fleet strategy - hvdc

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HVDC FLEET STRATEGY

Transpower New Zealand Limited 2013. All rights reserved.

HIGH VOLTAGE DIRECT CURRENT(HVDC)

Fleet Strategy

Document TP.FS 46.01

16/10/2013


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C O P Y R I G H T 2 0 1 3 T R A N S P O W E R N E W Z E A L A N D L I M I T E D . A L L R I G H T SR E S E R V E D

This document is protected by copyright vested in Transpower NewZealand Limited (Transpower). No part of the document may bereproduced or transmitted in any form by any means including, without limitation, electronic, photocopying, recording or otherwise,

without the prior written permission of Transpower. No information embodied in the documents which is not already in the public

domain shall be communicated in any manner whatsoever to any third party without the prior written consent of Transpower.Any breach of the above obligations may be restrained by legal proceedings seeking remedies including injunctions, damages and costs.


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Table of Contents

EXECUTIVE SUMMARY ...................................................................................................................... 1

SUMMARY OF STRATEGIES .............................................................................................................. 4

1 INTRODUCTION ....................................................................................................................... 5

1.1 Purpose ................................................................................................................................. 5

1.2 Scope .................................................................................................................................... 5

1.3 Stakeholders ......................................................................................................................... 7

1.4 Strategic Alignment ............................................................................................................... 7

1.5 Document Structure .............................................................................................................. 8

2 ASSET FLEET .......................................................................................................................... 9

2.1 Asset Statistics ...................................................................................................................... 9

2.2 Asset Characteristics .......................................................................................................... 13

2.3 Asset Performance .............................................................................................................. 20

3 OBJECTIVES .......................................................................................................................... 25

3.1 Safety Objectives ................................................................................................................ 25

3.2 Service Performance ........................................................................................................... 25

3.3 Cost Performance ............................................................................................................... 26

3.4 New Zealand Communities ................................................................................................. 26

3.5 Asset Management Capability ............................................................................................ 27

4 STRATEGIES.......................................................................................................................... 29

4.1 Planning .............................................................................................................................. 29

4.2 Delivery ............................................................................................................................... 38

4.3 Operations ........................................................................................................................... 40

4.4 Maintenance ........................................................................................................................ 43

4.5 Disposal ............................................................................................................................... 50

4.6 Asset Management Capability ............................................................................................ 50

4.7 Summary of RCP2 Fleet Strategies .................................................................................... 53


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Transpower New Zealand Limited 2013. All rights reserved. Page 1 of 54

EXECUTIVE SUMMARY

Introduction

The High Voltage Direct Current (HVDC) link provides a high-capacity connection between

the North Island and South Island electricity systems, enabling the operation of an efficient

national electricity market. We have recently completed a major upgrade of the HVDC link,

with the commissioning of the Pole 3 converter stations at Benmore and Haywards.

The HVDC inter-island link has achieved world-class levels of performance over the years

since the original scheme was commissioned in 1965. Our asset management approach for

the HVDC link seeks to achieve continued high levels of availability and reliability on a

sustainable basis, and to achieve least whole-of-life cost.

Asset fleet and condition assessment

The HVDC converter stations include a diverse range of equipment, some of which is highly

specialised. There are particular challenges in asset management of HVDC equipment,

because of the small population of similar equipment in service (even including similar HVDC

schemes worldwide). There is only a limited experience base on which to build a detailed

understanding of potential failure modes and develop appropriate condition assessment and

risk management strategies.

Further, our customers for the HVDC transmission service require high levels of annual

availability. We typically aim to limit scheduled outages for routine maintenance and

condition assessment to 23 days each year for each pole of the HVDC link.

The HVDC Pole 2 converter stations were commissioned in 1991 and use electrically

triggered thyristor technology. The main circuit equipment in Pole 2 is generally in goodcondition and has considerable remaining life.

However, some subsystems within the Pole 2 converter systems have reached the end of

their expected lives, and replacements or other interventions are now required. One

example is the original control and protection systems in Pole 2 that have recently been

almost completely replaced, as part of the new Pole 3 project.

