Implications of Erecting Additional Transmission Lines
Introduction
Auckland is one of the regions in New Zealand. Auckland does not have many power generation sites like the other regions in New Zealand. However, the demand characteristics for Auckland are still high and are projected to increase due to population growth and economic development. Given that many of the energy production sites have been developed and the development of the remaining sites faces opposition from environmental groups, the viable options for easing the supply issues in Auckland include the development of renewable energy sources such as wind and solar energy, the optimization of the current transmission network to reduce transmission losses, and the installation of new transmission lines to bring in more power to Auckland. This paper looks at the implications of investing in new transmission lines. Among other things, the paper will assess the need to invest in the national grid, the consumption patterns, the statutory and policy requirements for transmission enhancement, the cost and funding implications, and the pricing methodology among others.
The need to invest in the national grid of New Zealand is justified by the capacity concerns. From an historical perspective, New Zealand has always had sufficient resources for the generation of hydropower. Consequently, New Zealand has relied heavily on hydroelectricity to provide energy for the many end users. The sites where the hydroelectricity is developed have been developed significantly. The development of the remaining hydropower sites has been faced with mounting environmental opposition. The development of major new projects for the generation of hydroelectricity is not possible in these remaining sites.
This means that the perennial fluctuations in the supply of electricity will continue because of the dependence of the country on hydroelectricity. The fluctuations in the supply of power are direr in the dry season when the amount of water in the dams reduces thereby affecting the generation of power. These constraints justify the need to invest in the national grid. The investment will help improve the supply of electricity by reducing the losses through transmission. Int'L, B. P. U (2015) reported that the loss of power during transmission and distribution amounted to 7.6% in 2009.
The amount of power lost through the transmission and distribution is very high given that New Zealand is a developed nation. There are also other constraints that undermine the efficiency of the transmission system. For instance, the high reliance of hydropower makes it difficult to schedule periodic maintenance because the various assets need to be taken out of service; something that would mean the interruption of electricity transmission (Int'L, B. P. U, 2015). The investment in the national grid will help in the development of a transmission grid that is robust enough to meet the energy demands of the country. The investment in the national grid will also help improve the efficiency of the transmission lines by reducing the losses.
Cost and Funding Implications
The capital investments that are required in the improvement of the national grid are enormous. This is evident from the capital proposals that have been floated by the Electricity Commission. For instance, the capital proposal for the Pakuranga-Whakamaru series compensation amounted to 50 million dollars while the proposal for Waitaki Valley was projected to cost 20 million dollars. There are other approved proposals that are indicative of the cost of investing in the national grid.
Source: Commerce Commission New Zealand (2015).
The proposals above that were prepared by Transpower show the cost of improving the national grid. It is noteworthy that more capital investments are required to improve the efficiency of the national grid. The funding of these capital investments needs to be prioritized given the fact that there are other concurrent projects in other sectors of the economy. The approach by Transpower New Zealand Limited has been to carry out the investments in the national grid installments. The government makes budgetary allocations for both the capital investments and operational expenditure (Transpower New Zealand Limited, 2009).
Fair Treatment of all Regions in New Zealand
Auckland is a region in New Zealand that is hit with periodic shortage in the supply of electricity, especially during the peak load period. The transmission lines to Auckland suffer from supply losses due to the long distance from the power generation sites. This is primarily because the power that is used in Auckland is generated elsewhere. For instance, Auckland draws a significant power from the Whakamaru Power station in the North Island on the Waikato River. The generators stationed on Otahuhu use gas and oil that also comes from other regions in New Zealand. The long distance transmission of electricity which results in efficiency losses and the demand characteristics of Auckland necessitate the investments in additional transmission lines. However, there is a need to recognize that other regions in New Zealand also need their systems upgraded to ensure efficiency of transmission and supply optimization. For instance, Figure 1 shows that the electricity demand for Auckland and Northland combined were less than the demand for the Other North Island and South Island in 2005. While a lot has changed since the statistics still underscore the need to focus on all regions in the upgrading of the national grid.
Pricing Methodologies Determined by the Electricity Commission.
The pricing methodology is designed by the national grid operator (Transpower). Various principles are used in the design of the pricing methodology (Electricity Authority, n.d.). Among these principles is the use of a pricing approach that allows the national grid operator to recoup the capital investments made in improving the efficiencies of the national grid (Electricity Authority, n.d.). The pricing approach used also ensures that the national grid operator also recoups the operation and maintenance costs incurred. The pricing methodology is reviewed periodically so that it reflects the changes in the market. For instance, if more electricity is generated using thermal means which are more expensive than hydropower, the pricing methodology will reflect this element in the cost per unit of electricity (Electricity Authority, n.d.).
The periodic review of the pricing methodologies also reflects the financial impact of any capital investment proposals floated by the national grid operator and approved by the Electricity Authority (Electricity Authority, n.d.). For instance, if the proposal for the erection of additional transmission lines to Auckland were approved by the Electricity Authority, it would be accompanied by a review of the pricing methodology so that the cost per unit of electricity reflects the financial impact of the capital investment (Electricity Authority, n.d.).
