Alternatives to Additional Transmission Lines to Meet Escalating Demand in Northland and Auckland - Coursework Example

Alternatives to Additional Transmission Lines To Meet Escalating Demand in Northland and Auckland Table of Contents I. Introduction 3 II. New ZealandEconomy, Oil and Gas, Implications for Transmission and Generation 3 III. Industry Overview, Transmission Infrastructure 4 IV. Focus on Northland and Auckland 7 V. Alternatives to Transmission Lines Investment 9 References 13 I. Introduction This paper is an answer to Transpower’s call for suggestions and ideas relating to alternatives to the erection of additional transmission lines to answer the rising demand for electricity in Northland and Auckland. As the operator of the national electricity grid in New Zealand, Transpower has the responsibility to ensure that adequate power reaches those areas of the country that need it. As things stand, the rising demand for electricity in the above-mentioned areas has necessitated Transpower coming up with a proposal to erect additional transmission lines, to the tune of $1.5 billion. This proposed investment is up for approval before the Electricity Commission, and the approval rests on Transpower proving that there are no viable alternatives to such an investment. There is the matter of alternatives that need to be explored, as indicated in the case, that negates the need for massive infrastructure investments in transmission and power generation, via distributed power generation facilities, for instance, that are erected close to the demand, in this case, close to the areas that need them. There are also ideas floated with regard to the reduction of so-called peak demand, and the possible construction of additional power stations to meet the increased needs of some areas, notably Northland and Auckland. The paper discusses these and other alternatives, and evaluates their feasibility alongside the proposed investment in additional transmission lines (Daniels 2004). II. New Zealand Economy, Oil and Gas, Implications for Transmission and Generation There is merit in a brief overview of the New Zealand economy and the prospects of the economy moving forward, vis a vis power generation capacity and future power demand, as the two are correlative, meaning that rising demand for power in the country is a function of economic growth. In this regard the trend for power consumption ought to be positive in the long term, given the steady growth in the economy over the past few decades, and prospects for continued growth. It is ranked as the 65th largest economy in the world in 2011, with PPP GDP at $123.3 billion, and per capita GDP at $27,900, which places New Zealand at the 48th spot in terms of GDP per person. Services make up close to 72 percent of GDP, followed by the industrial sector at 24 percent. Key industries are the processing of wood, food, paper, and textiles; mining; tourism; banking and finance; and the manufacture of transport and other machinery and equipment. In terms of production of electricity, New Zealand production was pegged at 42 billion kWh, ranked 54th in the world in 2009, while consumption was 39.02 billion kWh in 2008, ranked 54th as well globally, making New Zealand self-sufficient in terms of power generation, with its net power generation greater than demand as of 2009. It consumes all of the natural gas that it produces, at 4.481 billion cubic meters in 2011, ranked 5oth worldwide in terms of production and 68th worldwide in terms of consumption of natural gas. The country has proven oil reserves of 112.5 billion barrels, ranked 68th in the world, and oil consumption is pegged at 149,700 barrels a day, versus production of about 60,480 barrels a day in 2010, making the country a net importer of oil. These latter figures for natural gas and oil are relevant in terms of the fuel inputs to power generation (Central Intelligence Agency 2012). III. Industry Overview, Transmission Infrastructure There is merit likewise in a general overview of the power industry in New Zealand, in order to map out where and how alternatives to massive investments in transmission lines can be had and done. The relevant stakeholders in the industry are the power generators; Transpower, the transmission company owning and maintaining the national electricity grid; the industrial consumers; the distribution utilities, which are the main customers of Transpower; the retail entities, which undertakes the packaging of electricity services to end consumers; and the domestic consumers, who are the final consumers of the electricity (Transpower 2012). Of key interest are the power generators and Transpower itself, which are the main players of interest as far as the issue of determining alternatives to putting up transmission lines to bolster supply in critical areas, together with the industrial players, which are the heavy consumers of electricity, and the source of key and peak demand for power. In the North Island, the key driver of demand is consumption from the Auckland region. The key transmission facilities are made up of 110 kV lines together with 220 kV lines. Generation facilities are distributed throughout the Northern region, and are a mix of a number of generation technologies. The mix includes geothermal, conventional, hydro, co-generation, and gas (combined cycle). Aside from these generation sources, the Northern region also sources power through the so-called HVDC line or High Voltage Direct Current line emanating from the South Island, in the so-called Benmore substation, running through the substation towards Wellington, in Haywards. This infrastructure in the Northern region is of particular interest in this paper, owing to the need to address the growing demand for power in the two northern regions of Auckland and Northland. As noted in this overview, Auckland in particular is of heavy interest, given that Auckland is the primary driver of demand for power in this region of New Zealand (Transpower 2012b). By way of an inventory, the table below details the assets and extent of the national grid owned and operated by Transpower for New Zealand (Transpower 