Some assets within the Pole 2 converter stations undergo frequent mechanical switching as

HVDC transfer varies. Asset management attention is focused on this frequently operated

equipment, to minimise the risk of failure. A programme of special inspections and condition

assessments is used to determine the need for major overhauls and replacements.

The HVDC Pole 3 converter stations were commissioned in May 2013, to fully replace the

mercury-arc valve converters of the original 1965 inter-island transmission scheme. The

Pole 3 converter stations use light-triggered thyristor technology. Asset management

approaches for the Pole 3 equipment will follow the manufacturersrecommendations, and

will be adapted with further operational experience.

The HVDC connection between the North Island and the South Island relies on three HVDC

submarine power cables across Cook Strait. The submarine cables were installed in 1991,

together with new cable terminal stations where the cables connect to the overhead HVDC

transmission line. The underwater environment in Cook Strait is harsh, and the cables are

now more than 20 years old. Yet underwater surveys indicate that the cables are still in good

condition and likely to remain usable beyond their original design life. The most significant


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risk to the submarine cables is damage caused by illegal fishing and anchoring in the Cook

Strait Cable Protection Zone (CPZ).

Strategies

The level of capital expenditure (capex) required during RCP2 for the HVDC fleet is expectedto be relatively low because of the good condition of the submarine cables and Pole 2 assets

and the new condition of the Pole 3 assets. This fleet strategy aims to ensure that we

maximise the remaining life of the assets, which is now likely to be greater than the original

design life of the submarine cables and the Pole 2 equipment.

The forecast capex is for some individual assets that require replacement or refurbishment

because they have a shorter life expectancy than the rest of the Pole 2 system, based on

their current condition, age and operation frequency. We will also make some investments

to bring the older Pole 2 assets up to the same standard as the new Pole 3 equipment where

practical and cost efficient, so that we can maximise the benefits of the Pole 3 project.

We will complete Stage 2 of the Pole 3 project as part of the originally approved Pole 3Major Capex Proposal (MCP). The remaining work involves improving voltage stability

through the addition of filter banks and a static synchronous compensator (STATCOM). This

will increase the HVDC capacity to 1,200 MW. Stage 2 is due to be commissioned by 2014.

The Pole 2 valve base electronics (VBE) and thyristor control units (TCUs) are critical

components of the Pole 2 control system. The main control and protection systems in Pole 2

have been replaced as part of the Pole 3 project, but the replacement of VBE and TCUs was

not part of the scope of work. We have very limited spares for this equipment and there is a

risk that failure rates will start to increase due to age-related deterioration. We plan to

replace this equipment during the RCP2 period to ensure continued high levels of reliability.

The Pole 2 filter bank circuit breakers operate frequently, as a result of changes in HVDCpower transfer. Several of the Pole 2 filter bank circuit breakers are expected to reach their

recommended maximum number of operations during RCP2. We plan to replace and

refurbish filter bank circuit breakers before the risk of failure escalates.

The Oteranga Bay Cable Station is located in an extremely harsh coastal environment. The

roof and wall cladding of the building is significantly corroded, and the building is no longer

weather-tight. We plan to re-clad the roof and walls of the cable station to protect the cable

station equipment and ensure reliability.

We will continue to monitor the Cook Strait submarine cables with a variety of approaches,

including a marine patrol of the Cook Strait CPZ to deter and detect illegal fishing and

anchoring. To ensure that we have reliable information about the condition of thesubmarine cables, we will continue with programmes of surveys by Remote Operated

Vehicles (ROVs) and by divers. We are currently investigating alternative approaches to the

maintenance of the submarine cables, to reduce the operating expenditure (opex) required.

Failure of the Cook Strait submarine power cables is a low probability but high-impact risk.

We will maintain contingency plans for undertaking repairs to submarine power cables, and

ensure preparedness to respond promptly and effectively to any cable fault.

Improvements

We have recently made a number of improvements to the asset management of the HVDC

assets.


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We have installed a Real Time Digital Simulator (RTDS) that will be used forsupporting operations, and for post-event analysis. It will also be used as a risk

management tool, for testing the effects of proposed changes to HVDC control

system software or settings, before any such changes are implemented at site.

We have established an in-house team of HVDC field engineers to help manage thelong-term risks of retaining an appropriate level of highly specialised skills required

for maintenance and support of the HVDC and power electronics assets.

