid. Table Number of kilometres of transmission lines, excluding HVDC and cable connections for production and interconnections. 16 Doc /09

17 The recently completed kv cable project from Struer to Ramme and the ongoing cable project from Vestlolland to Stigsnæs are included in the existing transmission grid. As regards the 400 kv overhead lines in Table 5.1.1, it should be noted that there will be 30 (1,190 1,160) more kilometres of track and 290 (1,560 1,270) more circuit kilometres in the future grid. As described in Section 5.2, this is because the 400 kv Kassø-Tjele overhead line will be converted to a double-circuit line, that the 220 kv Kassø-Germany overhead line will be converted to a 400 kv double-circuit line, that an additional 400 kv system will be installed on the existing Endrup-Revsing row of towers and that the 400 kv Hovegård-Kyndby Power Station overhead line, which today is operated at 132 kv, will be converted to 400 kv. 5.2 Partial undergrounding of the 400 kv grid Figure The 400 kv grid according to expansion principle C. Doc.40206/09 17

18 The plan for the undergrounding of the kv grids assumes that the 400 kv grid is expanded in accordance with principle C in the Electricity Infrastructure Report Figure According to expansion principle C, new 400 kv lines will be placed underground. At the same time, the 400 kv grid through Central Jutland will be reinforced by removing the existing row of towers between Kassø and Tjele and replacing it with a new double-circuit line on towers in a new design. In addition, the existing 220 kv lines between Jutland and Germany will be converted to 400 kv and installed on towers in a new design, and an additional 400 kv system will be installed on the existing row of towers between Endrup and Revsing. The rest of the 400 kv overhead lines will remain as they are, but the principle allows for the possibility of improving the visual appearance of the overhead lines, for example by replacing old tower types with new tower types, re-routing tracks and partially undergrounding cables. In collaboration with the environmental centres, Energinet.dk has prepared a separate plan for potential projects to improve the visual appearance of the overhead lines. As for the 400 kv grid structure, the grid analyses conducted in connection with the cable action plan have shown that it may be more advantageous to lay a 400 kv cable from Endrup to Idomlund instead of a 400 kv cable from Tjele to Idomlund, as assumed in expansion principle C. Energinet.dk will conduct more detailed technical and economic analyses of this in the second half of In pace with the developments in security of supply and technological and socio-economic developments, it will be assessed whether all 400 kv overhead lines can be undergrounded in the long term. The years of commissioning for the various elements of the assumed 400 kv grid expansion are summarised in Table Table Assumed 400 kv grid expansion. The years specified for the conversion of the Kassø-Tjele line, the installation of an additional system on the Endrup-Revsing line and the conversion of the 220 kv line to Germany are expected. The other years specified are estimated. During the second half of 2009, Energinet.dk will analyse the basic plan for the 400 kv grid development in accordance with the basic plan for the undergrounding of the kv grids. In connection with the establishment of the 400 kv cable between Glentegård, Amager Power Station and H.C. Ørsted Power Station, a new 400 kv connection to Sweden is assumed as a replacement for the old 132 kv lines in the Øresund Link. 18 Doc /09

19 5.3 Principles for the planning of undergrounding Figure shows the potential undergrounding of the kv grids in relation to the optimal dismantling times for the existing kv overhead lines and in relation to the restructuring of the kv grids. This minimises the costs incidental to write-offs on the existing overhead lines and optimises the total costs. Undergrounding according to optimal year for dismantling overhead lines km Before After 2040 Figure Undergrounding times, kilometres. The method applied to establish the undergrounding times can be explained as follows: 1. Data has been collected regarding the optimal dismantling times for each of the existing kv overhead lines. 2. For each overhead line, it has been assessed which cables are required to take over the overhead line s current function in the transmission grid. 3. The overhead lines and the identified cables which will take over the overhead lines current function in the transmission grid have then been sorted chronologically in relation to the optimal dismantling times for the kv overhead lines. 4. Cables occurring more than once in the data set have then been deleted so that they only occur once in the data set; namely where they occur the first time chronologically. 5. The year in which the cables were installed was then set to be one year before the optimal dismantling years for the overhead lines which they are to replace. This ensures that the cables have been established before the overhead lines are dismantled and scrapped so that the individual kv substations are supplied by the kv grids in the entire period up until It should be emphasised that the undergrounding rate in relation to the change of the grid structure of course depends on the assumptions applied as regards: Installed electricity generation capacity Location of the installed electricity generation facilities Electricity consumption Expansion of the 400 kv and the kv grids. Most uncertainty is associated with the first two items as the expansion of wind power may change the undergrounding rate. Particular focus has been on ensuring that security will be at the same level as today in the period up until 2040 and as a minimum throughout the entire transitional period until the kv grids have been undergrounded. Load analyses have not been conducted of the step-wise transition to underground kv grids. These will be carried out in connection with the implementation. Doc.40206/09 19

