WILTON 110 kv BUS RATIONALISATION. Stakeholder Information. December 2012

WILTON 110 kv BUS RATIONALISATION Stakeholder Information December 2012

1 Executive Summary This information paper provides an update to all interested parties and stakeholders as to the current status of the Wilton Bus investigation and its conclusions. The existing 110 kv bus configuration at Wilton substation means the loss of a bus section will require load to be shed at Central Park. This arrangement does not meet the Grid Reliability Standards (GRS) 1. We are required to identify places where the GRS is not met and propose investments to ensure the GRS is met.. In April 2012 we submitted a draft long list of possible options to meet GRS requirements at Wilton substation for consultation. After considering the feedback to that consultation, we finalised the long list of options. Screening criteria was applied to the long list to reduce it to a short list of options to which the Investment Test (IT) 2 was applied.. The economic analysis demonstrated that the most economic solution to address this need is to reconfigure the Wilton 110 kv bus into three bus sections at a cost of between $2 and $3 million 3. When we started this investigation, there was a possibility that the enhancement and development component of the preferred option would exceed the base capex programme threshold 4 of $5 million and thus require a major capex proposal (MCP) to be submitted to the Commerce Commission. However, given the required enhancement and development capex is well below that threshold, we will not be submitting an MCP to the Commerce Commission. 1 The GRS is Schedule 12.2 of Part 12 of the Electricity Industry Code, available at http://www.ea.govt.nz/act-code-regs/code-regs/the-code/part-12/, p87 2 Under the Capex IM (Schedule D), to satisfy the Investment Test a proposed investment must maximise expected net electricity market benefit 3 This cost is based on high level estimates of three very similar options, the scope and cost of which will be better defined through a solution study report. 4 The base capex programme threshold is currently $5 million, Part 1, Capex IM 2

Contents 1 Executive Summary... 2 2 The Need... 4 2.1 Description of the existing system... 4 2.2 Meeting the GRS - Grid Reliability Standards and Core Grid Determination... 6 2.3 Wilton 110 kv configuration... 7 2.4 Planned replacement and refurbishment on 110 kv bus to mitigate corrosion... 7 3 Assumptions... 8 3.1 Forecast electricity demand... 8 3.2 Existing generation... 8 3.3 New generation... 9 4 Options... 10 4.1 The Options... 10 5 Selecting the investment proposal... 14 5.1 Application of the Investment Test... 14 5.2 The Costs... 14 6 Reasons project is no longer a MCP... 16 7 Next Steps... 17 3

2 The Need The existing 110 kv double bus arrangement at Wilton has two bus sections which means that one 110 kv bus section has two of the three Central Park Wilton circuits connected to it.. In the event of a fault on that 110 kv bus section, the transmission capacity into Central Park is reduced to the one circuit on the Central Park Wilton-A line. This arrangement does not meet the GRS. The GRS 5 requires that the grid remains in a satisfactory state during and following a single credible contingent event on the core grid. A Wilton 110 kv bus section outage meets the definition of a single credible contingent event on the core grid. Under this event, the transmission line ratings on the remaining Central Park-Wilton circuit are limited to 174 MVA (when Summer ratings apply), 183 MVA (Shoulder) and 191 MVA (Winter). While variable line rating (VLR) and dynamic line rating (DLR) 6 may extend the ratings during these periods, the demand at Central Park is forecast to exceed these limits. Current forecasts have the load at Central Park growing by approximately 4 MW per annum to 260 MW by 2027. 2.1 Description of the existing system The Wellington regional transmission network of interest is shown in Figure 2-1. The Wilton 110 kv bus is supplied by a single 220/110 kv 250 MVA interconnecting transformer (T8) and two circuits from Takapu Road. A double-circuit 220 kv line from Bunnythorpe supplies the Wilton 220 kv bus, which in turn supplies the Wilton 110 kv bus via an interconnecting transformer, and also the Wilton 33 kv bus via two 220/33 kv 100 MVA supply transformers (T3 and T5). The Central Park and Kaiwharawhara substations, which feed the Wellington CBD, are supplied directly from Wilton. As such, Wilton is a key substation in the Wellington region. 5 The GRS is Schedule 12.2 of Part 12 of the Electricity Industry Code, available at http://www.ea.govt.nz/act-code-regs/code-regs/the-code/part-12/, p87 6 Transpower has been progressing trials of VLR and DLR in some parts of the grid and intends to implement these ratings methodologies sometime in the next 5-10 years grid wide as part of its Transmission Tomorrow plan. 4