Statutory Requirements for Transmission Enhancement
There are various statutory and policy considerations that affect the enhancement of the transmission lines towards Auckland. There are in place to ensure that even to the supply optimization is necessary; such activity is undertaken in consideration of the environment, other infrastructure, and the people in the areas where the assets for the transmission enhancement will be installed. These statutory and policy requirements are outlined in the Resource Management Act of 1991 (Ministry of the Environment, n.d). One of the requirements is that before the enhancement of the transmission, the relevant agencies have to show the national benefits of the transmission enhancement (Ministry of the Environment, n.d).
Some of the indicators include the increase in transmission efficiency by reducing transmission losses and the elimination of points of congestion (Ministry of the Environment, n.d). There are several policies which underscore the importance of managing the effects on the environment that result from the overhead transmission of electricity (Ministry of the Environment, n.d). For instance, policy three in the act requires the consideration of the constraints that face the measures introduced to counter the environmental effects associated with the overhead transmission of electricity (Ministry of the Environment, n.d).
Policy six in the act also requires that proposals aimed at the enhancement of transmission also outline measures to reduce the existing effects on the environment. This implies any proposal to enhance transmission to Auckland by erecting new transmission lines should also address the environmental effects that are caused by the existing lines. This adds a significant cost premium to the proposal (Ministry of the Environment, n.d). Additionally, policy four requires that the mitigation of the environmental effects is to be measured not just by the method used but also the route and the site of the installation of the assets (Ministry of the Environment, n.d). This implies that Transpower would have to look for routes that result in the least environmental effect as well as implement other measures to ensure the newly erected transmission lines have the least environmental effect (Ministry of the Environment, n.d).
The statutory and policy requirements also entail the proper management of the effects that are associated with third parties. These could be the owners of the land and businesses where the new transmission lines are installed (Ministry of the Environment, n.d). In this respect, policy ten of the act requires that sufficient measures are taken to avoid reverse sensitivity and also to ascertain that the upgrading of the transmission network is not affected negatively. Policy eleven requires that national grid operator in collaboration with the local authorities identify buffer corridors where resource consent is not required and where long-term planning of grid upgrading can be done (Ministry of the Environment, n.d).
Health Issues in Relation to Overhead Transmission Lines
The erection of new transmission lines is an option that Transpower can explore in improving the efficiency of the national grid. However, such a decision would require the consideration of various factors. A factor to be considered is the effect on the health of the people in the areas where the overhead high voltage transmission lines are erected. Balaji (2015) argues that the perceived health effects on human, animal, and plant life are caused by the electromagnetic field that caused by the high voltage overhead transmission lines. Balaji (2015) also finds that the health effects are both short-term and long-term.
The electromagnetic radiation that is emoted by the high voltage overhead transmission lines causes destruction of the DNA strands in human beings, the erosion of the immune system and the and the interference with the functioning of the cells. The biological irregularities that result from the effects described above manifest through fatigue, digestive disorders, dizziness, nausea, and headaches. Balaji (2015) also argues that the short-term effects are more pronounced in the form of serious disorders in the elderly, pregnant women, and children.
The long-term effects are caused by the ionization of the air particles leading to the emission of corona particles. Balaji (2015) reports that when the corona effect risk is analyzed, there are more than 400 incidences of mortality due to lung cancer and more than 3000 incidences of respiratory, cardiovascular, and aggravated asthma in a population of 2.7 million people who live in proximity to high voltage overhead transmission lines. The negative health outcomes that are associated with the erection of high voltage transmission lines include Alzheimer’s disease, genetic defects, tumor growth, abnormal cell activity, miscarriages, and immune system deficiency among others (Balaji, 2015).
While the Ministry of the Environment (n.d) corroborates the concerns for the health of the people in proximity to the high voltage overhead transmission lines, the government ministry gives examples of hazards that the erection of overhead transmission lines can cause. For instance, the failure of a joint in the Otahuhu-Whakamaru-A 220 kilovolts overhead transmission line caused a section of the line to detach and fall in Auckland over a residential line. Although no mortalities were reported, there was damage to property in sixteen houses. The incident also posed a risk to the safety and health of the public.
Energy Usage Patterns and Incentives/Legislation to Optimize Supply/Demand
The demand for electricity as characterized by the consumption patterns by various sectors in New Zealand also contribute to the need for an increase in the supply of electricity. The demand for electricity varies from region to region. The chart below illustrates the varying demand for electricity in New Zealand.
Figure 1 showing the demand for electricity by region
Source: Electricity Authority (2011).
Figure 1 above shows that the South Island had the highest demand for electricity in 2011. However, the difference in the demand for electricity in the three regions was not very significant. However, the percentages change with time due to the increase in population and economic growth; two factors that contribute to the increased need for electricity (Electricity Authority, 2011). Different sectors of the New Zealand economy also contribute differently to the total electricity demand as illustrated below.