We have appointed an HVDC Manager, who has responsibility for overview of theasset management of the HVDC asset fleet.


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SUMMARY OF STRATEGIES

This section provides a high-level summary of the main asset management strategies andtheir costs during the RCP2 period (20152020) for the HVDC fleet. The three main

strategies summarised below relate to capex.

Capital Expend iture

Replace Pole 2 Valve Base Electronics and Thyristor

Control UnitsRCP2 Cost $7.6m

The VBE and TCUs are critical parts of the control system and are nearing the end of their

useful lives. We have very limited spares for this equipment and failure rates are starting to

increase due to age-related condition deterioration.

Our strategy is to replace the Pole 2 VBE and TCU over RCP2, to improve long-term

reliability.

Over the RCP2 period, we plan to replace the VBE and TCU, together with the connecting

fibre optic links, at an estimated cost of $7.6m.

Replace and Refurbish Pole 2 Filter Bank Circuit

BreakersRCP2 Cost $3.2m

Several frequently operated Pole 2 filter bank circuit breakers are expected to surpass theirrecommended number of operations during RCP2.

Our strategy is to replace and refurbish filter bank circuit breakers before the risk of failure

escalates.

The plan will involve replacing 5 filter bank circuit breakers and refurbishing 1 filter bank

circuit breaker over RCP2 at an estimated cost of $3.2m.

Re-clad Oteranga Bay Cable Station RCP2 Cost $2.2m

The Oteranga Bay Cable Station is located in an extremely challenging coastal environment.The roof and wall cladding of the building is significantly corroded, allowing water to enter.

Our strategy is to re-clad the roof and walls of the cable station with a design that is better

suited to the environment. This will result in enhanced protection of cable station assets.

Over the RCP2 period, we plan to re-clad the cable station roof at a cost of $1.2m and the

exterior walls at a cost of $800,000.

Chapter 4 has further details on these strategies and a discussion of the remaining

strategies.


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1 INTRODUCTION

Chapter 1 introduces the purpose, scope, stakeholders, and strategic alignment of the High

Voltage Direct Current (HVDC) fleet strategy.

1.1 Purpose

We plan, build, maintain and operate New Zealands high-voltage electricity transmission

network (Grid). This includes the HVDC assets, which provide a high-efficiency, high-

capacity connection between the North Island and South Island electricity grids.

The purpose of this fleet strategy document is to describe our approach to lifecycle

management of the HVDC asset fleet. This includes a description of the asset fleet,

objectives for future performance and strategies being adopted to achieve these objectives.

The strategy sets the high-level direction for fleet asset management activities across the

lifecycle of the asset fleet. These activities include Planning, Delivery, Operations,

Maintenance, and Disposal.

This document has been developed based on good practice guidance from internationally

recognised sources, including BSI PAS 55:2008.

1.2 Scope

The New Zealand HVDC systems assets have key asset management differences to the AC

system, which is why the assets in the HVDC system have their own fleet strategy. The scope

of the fleet strategy includes the following HVDC asset categories:

Converter Stations:converters, DC yard equipment, and AC switchyard equipment

Electrode Stations:earthing electrodes, isolating switches, roof bushings andbuildings

Submarine Cables and Cable Stations:submarine cables, cable terminations, andbuildings.

The HVDC system is a sophisticated system that requires complex controls to ensure it

operates optimally and safely. This includes two reactive power control (RPC) systems, one

at Benmore and one at Haywards. We also have a Real Time Digital Simulator (RTDS) and a

valve base simulator for the HVDC system. This is located at Transpower House andsimulates the real-time response of the power system to various scenarios to support

maintenance and testing of HVDC controls.

Given the extensive nature of the HVDC system with its large number of asset types, further

information on the assets within each category is provided below.

Converter Stations

The valve halls at each converter station contain the primary equipment that enables the

conversion between DC and AC. The two main types of equipment in the valve halls are:

thyristors

bushings.


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The converter stations include a diverse range of complex and special purpose secondary

equipment, such as protection systems, control systems, water cooling systems, and

auxiliary power supplies. The scope of this strategy document includes the converter valve

hall buildings themselves and their building services.1

The converter stations also include DC and AC switchyards, which include a number of

assets. The most important of these assets are:

converter transformers

circuit breakers

harmonic filters

buses

disconnectors and earth switches

instrument transformers

smoothing reactors.