2012b): Asset Description Detail Length of HVAC and HVDC Transmission Line 11806 km HVAC Transmission Line Voltages 220, 110, 66, 50 kV HVDC Transmission Line Voltages 350, 270 kV HVDC Link Capacity (with two cables on pole 1) 700 MW* Substations 178 Capacitor Banks 124 Transformers (Units) 1116 Transformers (Banks – excluding HVDC) 343 Synchronous Condensers 10 Static Var Compensators (SVC) 4 Table Source: Transpower 2012b From the table above we get that the key elements of the national grid of New Zealand consists of the 220 kV lines that run through the islands, together with the HVDC lines that run through the country and through the different islands comprising it. The 220 kV lines form the backbone that carries power from the key generating facilities to the key centers of load. The provincial nodes, together with the lesser power stations, connect to the main loads via differently rated transmission lines, ranging from 220 kV to 110 kV, 50 kV and 66 kV (Transpower 2012c). Moving over to power generation, it is notable that as of 2004, the single largest energy source for New Zealand is hydro power, accounting for about 62 percent of total power generation in the country, followed by gas at 21.5 percent, coal at just 7 percent, and geothermal at 6.3 percent. Annual growth in energy demand by 2004 was pegged at about 2 percent, translating into about 150 MW of additional capacity required on an annual basis. The plot below details growth in overall power consumption in New Zealand, as well as the contribution of the different generation assets by fuel type to the national energy mix (Parliamentary Library 2004, pp. 1-2): Graph Source: Parliamentary Library 2004, p. 1 IV. Focus on Northland and Auckland Northland and Auckland are the key areas noted in the report, that Transpower deemed as areas with escalating demand, and areas that prompted the proposal for the installation of additional transmission lines, estimated to cost $1.5 billion at the time of the writing of the report in 2004. The proposed additional transmission lines was supposed to run from South Waikato all the way to the southern part of Auckland, which was earlier identified to be a key driver of consumption of power in the region. At the time of the report, the projection was that Auckland was to need serious new infrastructure from the grid, in order to meet presumably increased demand for power in Auckland and Northland moving forward from 2010. Projections by Transpower during that time were that there will be a growth of 12 percent in terms of peak demand in Auckland by 2010, from 2004 levels, and that the hope was that during that time any alternatives to such transmission projects, if viable, would push forward the time by which the region would need additional investments in transmission infrastructure. At the time of the report the estimate was that Auckland transmission projects would cost about 500 million. At that time about 75 percent of demand in Auckland could not be met by local supply, necessitating the need for transmission from other parts of the country, or else Auckland would be in short supply of electricity during peak times, mornings and evenings (Daniels 2004; Transpower 2012; Transpower 2012b; Transpower 2012c; Map of New Zealand and Hilken 2006). By way of graphically representing the region, the map below details the areas of concern for this paper (Daniels 2004; Transpower 2012; Transpower 2012b; Transpower 2012c; Map of New Zealand and Hilken 2006): Map Source: Map of New Zealand and Hilken 2006 Fast forward to the present, and by way of hindsight, and Transpower and the media has come to detail the extent of the progress made with regard to several transmission infrastructure projects that have been undertaken in the region, with emphasis on transmission facilities and additional power generation inputs into the key area of Auckland. The project, as reported in the media, runs the length of Whakamaru in Waikato all the way to Auckland, running to 186 kilometers, at a cost of $824 million (Radio New Zealand 2012). Further up north, there is a proposed project commissioned to start in 2013, that upgrades the 220 kV infrastructure from North Auckland all the way to Northland, again to meet increased demand in the northern part of that region. This project is slated to cost $417 million, running for 37 kilometers (Transpower 2012d). V. Alternatives to Transmission Lines Investment The proposal, according to the report, was to put up transmission infrastructure from Waikato and into Auckland, in order to solve the problem of lack of supply and the problem of the inability of local generation to meet Auckland’s peak energy needs. At the time, the local generators could at most meet a quarter of all Auckland demand. The shortage was severe, and given the data on the rise in demand, the shortage was expected to become more pronounced moving forward. At the very least, from Transpower estimates, Auckland or Transpower had to be able to provide 12 percent additional power into Auckland by 2010 (Daniels 2004). The report details generation closer to the source, as opposed to generation from large-scale generation facilities that then need to be distributed to far areas via suitable transmission infrastructure. The logic is simple. If generation facilities can be built close to those who demand the electricity, then there is decreased need to build transmission facilities from generation facilities farther away. The demand would be met by close-by generators that do not need as much investment in transmission infrastructure. What transmission requirements are needed to be built, will be built closer to the source; and given that the generation facilities close by will be by nature smaller in capacity, the transmission infrastructure will likewise be built to smaller scales, necessitating smaller financial investments. This indeed is the notion put forward by Transpower in the report, and the reason why they said that with alternatives to power transmission projects the need for additional infrastructure would be diminished. This is corroborated within New Zealand itself, by entities that offer