Figure 2-1: Wellington regional transmission network detailing the 220 kv and 110 kv transmission connections at Wilton substation Takapu Road Bunnythorpe 220 kv 33 kv Wilton Kaiwharawhara 11 kv 110 kv 11 kv Central Park 220kV CIRCUIT 110kV CIRCUIT SUBSTATION BUS TRANSFORMER LOAD UNDERGROUND CABLE West Wind 33 kv There are currently three 110/33 kv transformers at Central Park (see Table 2-1). T3 and T4 are both expected to be replaced and upgraded in the near future. Table 2-1: 110/33 kv Transformer parameters at Central Park Year of manufacture Winter Shoulder Summer T3 1975 100 MVA 109 MVA 112 MVA T4 1975 100 MVA 108 MVA 112 MVA T5 2005 120 MVA 146 MVA 147 MVA Each of the 110/33 kv transformers at Central Park are directly connected to one of the Central Park Wilton 110 kv circuits. This means that for a 110 kv bus section outageat Wilton, demand at Central Park will be limited to the capacity of a single transformer, and significant load reduction will be required to avoid overloading this transformer. In this regard, the present 110 kv bus arrangement at Wilton does not meet the GRS. 5

Figure 2-2: Central Park n-1 supply security for a Wilton 110 kv bus section fault 250 200 150 CPK 2012 Demand Duration Curve (MW vs hours) CPK 2012 MW CPK N 1 Load at risk 100 50 0 Figure 2-2 illustrates the amount of load at risk following a bus section fault at Wilton. The blue line represents the Central Park 33 kv and 11 kv expected forecast 2012 load duration curve and the red line shows the maximum capacity suppliable from Central Park following a bus section outage at Wilton. The distance between the blue line and red line indicates the amount of load needing to be managed for the loss of two Central Park Wilton circuits following a bus section fault at Wilton. Even under a low load growth scenario, the Wilton 110 kv bus configuration does not meet the Grid Reliability Standards (GRS). 2.2 Meeting the GRS - Grid Reliability Standards and Core Grid Determination The core grid is defined in Schedule 12.3 of the Electricity Industry Participation Code (EIPC) 2010 7. The 110 kv circuits into Wilton from Takapu Road and onto Central Park are all presently defined as core grid elements. So by inference, the 220/110 kv interconnecting transformer and 110 kv bus at Wilton are also core grid elements. If a single credible contingency event 8 were to occur on the core grid, which includes a bus section outage 9, the power system has to remain in a satisfactory state. Under the present configuration at Wilton, the power system will not remain in a satisfactory state following a single credible contingency event, as unacceptable overloading of...primary transmission equipment can occur for a 110 kv bus section outage at Wilton and/or there will be insufficient supply of electricity to satisfy demand. 7 Available at http://www.ea.govt.nz/act-code-regs/code-regs/the-code/part-12 8 EIPC 2010 Part 1, Schedule 12.2 clause 2 (2)(b) 9 See pg 60 of the EIPC 2010 Part 1, available at http://www.ea.govt.nz/act-code-regs/code-regs/thecode/part-1/ 6

2.3 Wilton 110 kv configuration The Wilton 110 kv switchyard, illustrated in Figure 2-3 consists of seven bays including a spare bay. It is fed by two circuits from Takapu Road and the 220/110 kv interconnecting transformer - T8. Wilton supplies Central Park and Kaiwharawhara substations via five 110 kv circuits. West Wind generation tees into the Central Park Wilton 2 and 3 circuits. Both the Wilton 110 kv top and bottom busbars and disconnectors are all rated at 1600 A. Figure 2-3: Wilton 110 kv switchyard configuration 2.4 Planned replacement and refurbishment on 110 kv bus to mitigate corrosion The majority of componentry in the Wilton 110 kv bus date from 1966. Condition Assessment reports have identified over half of the equipment at Wilton needs to be replaced or refurbished to maintain the Wilton 110 kv switchyard over the next 10 years. We have already had funding budgeted for this work in our base capex allowance 10 which is approved by the Commerce Commission for Transpower expenditure. 10 Clause 1.1.5(2) of Part 1 of the Capex IM 7