Figure 2 showing the electricity demand by sector
Source: Electricity Authority. (2011).
Figure 2 shows that the industrial sector edges the residential sector by 1% in terms of the percentage of energy in the national grid that the sector uses. The higher demand for electricity in the industrial sector is because of the presence of heavy industries that are power intensive. For instance, the Rio Tinto smelting factory that is located in Tiwai Point is responsible for 14% of the total energy demand in New Zealand every year (Electricity Authority, 2011). This isolates the residential sector as a significant contributor to the demand for electricity in New Zealand.
The energy use characteristics for Auckland show that the transportation sector consumes 56% of the total energy that is produced or supplied into the region. This amounts to 101 petajoules per year (Auckland Council, n.d.). The subsectors in the transportation industry that consume the most of this energy are the road transport and aviation subsector which consumer 57 petajoules and 38 petajoules per year respectively. While most of the energy used in the transportation sector is petroleum based, the energy usage in the non-transport sector is mainly from electricity (Auckland Council, n.d.).
Statistics show that the electricity usage in Auckland amounts to 40.4 petajoules per year. The other sources of energy for the non-transport sector include coal and gas which contribute 17.2 petajoules and 14.8 petajoules per year respectively (Auckland Council, n.d.). The main consumers of energy in the non-transport sector in Auckland are players in the commerce and industry sector. These players account for 70% of the total energy consumption for the non-transport sector. The households in Auckland account for the remaining 30% of energy consumed in the non-transport sector (Auckland Council, n.d.).
Estimates show that that the business and households in Auckland spent 3.6 billion dollars and 2.1 billion dollars on transport and non-transport energy consumption in 2008. The total expenditure on energy for both transport and non-transport region amounted to 5.7 billion dollars, an amount that represents 10% of the Gross Regional Product (Auckland Council, n.d.). Projections in energy consumption show unless gains in energy efficiency are made in Auckland, there will be a significant increase in energy. The precise figures show that by 2031, the energy demand in Auckland will increase by 65% to 300 petajoules annually (Auckland Council, n.d.).
The statistics on usage patterns and demand for electricity in Auckland vindicate the need for optimizing the supply of electricity into the region. More importantly, the statistics have shown the reliance on electricity as a source of energy for the non-transport sector. The continued increase in population and development of industries and more business will only result in increased demand for electricity.
Conclusion
The erection of new transmission lines is a viable option for meeting the increasing load demand in Auckland. However, Transpower has to make significant efforts to ensure that this option can be implemented and also ensure that its implementation serves the purpose for which it is designed. As highlighted in the discussion, the national grid operator will need to comply with several statutory and policy requirements to get the approval of the Electricity Authority. There is also a cost implication in the erection of the new transmission lines. As shown in the discussion, the capital investment projects in the national grid which have been approved the previous cost a lot of money. Transpower would have to source for the funding of the capital investment. Nonetheless, there are incentives for the capital investment in the form of consumption characteristics, load demand, and the transmission losses in the transmission network.
References
Auckland Council. (n.d.). Pressures: consumption and production. Retrieved from http://www.aucklandcity.govt.nz/council/documents/technicalpublications/Chapter%203 _0%20-%20Pressures%20part%203.pdf
Balaji, A. (2015). Effect of High Voltage Transmission Lines on Human Health, Plant Life, and Animal Activity. International Research Journal of Engineering and Technology, 2(3): 441-446.
Commerce Commission New Zealand. (2015). Transpower major capital proposal. Retrieved from http://www.comcom.govt.nz/regulated-industries/electricity/electricity- transmission/transpower-major-capital-proposal/
Electricity Authority (n.d.). Form of proposed transmission pricing methodology. Retrieved from https://www.ea.govt.nz/code-and-compliance/the-code/part-12-transport/12-89-form-of- proposed-transmission-pricing-methodology/
Electricity Authority. (2011). Electricity in New Zealand. Retrieved from www.ea.govt.nz%2Fdmsdocument%2F12292&usg
Int'L, B. P. U. (2015). New Zealand energy policy, laws and regulations handbook: Strategic information and basic laws. S.l.: Intl Business Pubns USA.
Ministry of the Environment. (n.d). 2. The Problems with Development near High-voltage Transmission Line. Retrieved from http://www.mfe.govt.nz/publications/rma/national- policy-statement-electricity-transmission-further-guidance-risks
Ministry of the Environment. (n.d). National Policy Statement on Electricity Transmission. Retrieved from http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/ plansstrategies/unitaryplan/Documents/Section32report/Appendices/Appendix%203.10.2 .pdf
Transpower New Zealand Limited. (2009). Grid Upgrade Plan 2009 Instalment 1. Retrieved from http://www.ea.govt.nz/about-us/what-we-do/our-history/archive/operations- archive/grid-investment-archive/gup/2009-gup/