20 6. Overviews and economy 6.1 Overview, kv basic plan The restructuring outlined in the basic plan means that approx. 3,200 circuit kilometres of kv overhead lines will be dismantled and that approx. 2,900 kilometres of new kv cables will be established. Figure shows the undergrounding and dismantling times for overhead lines. Undergrounding and dismantling of overhead lines km Before After 2040 Undergrounding System km Track km Figure Undergrounding and dismantling times for overhead lines. The workload will be the heaviest in the first two five-year periods up until 2020, in which half the undergrounding will be carried out across the country according to the basic plan. It should be noted that in the period before 2016, the number of kilometres of cables to be undergrounded exceeds the number of circuit kilometres of overhead lines which can be dismantled. Then, in the subsequent five-year periods, more circuit kilometres of overhead lines can be dismantled than are installed underground kv basic plan, economy Table shows the primary costs of the kv systems set out in the basic plan. Table Primary costs for the kv grids 2008 prices. At the end of the service life of the cable installations, they must be dug up, and the area must be re-established. It will cost approx. DKK 1.5 billion to remove the cables at the end of their service life, and this sum is included in the total costs. The costs of dismantling the existing kv overhead lines total approx. DKK 225 million, and this sum must also be included in the total costs. The minor investments to be made in the overhead lines up until their optimal dismantling times are insignificant and not included in the total costs. 20 Doc /09

21 The prices include all costs incidental to planning/projecting, contractor s work and the procurement of materials/components. Table shows the total investments in fixed prices and the socio-economic present value of the investments calculated using a discount rate (DR) of 6% and a net tax factor (NTF) of 1.17 in accordance with the Danish Energy Agency s guidelines for socio-economic analyses within the energy area ( Vejledning i samfundsøkonomiske analyser på energiområdet ) from April 2005 and most recently updated in Table Present value and tariff impact of investments in kv grids. The calculations for Table assume an investment profile corresponding to the undergrounding rate and the dismantling of overhead lines shown in Figure It is assumed that the costs of removing cables at the end of their service life will fall due 30 years after installation. Table also shows the average (avg.) gross tariff impact for the period. The tariff impact has been calculated in accordance with the assumed electricity consumption projection up until 2040 for ordinary electricity consumption (51 TWh) and taking account of the financial regulation of the regional transmission companies. The transmission companies are subject to the revenue cap executive order which stipulates that the companies are entitled to a return on their non-current assets at a rate of 1% above the calculated long-term building loan interest rate, corresponding to a return of 6.7%. In the tariff calculation, a return of 6.7% and an inflation rate of 2% are assumed. All prices are at 2008 level and exclusive of VAT and duties. A tariff increase of DKK per kwh, exclusive of VAT and duties, will cost an average household with an annual consumption of 4,500 kwh approx. DKK 50 per year, a small business with an annual consumption of 160 MWh approx. DKK 1,900 per year and a large industrial enterprise with an annual consumption of 300 GWh approx. DKK 3,500,000 per year kv grid expansion, economy Table shows the investments incidental to and the tariff impact of the assumed 400 kv grid expansion. Table Present value and tariff impact of investments in 400 kv grid. Doc.40206/09 21

22 The calculations assume an investment profile based on the years of commissioning listed in Table The average gross tariff impact has been calculated in the same way as for the investments in the kv grids. The financial regulation of Energinet.dk does, however, prescribe that only the actual interest expenses can be included which are expected to be 0.15% above the interest rate on long-term government bonds, or approx. 4.5%. In the tariff calculation, an interest rate of 4.5% and an inflation rate of 2% are assumed. All prices are at 2008 level and exclusive of VAT and duties. The total average gross tariff impact of the investments in the kv and the 400 kv grids amounts to DKK per kwh. Exclusive of VAT and duties, this will cost an average household with an annual consumption of 4,500 kwh approx. DKK 75 per year, a small business with an annual consumption of 160 MWh approx. DKK 2,700 per year and a large industrial enterprise with an annual consumption of 300 GWh approx. DKK 5,100,000 per year. 6.4 Accelerated dismantling of overhead lines in urban and natural areas, scenario 1 According to the basic plan, the priorities in scenario 1 will be as follows, provided that it can be financed and there is political interest: - The undergrounding of overhead lines in major urban areas will be prioritised in the period, possibly through partial undergrounding. - The undergrounding of overhead lines in natural areas and landscapes of national interest will be prioritised in the period, possibly through partial undergrounding. If the optimal dismantling times are accelerated, it will not be possible to make the most of the investments made so far in the installations, and this will result in advanced depreciation of the installations. This would apply to approx. 100 kilometres in urban areas and 64 kilometres through landscapes as calculated in Section 4.2, ie a total of 164 kilometres. Figure shows the remaining overhead lines following the above-mentioned accelerated installation of underground cables in the prioritised urban and natural areas compared with the basic plan. Figure Remaining overhead lines in the basic plan and with accelerated undergrounding in urban and natural areas. 22 Doc /09