3 Assumptions 3.1 Forecast electricity demand The forecast demand of the Central Park GXP that Wilton directly supplies is based on the 2012 Annual Planning Report 11. The after diversity maximum demand (ADMD) for the Wellington region is forecast to grow on average by 1.4% annually over the next 15 years, from 756 MW in 2012 to 934 MW by 2027. This is lower than the national average demand growth of 1.7% annually. Table 3-1 is an extract from Transpower s 2012 Annual Planning Report and shows prudent forecast 12 annual peak demand (MW) for selected Wellington grid exit points to 2027. Table 3-1: Demand forecast of Wellington region GXPs Grid exit point Power Peak demand (MW) factor Next 5 years 5-15 years out 2012 2013 2014 2015 2016 2017 2019 2021 2023 2025 2027 Central Park 11 kv 0.98 27 33 33 34 34 35 36 37 38 39 40 Central Park 33 kv 0.98 175 174 177 181 184 188 196 203 209 216 220 3.2 Existing generation West Wind wind power station (installed capacity: 143 MW) is connected into the Central Park Wilton 110 kv circuits. West Wind has historically been required to be constrained-off during certain maintenance outages at the Wilton site. In addition to West Wind, there is embedded generation into Central Park. Table 3- details the predicted forecast generation capacity (directly affecting the Wilton, Central Park and Kaiwharawhara GXPs) to 2027 which may affect the Wilton 110 kv bus. 11 Available at http://www.transpower.co.nz/n4690.html 12 Our prudent peak forecasts can be interpreted as representing a 10% probability of exceedance (POE) forecast until 2017 and then are assumed to grow at an expected rate. In other words, in the first five years one would expect actual demand to exceed the forecast in one year out of ten. We consider this is an appropriate basis on which to conduct our planning. 8

Table 3-2: Forecast annual generation capacity (MW) that may affect Wilton 110 kv Grid injection point (location if embedded) Central Park (Southern Landfill) Central Park (Wellington Hospital) Next 5 years Generation capacity (MW) 5-15 years out 2012 2013 2014 2015 2016 2017 2019 2021 2023 2025 2027 1 1 1 1 1 1 1 1 1 1 1 8 8 8 8 8 8 8 8 8 8 8 West Wind 143 143 143 143 143 143 143 143 143 143 143 3.3 New generation Following previous consultations, we considered it reasonable to conduct the analysis on the basis that no new generation is connected in the area. The Statement of Opportunities (SoO) 2010 13 predicts little generation for the Wellington region Mill Creek (60 MW) and Long Gully (12.5 MW). While new generation may affect transmission capacity and fault levels in the region, any new generation will not resolve issues associated with the loading of the Central Park transformers. 13 Available at http://www.ea.govt.nz/industry/ec-archive/soo/2010-soo/ 9

4 Options 4.1 Long list options A long list of possible options was developed and consulted on in April 2012 14. The draft long list of options included five broad development options to meet the need: Option 1: Wilton solution including a 3-section bus Option 2: Bus at Central Park, 2- section bus at Wilton Option 3: Up-Rating Kaiwharawhara and/or Wilton GXPs and load transfer from Central Park Option 4: A new Wellington GXP and load transfer from Central Park Option 5: New Transmission including new 110 kv circuit(s) between Kaiwharawara and Central Park, and cross-harbour 110 kv circuit(s) to Central Park Five submissions were received to the draft long list of options, a summary of which can be found at https://www.transpower.co.nz/sites/default/files/plain-page/attachments/wiltonsubmissions-summary.pdf. There was general agreement that investment is required to not only meet the GRS but also for commercial, economic and regional development reasons. Wellington City Council outlined their request for resilience and redundancy to be built into the network. They also drew attention to the importance of electricity services as demonstrated by the loss of supply during the Canterbury earthquakes. Further option variants of option 1 (1a and 1b) and option 2 (2b, 2c, 2e, and 2f) were identified through the consultation stage and were added to the long list of options. Our final Long List of options is shown in Table 4-1. We also included the screening criteria that would be used on the long list of options in the April consultation and this is shown below. This criteria has been applied to eliminate those options that are not appropriate for consideration in the short list of options to which we apply the Investment Test. The short-listing criteria applied are as follows: A. Fit for purpose The design will assist meeting future energy demand growth The extent to which the option resolves the relevant issue. B. Technically feasible Complexity of option Reliability, availability and maintainability of the option Is this proven technology (ie. used commercially, internationally and/or with available data on performance, and expected life cycle)? Does Transpower have experience with the technology? 14 https://www.transpower.co.nz/sites/default/files/plainpage/attachments/wilton%20110%20kv%20bus%20rationalisation%20rfi.pdf 10