Much of the equipment in the HVDC converter stations are specialised unique designs that

vary significantly from those used on the AC system, which is the reason they are considered

under this strategy and asset portfolio and not under the relevant AC asset fleet strategy.

The converter transformers are particularly unique assets, with designs that are much more

complex and fundamentally different from our AC power transformers.

Electrode Stations

There are two electrode stations, with one set of electrodes being inland and the other set

underwater. The electrode stations include:

roof bushings

electrode arms

isolating switches

cabling.

Submarine Cables and Cable Stations

Three HVDC submarine cables cross Cook Strait to connect the North Island with the South

Island. There are two cable terminal stations, where the HVDC submarine cables are

connected to overhead lines.

Exclusions

The HVDC overhead transmission lines are excluded from this strategy as they are covered

within the Conductors and Insulators fleet strategy. Similarly, the management of the HVDC

towers is described in the Towers and Poles fleet strategy. The Haywards synchronous

condensers, which support the operation of the HVDC link, are included in the Reactive

Power Fleet Strategy.

1 At the time of writing, we are considering a transfer of responsibility for several aspects of HVDC buildings and

grounds management from the HVDC maintenance service providers to the Buildings and Grounds FacilitiesManagement service provider.


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1.3 Stakeholders

The HVDC system provides a high-efficiency and high-capacity connection between the

North Island and South Island electricity grids, enabling a national electricity market. Correct

operation and maintenance of the HVDC asset fleet is essential for transporting electricityfrom areas of high supply to areas of high demand, thus reducing disparity between the

electricity prices in different regions of New Zealand.

Key stakeholders include:

Transpower Groups: Grid Development, Performance and Projects

regulatory bodies: Commerce Commission and Electricity Authority

generators

service providers

landowners customers: including distribution network businesses

fishing and shipping industry.

1.4 Strategic Alignment

A good asset management system shows clear hierarchical connectivity or line of sight

between the high-level organisation policy and strategic plan, and the daily activities of

managing the assets. This document forms part of that connectivity by setting out the

strategy for managing the HVDC asset fleet to deliver our overall Asset Management

Strategy.

This fleet strategy directly informs the HVDC Asset Management Plan, which is provided

separately. The hierarchical connectivity is represented graphically inFigure 1.It indicates

where the fleet strategy and plan fit within our asset management system.


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Figure 1: The HVDC Fleet Strategy within the Asset Management Hierarchy

1.5 Document Structure

The rest of this document is structured as follows.

Chapter 2provides an overview of the HVDC asset fleet including fleet statistics,characteristics and their performance.

Chapter 3sets out asset management related objectives for the HVDC asset fleet. These

objectives have been aligned with the corporate and asset management policies, and with

high-lever asset management objectives and targets.

Chapter 4sets out the fleet specific strategies for the management of the HVDC fleet. These

strategies provide medium-term to long-term guidance and direction for asset management

decisions and will support the achievement of the objectives in chapter 3.

HVDC Plan

HVDC Strategy

Corporate Objectives & Strategy

Asset Management Policy

Asset Management Strategy

Lifecycle Strategies

DeliveryPlanning Operations DisposalMaintenance


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2 ASSET FLEET

Chapter 2 provides a high-level description of the HVDC asset fleet, including:

Asset statistics:including population, diversity, age profile and spares

Asset characteristics:including safety and environmental considerations, assetcriticality, asset condition, maintenance requirements and interaction with other

assets.

Asset performance:including reliability, safety and environmental

Risks and issues.

2.1 Asset Statistics

This section outlines the HVDC asset fleet population, along with their diversity and age

profiles.

2.1.1 Overview of Asset Fleet

The HVDC system is an important part of New Zealands electricity transmission system.It

connects the North Island with the South Island via submarine cables. The HVDC system has

a high capacity and low losses due to its high voltage and DC configuration (HVDC is only

cost effective for long distance point-to-point transmission).