23 By extending the service life of overhead lines not having an environmental impact beyond the optimal dismantling times and postponing the corresponding undergrounding of cables, the above priorities can, in principle, be carried out without increasing the costs of implementing the basic plan. If, instead, it is decided to accelerate the undergrounding (through partial undergrounding) of the approx. 100 kilometres of lines in the urban areas and 64 kilometres through open countryside, just under 6%, or approx. DKK 650 million, of the total cable installation costs of DKK 11.6 billion must be brought forward by five to ten years. 6.5 Accelerated undergrounding and dismantling of overhead lines, scenario 2 According to the basic plan, almost 90% of the investments will be made in the first 20 years during which 80% of the overhead lines will be dismantled, as shown in Figure Figure Undergrounding and dismantling times for overhead lines before and after By accelerating the undergrounding to a 20-year period, which means that 100% of the overhead lines will be dismantled by 2030 (scenario 2), the payment of approx. 10%, or about DKK 1.5 billion of the total costs of DKK 14.5 billion, will have to be brought forward by approx. 10 years. Assessments show that it will be practically feasible to implement the cable action plan in 20 years. It is, however, recommended that any decision to this effect await an evaluation of the implementation after the first five-year period. 6.6 Breakdown of costs As mentioned above, the prices include all costs incidental to planning/projecting, contractor s work and the procurement of materials/components. As illustrated in Figure 6.6.1, in an average cable project, approx. 10% of the costs are allocated to planning/projecting, approx. 35% to contractor s work and approx. 55% to the procurement of materials and components. Doc.40206/09 23

24 Figure Breakdown of costs of an average cable project. Planning/projecting include consideration by the authorities, negotiations on cable and digging contracts, supervision of the construction work performed, archaeological surveys, the holding of site and safety meetings, and compensation for landowners. Contractor s work comprises an all-inclusive digging contract consisting of the digging up, handling and laying of cables, the supply of sand and filling-up of cable trenches with sand, drain repair work, re-establishment of cable trenches, removal of surplus earth and all necessary contractors machinery. Procurement includes the supply and installation of cables and joints as well as the performance of various tests. In total, labour accounts for approx. 45% of the costs of a cable project. 7. Implementation of the cable action plan The decision made by the individual transmission companies on undergrounding and the subsequent dismantling of overhead lines as well as the processes of implementation, approval, consideration by the authorities, procurement and delivery etc. may have a decisive impact on how soon the overhead lines can be scrapped in practice. Figure 7.1 shows a possible timeline from a decision is made to install a specific underground cable until the overhead line is dismantled. The basic plan has not taken account of any delays in this process. Figure 7.1. Timeline from decision is made on undergrounding to dismantling of overhead line. 7.1 Decision-making process Analyses, approvals and installation agreements Once the supervisory boards of the regional transmission companies have decided to go ahead with the installation of underground cables, the planning of the first connections will start. 24 Doc /09

25 Before the actual undergrounding of a cable connection can start, specific analyses must be conducted in collaboration between the regional transmission companies and Energinet.dk. These analyses will determine the basis for the dimensioning of the cable installations in question, ensuring that the properties and capacity of the cable installations will suit the overall transmission grid in both the short and the long term. Upon completion of these analyses, Energinet.dk and the regional transmission company in question will enter into an installation agreement which will regulate the establishment of the cable installations. The installation agreement will form the basis for the regional transmission company s application to the Danish Energy Agency for approval of the establishment of the cable installations in question. The purpose of the application to the Danish Energy Agency is for the regional transmission company to obtain an advance declaration to the effect that the costs of establishing the cable installations will result in an increase of the availability payment. The availability payment is the payment made by Energinet.dk to the regional transmission company for making its transmission grid available. The regional company s approval of the cable installations is conditional upon the installation agreement, the approval from the Danish Energy Agency and the advance declaration to the effect that the availability payment will be increased. Once the cable installations have been approved by these two forums, the actual projecting of the installations will begin. The projecting includes two elements: Authorities and landowners Technical aspects and procurement. Authorities and landowners After an overall approval of the cable installations has been obtained, a specific cable track is laid. Agreements must be made with the affected landowners concerning the location of the cable installations. Voluntary agreements are often made, but in some cases compulsory acquisition is required. The size of the compensation paid to the landowner is determined by the National Agreement between the Danish Energy Association and Danish Agriculture, but is, in the event of a dispute, settled by arbitration. The location of the track and the construction method must, if the track runs through areas of interest to the affected municipalities, be approved by the municipality in question (possibly in the form of an exemption). As regards roads and streets, the 'guest principle' set out in the legislation on public road construction applies. In addition, applications must be submitted for permission to cross roads, railroads etc. Technical aspects and procurement The regional transmission company is responsible for the projecting of the individual cable installations. The projecting comprises technical aspects of the cable installations as well as the establishment of compensating equipment. Doc.40206/09 25