Is there a low level of risk associated with implementing this technology (such as on-going maintenance requirements and availability of after sales support and spare parts)? Future flexibility - Grid Development Strategy To what extent does the option open up or foreclose future development options? Could the investment be stranded under certain conditions? C. Practicability of implementing the option It must be possible to implement the solution by the required dates (probability of proceeding) How long will it take to implement this option? Consideration includes: Property acquisition time Likelihood of gaining required environmental approvals Equipment lead time Time taken to build Implementation risks, including potential delays due to property and environmental issues Are there technical issues with access or available space for the works? Implementation risks, eg. are outage constraints on the existing system going to impact on this option? The availability of proponent for or potential counterparty to a transmission alternative D. Good electricity industry practice (GEIP) 15 Ensure safety Consistent with good international practice Minimise or mitigate environmental impacts Accounts for relative size, duty, age and technological status Manage technology risks E. System security (additional benefit resulting from an economic investment) Improved system security System Operator benefits (controllability) Does the option provide operational flexibility? F. Indicative cost Whether an option will clearly be more expensive than another option with similar or greater benefits The cost estimates, if used, are high level. Any option that does not meet one or more of the criteria was removed from further consideration. The overall assessment is indicated by a or above. 15 refer Part 1 of the Electricity Industry Participation Code 11

Table 4-1: Long list and summary of short-listing 1a 1b 1c 1d 1e 1f 1g 2a 2b 2c 2d 2e 2f 3 Option No options presented Short- Listed? Criteria Failure Reference Non-Transmission Solutions Transmission solutions optimisation of existing assets Reason There is no economic solution which could meet the need Three section (AIS) bus at Wilton using conventional circuit breakers Three section (AIS) bus at Wilton using Hypact disconnecting circuit breakers Three section (AIS) bus at Wilton with top bus retained as maintenance bus Three section Gas Insulated Switchgear (GIS) bus at Wilton F Too costly Three section Hybrid Insulated Switchgear (HIS) bus at Wilton F / B Too costly and wrong environment Modern three section Air Insulated (AIS) Bus at Wilton F Too costly. Modern Beaker and a half Air Insulated (AIS) Bus at Wilton F Too costly and insufficient space Two section (AIS) bus at Wilton a 110kV bus and two replacement 160MVA transformers at Central Park Modern three section airinsulated (AIS) bus at Central Park substation with two large F / B Too costly and not technically feasible 270MVA transformers Modern three section GIS/HIS bus at Central Park substation F Too costly Three new 180MVA transformers at Central Park F Too costly 1x 120MVA and 2x 270MVA replacement transformers at Central Park F / B Too costly Four new 120MVA transformers at Central Park F Too costly Up Rating Kaiwharawhara and/or Wilton GXPs F Transmission solutions new assets on new land Too costly (when considering 33kV local network costs alone) 4 A New Wellington GXP F Too costly 5a 5b Transmission solutions additional transmission circuits New 110 kv circuit(s) between Kaiwharawhara and Central Park F Cross Harbour 110 kv circuit(s) to Central Park F Too costly (even when costing the minimal capacity to meet GRS) Too costly (even when costing the minimal capacity to meet GRS) NB. When an option is not progressed due to being too costly the option was significantly more expensive than the options that were short listed. 12

4.2 Short list development plans All options will eventually result in the need for future investment at both Wilton and Central Park to meet the GRS. This is because, even with enhancements at Wilton in the near future, additional transformer capacity is needed at Central Park so the load can be supplied with one bus section and one transformer out-of-service. To enable us to compare the investment options on a consistent whole of life basis, a 20 year development path was developed for each option considering the investment requirements at both Wilton and Central Park. The five short-listed development plan options are shown Table 4-2 below. Table 4-2: Short-listed development plan options Investments required in each development plan option Option 2017 2018 1a 1b(i) 1c 2a Wilton 3 section bus (conventional circuit breakers) Wilton 3 section bus (disconnecting circuit breakers) Hypact Wilton 3 section bus (maintenance bus) Wilton 2 section bus 2x180MVA replacement transformers at Central Park 2x180MVA replacement transformers at Central Park 2x180MVA replacement transformers at Central Park New 110kV Bus at Central park + 2x replacement 160MVA transformers at Central Park Our economic analysis determines the total cost of each development plan out to 2035, using the capital costs for each element in the plan, the resultant operating and maintenance costs and other cost differences as detailed in section 5.2. The costs are then discounted to a present value and the option with the lowest present value cost 16 satisfies the Investment Test. 16 Under the Capex IM, to satisfy the Investment Test a proposed investment must maximise expected net electricity market benefit. Our lowest cost approach is the same and is used for ease of presentation. 13

