Huge pylons in Te Miro, Waikato, are part of Transpower's national grid upgrade to supply electricity to Auckland. Photo / Christine Cornege
When Patrick Strange took over as head of Transpower late in 2007 the national grid was fraying at the seams.
Years of under-investment - based on a 1990s premise power stations would be peppered widely around the country - meant had there hadn't been significant investment for years.
Just before Strange was appointed one part of the interisland link, Pole 1 of the HVDC link failed and within the next two years power to parts of Auckland and beyond was knocked out by a container hoist in Penrose. In 2010 a fire in the Waikato triggered a chain of events which knocked out power to parts of Auckland again.
So Strange's reason for spending $3.5 billion was plain and he says he leaves Transpower with the grid as reliable as it has been for a decade.
"Resilience and reliability has improved - over the past year we had our best year in terms of outages for 10 years."
The interisland link cost about $600 million, $70 million below budget and was commissioned in May. The work involved building and installing new equipment at each end of the 575km link at Benmore in Otago and Haywards near Wellington, replacing Pole 1, which relied on 50- year-old mercury arc valve technology to convert alternating current to direct current and back again.
New control equipment was installed for the newer Pole 2 link.
"The big thing about Pole 3 and the whole upgrade is that it will allow New Zealand to have a single frequency and reserves market," Strange says.
At present New Zealand is effectively run as two power systems, one on each island, and each island has to have reserves as a backstop for the biggest part of the system failing.
"Within the next 12 months we're able to implement a regime where we can transfer reserves instead of having some in the north and some in the south, saving tens of millions of dollars."
Seimens New Zealand started work on the HVDC link in 2010 and chief executive Paul Ravlich describes the job as challenging.
He says most of the HVDC systems were at the greenfields site but the Benmore and Haywards projects were surrounded by live lines, creating safety issues.
"Both of them were challenging, particularly Haywards because it was built on a fault line so the seismic requirements were quite significant."
The buildings sit on teflon bearings to allow 70cm movement in any direction and survive 9G forces.
Strange said the July 21 earthquake which caused damage to buildings in Wellington was "a tiddler" for the rebuilt Haywards and it escaped without any damage.
The North Island grid upgrade project involved the building of a double circuit transmission link between Whakamaru, near Mangakino, and Auckland - the big pylons that stirred anger among some farmers and lifestyle block owners.
About $200 million was spent buying land and Strange says Transpower didn't always get it right in a company that used to be very "asset-centric."
"We used to talk about transformers failing and reliability about circuit breaker failures. We've spent six years teaching people that we're a service company - we're about providing service to you and your grandmother," Strange says.
"It's been a big shift for Transpower and that's transferred over to our relationship with our landowners that did need a bit of repair. The landowners do have the impost of our lines on their land so we'll treat them the way we'd like to be treated - we've made a massive effort to be more personal with them and apologise when we get it wrong," he says.
"We still have grumpy landowners, sometimes for good reason."
The president of Federated Farmers, Bruce Wills, says there has been "active engagement" with Transpower that was always available but some of his members are still pushing for compensation for lines on their properties which interfere with property. "We have a view that we would rather be constructive and they're always happy to front."
Improved reliability - and better service - has been attributable to another shift in approach.
Maintenance crews are being deployed to vulnerable parts of the system before severe weather strikes. The tactic meant there were no transmission faults during the severe wind and snow storm in the South Island earlier this winter.
The grid rebuild has also harnessed green technology and techniques.
Transpower has implemented a demand side programme - where it pays customers to turn off power - rather than carry more of it in times of high demand. The scheme has proved popular.
At the middle of the year Transpower said it had received a greater amount of demand response than expected, with 128 MW offered compared to its target of 100 MW.
"It was also offered at a lower cost than anticipated, which makes demand response a real, and very exciting opportunity, for New Zealand," he says.
Ultimately, by reducing the number of physical assets that need to be built in the future, the demand response programme could mean lower costs to the end consumer.
Being able to run variable line ratings by more accurately assessing seasonal and weather effects on big transmission lines is another example of a new approach.
Transmission grids cannot be run too hot because they sag too low, limiting capacity.
"We took our key lines and worked out that they're not always at their hottest and did a a lot of work and are able to vary our line ratings to match the weather and that brought us 3 per cent to 4 per cent more capacity and saved us hundreds of millions of dollars," says Strange.
During a trial, lines were capacity-increased by as much as 30 per cent.
The company is using more sophisticated electronics to run the system more efficiently.
It is also moving to decrease its use of sulphur hexafluoride (SF6), a gas it uses in high voltage circuit-breakers and other switchgear.
"It's one of the worst greenhouse gases there is and the stuff does leak and it makes up about 30 per cent of our global footprint, so we've had a big programme to work with suppliers to work beyond SF6," Strange says.
Capital spending on maintenance - replacement and refurbishment - is running at $200 million a year for the grid, much of which is older by international standards.
The rebuild and maintenance is contributing to what Strange says have been "chunky" price increases over the plast seven years but over a life cycle it will put transmission charges in real terms about where they were in 1992.
"We used to be about about 16 per cent of [typical power] bills in 1992 and even when we've finished the upgrade, this year will be the last one of the big price increases. From now it's flat or down and below 10 per cent of the bill."
Consulting engineer Bryan Leyland says the projects have gone pretty well and they've been well managed.
"They were done in a situation where the system was creaking at joints and in hindsight it would have been better to do it earlier when it was possible to upgrade existing lines and defer all this work, but that wasn't Patrick's fault."
Strange says there have been questions about whether the multibillion-dollar investment was needed, given flat load growth for several years and forecasts of only modest increases in demand in coming years. But there is still demand growth in Auckland at a time when generation north of Taupo is being taken out of commission or - in the case of Genesis' proposed Rodney power station - not being built. This means reliable transmission from outside the city is even more important, he says.
Rebuilding the grid
More than $2 billion has been spent on major projects including:
• North Island grid upgrade project
Total cost: $900m plus.
Double circuit link between Whakamaru and Auckland.
186km overhead double circuit 400kV line from Whakamaru to South Auckland.
Two 9km 220kV underground cables in Auckland.
Commissioned: October 2012.
• HVDC Pole 3
Stage 1: Approved cost: $673m.
New converter equipment (Pole 3) at Haywards and Benmore.
Stage 1 commissioned in May this year.
Stage 2:Replacement of the control system of Pole 2.
Expected to be commissioned late 2013.
North Auckland and Northland Project.
Approved cost: $415m.
New 37km underground 220kV cable between Pakuranga and Albany, and new
substations at Hobson St and Wairau Rd.
Commissioning later this year.
• Central North Island ring
Wairakei-Whakamaru C line.
Approved cost: $141m.
New 220kV double circuit transmission line between Wairakei and Whakamaru.
Commissioning first quarter of next year.
A potential low-system is set to form on the northeast coast of New Zealand.