New Zealand’s (NZ) electricity transmission operator, Transpower, has received final regulatory approval to proceed with a NZ$1.1bn ($631m) upgrade of its high-voltage direct current (HVDC) inter-island electricity link.
The NZ Commerce Commission confirmed it had signed off on the first stage of Transpower’s plan to replace the three existing Cook Strait cables, add a fourth cable and construct new termination stations, increasing the link’s capacity from 1.2GW to 1.4GW.
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The Cook Strait cable, also known as the HVDC inter-island link, connects NZ’s North and South Island electricity networks.
The upgrade aims to address ageing infrastructure that is expected to reach the end of its serviceable life by 2030.
According to Commerce Commission Associate Commissioner Nathan Strong, the works are intended to reduce the risk of faults and outages, which could otherwise lead to increased electricity costs.
Strong said: “The cost of the infrastructure will be added to Transpower’s regulated asset base and recovered over the life of the equipment.
“Under the benefits-based pricing method, those costs will be shared by the electricity consumers and generators that benefit from the HVDC link.”
He noted that feedback during stakeholder consultation generally supported the Commission’s draft position, adding: “Installing the fourth cable as part of the initial upgrade will maximise benefits and avoid higher costs later. Analysis shows that delaying it would reduce overall market benefits.”
The enhancement is also expected to improve system resilience and security, including seismic upgrades to help reduce the likelihood and impact of outages.
Welcoming the Commission’s final decision, Transpower CEO James Kilty said: “The link is of national importance for three key reasons. Firstly, it allows Kiwis to access the lowest-cost electricity around New Zealand each day.
“Secondly, it plays an important role in keeping the power system stable – including helping us manage the more variable power flows from wind and solar, and finally it contributes to energy resilience by linking businesses and communities to many sources of electricity generation.”
Kilty added that timely approval would enable the company to secure manufacturing contracts for new cables ahead of global supply constraints.
Construction is due to be completed by the early 2030s. This project represents the first phase of Transpower’s broader HVDC Link Upgrade Programme.
The company indicated it would seek further approval for a new IT system to control link operations later in the year.
Transpower is also considering future plans for the existing cables following replacement, with further assessment to be undertaken closer to their decommissioning.