5 Selecting the investment proposal Under the Capex Investment Methodology (IM), to satisfy the Investment Test, a proposed investment must have a positive expected net electricity market benefit unless it is required to meet the deterministic limb of the grid reliability standards. Investment in the Wilton 110 kv bus falls into the latter category. For presentation purposes, all costs and benefits are shown here as costs. This simplifies the presentation and does not affect the result. The least-cost option passes the Investment Test. This produces exactly the same outcome as calculating expected net market benefit. 5.1 Application of the Investment Test We applied the Investment Test to the development plan for each of the five short list options. 5.2 The Costs The cost of the five short listed options are the costs incurred for the entire development plan, including: Capital costs The expected capital costs to install and commission each element of the development plan. Operating and maintenance costs The relative on-going operating and maintenance costs of the capital equipment i.e. some options will result in reduced operation and maintenance costs and this has been factored into the analysis. Cost of demand curtailment during maintenance The value of expected unserved energy taking into account the probability of fault during maintenance. Even with a reliable and resilient network there is still some chance of loss of supply. We cost this at the value of unserved energy, $24,200/MWh 17. The costs above have been combined for each development plan and a total expected cost for each option has been calculated and are shown in Table 5-1. The third column shows the expected cost of each development plan option out to 2035, expressed as a Present Value (PV) to account for phasing of the required works. The final column shows the difference in costs between the options, relative to Option 1a (the cheapest capital cost option that will meet the deterministic GRS) which has been used as a reference case. 17 $20,000/MWh in 2004 inflated to 2011 as per our April 2012 consultation 14

Table 5-1: Development plan net market costs (Present Value 2012 $m) Option Description Present Value Present Value Relative Expected Expected costs costs (2012 $m) (2012 $m) 1a Three section bus at Wilton conventional circuit breakers (2017) and 2x180MVA replacement transformers at Central 17.5 0.0 Park (2018) 1b Three section bus at Wilton Hypact disconnecting circuit breakers (2017) and 2x180MVA replacement transformers at Central 18.5 1.0 Park (2018) 1c Three section bus at Wilton with maintenance bus (2017) and 2x180MVA 18.3 0.8 replacement transformers at Central Park (2018) 2a Two section bus at Wilton (2017) and 110kV bus at Central Park and 2x160MVA replacement transformers (2018) 20.6 3.1 As can be seen in Table 5-1 a three section bus option at Wilton is the most economic (i.e. least cost) option for solving the deterministic GRS, and is significantly cheaper than installing a new bus at Central Park. However, the cost differences between the three section bus solutions are relatively small (within $1m). 15

6 Reasons project is no longer a MCP There is nearly $5 million of condition-based refurburbishment work on the Wilton 110 kv bus planned over the next few years and this is included in our base capex allowance 18. This project is for the additional enhancement work (see Table 6-1) to meet the GRS. The total enhancement cost is approximately $2 $3 million dollars. For an investment to be an major capital proposal (MCP) 19 the expected cost of the enhancement component of the investment must be more than $5 million 20. As this project is less than $5 million, Transpower will fund the project through its base capex allowance. Table 6-1: Enhancement comparison net market costs of preferred three section Wilton option Option Total Expected Costs Relative Enhancement Component ($m) ($m) Planned Wilton 2 section bus : refurbishment/replacements due to Replacements condition 4.8 0.0 1a Wilton 3 section bus (conventional circuit breakers) 6.7 1.9 1b Wilton 3 section bus (disconnecting circuit breakers) Hypact 8.1 3.3 1c Wilton 3 section bus (maintenance bus) 7.2 2.4 18 Base capex means capital expenditure incurred in relation to asset replacement, asset refurbishment, business support, and information system and technology assets 19 A major capex proposal is defined as a document identifying a proposed investment for which Commission approval is sought 20 Part 1 of the Capex IM, base capex programme threshold has the [combine footnotes here, bcpt reference, currently $5million] 16

7 Next Steps From our investigation, having three bus sections on the 110 kv bus at Wilton is the best option to address the GRS issue of 110 kv supply to Central Park. As the high level cost estimates for the different equipment solutions are very similar we intend to scope and cost each at a higher level of detail before settling on the final detailed option. We will fund this project through our base capex allowance. 17