26 Delivery contracts must be concluded with suppliers of cables and other technical components. In addition, a contract must be concluded with the contractor who will be responsible for laying the cables. Delivery of cables and components Delivery times vary considerably and depend on the world market. They are typically between 12 and 30 months. Undergrounding of cables and substation conversions Undergrounding is normally carried out in the March-to-October period. In open countryside, 1,000-1,500 metres of cable are typically undergrounded a week. In urban areas, the conditions are more complex, and the number of metres laid is much smaller. The cables are normally delivered direct from the supplier to the site to avoid unnecessary transport. The required changes will be made at the substation to prepare it for cables instead of overhead lines. The required compensating equipment will be installed. Dismantling of overhead lines The dismantling of an overhead line can be commenced immediately after the commissioning of a cable installation, provided that the cable installation is a direct replacement of the overhead line. Depending on the length of the overhead line and the area in which it is installed, the dismantling process will typically take between three and six months. 26 Doc /09

27 7.2 Environmental aspects of undergrounding Table below lists the themes which may be negatively affected by cable undergrounding. This will be taken into account in connection with the implementation of the cable action plan. The basic plan includes costs of directional drillings etc., and account has been taken of the fact that the cable will not necessarily be laid in a direct line between two substations. Table Overview of environmental aspects of cable undergrounding. Doc.40206/09 27

28 Appendix 1. New guidelines for undergrounding and expansion of transmission grid On 4 November 2008, the political parties in the Danish parliament behind the energy agreement of 21 February 2008 entered into the following agreement on the guidelines for the future expansion of the main electricity transmission grid in Denmark. Source: Memorandum from the Danish Energy Agency of 8 October 2008, case no / The future infrastructure must be planned to strike a balance between the considerations regarding security of supply, RE expansion, economy, the environment and the functioning of the electricity market. This applies to both the infrastructure in Denmark and the interconnections. Any specific expansion must be in line with an overall expansion strategy. When specific expansion needs are identified, it must be assessed, taking into account socio-economic aspects, whether national and local means can reduce or eliminate the need for transmission grid expansion, and the conduct of long-term scenario analyses to shed light on this must also be considered. The integration of large volumes of renewable energy, the efficient use of this as well as the increase in trading capacities with neighbouring areas require expansion of the electricity transmission grid in the short term. As such, two offshore wind farms are planned for 2012 as well as an increase in the trading capacity with Germany and Norway in the period. In Sweden, it has also been decided to reinforce the transmission grid, which will increase the possibility for trading electricity between Denmark and Sweden. The grid expansions must be sufficiently accommodating and robust to support the security of supply and the market function when using various combinations of interconnections and domestic electricity generation capacity and demand response. The expansion must, in particular, be capable of accommodating the expansion of future offshore wind farms in different locations as well as ensuring the socio-economically optimal utilisation of the renewable energy generated in Denmark. Electricity infrastructure expansion must take account of landscape impacts. Denmark is a world leader when it comes to the undergrounding of high-voltage lines, and this development must be continued and intensified as technological advances and the economic conditions make it possible to step up the undergrounding of the electricity grid so as to reduce the number of overhead lines in Denmark even further. The specific expansion projects will be carried out as and when required, and when the aim of the expansion is to increase the security of supply, safeguard preparedness, create well-functioning competitive markets and to integrate renewable energy. In pursuance of the Danish Act on Energinet.dk (Lov om Energinet.dk) and the Danish Electricity Supply Act (Elforsyningsloven), the projects are subject to approval by the Danish Minister for Climate and Energy. The expansion, improvement of the visual appearance and renovation of the transmission grid will be carried out in accordance with the following principles: 400 kv grid In step with developments in security of supply as well as technological and socio-economic developments, the aim is to underground all 400 kv lines. 28 Doc /09