distributed generation power options, accounting for about 5 percent of the country’s energy requirements by some estimates (Daniels 2004; Energy Efficiency and Conservation Authority 2012). The literature explores this further, and differentiates between two types of nearby power generation options. One is distributed generation, as discussed above, which are close by facilities that are still connected to the grid, so that consumers and industrial users are still able to source power from the grid when local generation is insufficient, and so that the local distributed generation facility can feed power back to the grid when generation exceeds demand. Options for distributed generation technologies include solar, wind, water turbines, geothermal, biogas, and conventional engines powered by gas and/or diesel. This is opposed to so-called “stand alone power systems” or SAPS, which are characterized by generation facilities that are smaller scale, to supply the needs of individual end-users, for instance, and small industrials and commercial consumers of power in New Zealand. Such alternatives to grid power, as discussed earlier, contribute about 5 percent of the total energy needs of the country. This can be extrapolated to be the same contribution percentage for Auckland and Northland (Daniels 2004; Energy Efficiency and Conservation Authority 2012; Energy Efficiency and Conservation Authority 2012b). Auckland itself has recognized the need to diversify power sourcing and to move away from its heavy reliance on the national grid, from which, as late as 2011, Auckland and the surrounding areas sourced about 70 percent of all its electricity requirements. There is merit, as acknowledged by Auckland planners, in further exploring the future of the region’s energy sourcing and the increased use of distributed generation options. Pushing through 2021, for instance, Transpower is projected to spend an additional $1.7 billion in additional transmission infrastructure to meet the projected increase in demand for electricity in Auckland through that time period. The bulk of the projects will be in the areas of sourcing power from other areas and feeding them into Auckland and the surrounding areas, including Northland. This seems to be the same story as from 2004, when the same financial outlay was projected to meet the demand in the region. The project, as discussed in the media, is now running at about $824 million dollars. Clearly, distributed generation is a viable option, if the same amount slated for transmission infrastructure is likewise allocated to build new distributed generation facilities in and around Northland and Auckland. This is especially viable given the criticism that the national grid is not as reliant as Auckland wants it to be, and therefore must have alternatives to the national grid in terms of sourcing its internal electricity requirements (Daniels 2004; Auckland Council 2011, pp. 1-4; Radio New Zealand 2012). As discussed earlier, alternatives to the putting up transmission facilities can definitely take the form of distributed generation options, and among those options, there is a growing support for renewable energy sources as the technologies that can make a profound impact on the energy situation in Auckland and Northland. Distributed solar and wind power generation facilities in Auckland and in Northland can definitely decrease the need for new transmission infrastructure, and decrease the region’s dependence on power from the grid, and from large generation facilities located far away from the demand. There is a growing body of work that supports the use of wind power, and solar power to a certain extent, together with other traditional sources of distributed generation power in New Zealand, to successfully diversify the energy mix of a region, and decrease dependence on the national grid (The University of Auckland 2012; Daniels 2004; Auckland Council 2011, pp. 1-4; Radio New Zealand 2012). References Auckland Council 2011, ‘Infrastructure: Energy’, Draft Auckland Plan, Retrieved 29 April 2012 from http://www.aucklandcouncil.govt.nz/SiteCollectionDocuments/aboutcouncil/planspoliciespublications/theaucklandplan/aptdinfrastructureenergy.pdf Central Intelligence Agency 2012, ‘New Zealand’, The World Factbook. Retrieved 29 April 2012 from https://www.cia.gov/library/publications/the-world-factbook/geos/nz.html Daniels, Chris 2004, ‘Grid co calls for answers’, NZ Herald News, Retrieved 29 April 2012 from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=3595590 Energy Efficiency and Conservation Authority 2012, ‘Distributed electricity generation’, EECA, Retrieved 29 April 2012 from http://www.eeca.govt.nz/distributed-generation Energy Efficiency and Conservation Authority 2012b, ‘Stand alone power systems (SAPS)’, EECA, Retrieved 29 April 2012 from http://www.energywise.govt.nz/how-to-be-energy-efficient/generating-renewable-energy-at-home/stand-alone-power-systems Map of New Zealand and Hilken, Rob 2006, ‘Map of Auckland’, Tourizm Maps, Retrieved 29 March 2012 from http://www.map-of-newzealand.co.uk/map-of-auckland.htm Parliamentary Library 2004, ‘Electricity generation: New Zealand and selected OECD countries’. Background: Information Briefing Service for Members of Parliament, Retrieved 29 April 2012 from http://www.parliament.nz/NR/rdonlyres/A7E4C7AE-DB6C-4179-9054-0DE9E3B559D7/292/0408ElectricityGeneration1.pdf Radio New Zealand 2012, ‘New power grid line on target’, Radio New Zealand News, Retrieved 29 April 2012 from http://www.radionz.co.nz/news/national/104480/new-power-grid-line-on-target Transpower 2012, ‘Industry Structure’, Transpower, Retrieved 29 April 2012 from http://www.transpower.co.nz/f1010,147817/industry-structure-diagram.jpg Transpower 2012b, ‘National Grid Today’, Transpower, Retrieved 29 April 2012 from http://www.gridnewzealand.co.nz/grid-today Transpower 2012c, ‘Transmission Lines’, Transpower, Retrieved 29 April 2012 from http://www.gridnewzealand.co.nz/transmission-lines Transpower 2012d, ‘North Auckland and Northland Grid Upgrade Project’, Transpower, Retrieved 29 April 2012 from http://www.gridnewzealand.co.nz/naan-home Read More