The HVDC system runs from Benmore Station in the Waitaki Valley (South Island) to the

Haywards station in the Hutt Valley (North Island). The system includes the HVDC Cook Strait

submarine power cables connecting the North Island with the South Island, overhead HVDC

transmission lines in both islands, and the Benmore and Haywards converter stations, where

power is converted between AC and DC. There are also two electrode stations which provide

an earth return system. Cable stations are located at Fighting Bay and Oteranga Bay where

the HVDC overhead line conductors are connected to the Cook Strait submarine cables.

The original Pole 1 converter station equipment, first commissioned in 1965, was replaced in

2013 with the new Pole 3 equipment (although the use of Pole 1 equipment was restricted

from 2007, and it was fully decommissioned in 2012). The Pole 3 project has brought the

fleet up to a modern standard.

2.1.2 Asset PopulationTable 1 shows the population of the current asset fleet as of June 2013.

Station Population Comment

Converter Stations 4 2 at Benmore and 2 at Haywards

Electrode Stations 2 1 at Bog Roy and 1 at Te Hikowhenua

Cable Stations 2 1 at Fighting Bay and 1 at Oteranga Bay

Submarine Cables 3 38 km per submarine cable

Table 1: HVDC Asset Fleet


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2.1.3 Fleet Diversity

Fleet diversity is a significant issue for the management of the HVDC fleet given the small

number of each asset type within the fleet. The small numbers of individual types of

equipment mean that there is limited operational experience on which to base assessments

of condition and risk. Further, the unusual characteristics of many of these items of

equipment require us to consider a diverse range of asset management risks and issues in

managing the system as a whole. In some cases, the worldwide population of identical

equipment is very small. This makes the retention of skills important as well as maintaining

relationships with suppliers and service providers, including specialised overseas service

providers.

Converter stations

The four converter stations are of the same basic type, that is, Line Commutated Converter

(LCC). However, there are significant differences in the technology used in Pole 2 and Pole 3.

For example, they have different thyristor technology, which are also from differentmanufacturers. The differences in technology have some benefits and some disadvantages.

One benefit is that the technology reduces the likelihood of simultaneous pole failure on

both poles from a common cause.

The maintenance tasks for the converter stations are the same in a general sense, but the

specific procedures for the tasks differ between the two poles, and different spares are

required. For example, Pole 3 uses light triggered thyristors, whereas Pole 2 uses electrically

triggered thyristors, so separate spares must be kept. There is only one HVDC equipment

supplier worldwide that supplies light triggered thyristors.

As part of the Pole 3 project, the Pole 2 control system was replaced with a system identical

to that of Pole 3 so the control systems would be fully compatible.

The majority of assets in the HVDC system require a unique design with different

specifications to the assets on the AC system. For example, HVDC transformers and filter

bank circuit breakers are very different to those in the AC system.

Electrode and cable stations

Diversity is not a significant issue for the majority of the assets at the electrode and cable

stations. However, diversity is relevant to the cable station roof bushings. Roof bushings can

be damaged by extreme weather, so maintenance and emergency replacement may be

required. Using standard designs for all four roof bushings has made such activities easier.

Submarine cables and cable stations

Historically, submarine cables were impacted by diversity given that the cable fleet was

procured in tranches over time and used differing technology. However the three cables that

are now in service are identical in design and practice, even though they were produced by

two different manufacturers. Table 2 shows the types of submarine cable in the fleet.

Cables Type Comment

HVDC Cables 46 Oil impregnated paperIdentical designs; two differentmanufacturers.

Table 2: Diversity of the Submarine Cable Fleet

We only need to carry one type of spare cable because the three cables in service have thesame design.


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2.1.4 Age Profile

The original HVDC link was commissioned in 1965 and there was a substantial HVDC upgrade

project in 1991, when the Pole 2 converter stations were commissioned and the three

currently operating HVDC submarine power cables were installed. This upgrade process has

continued with the recent replacement and refurbishment of some Pole 2 HVDC assets.

As discussed in subsection 2.1.1, new converter stations, called Pole 3, replaced the

decommissioned Pole 1 converter stations in 2012/13.

Converter stations

It is worth noting that life expectancy as shown in Table 3 is the nominal life established for

fixed asset accounting purposes. It represents the typical average life expected from a type

of equipment before it is no longer fit to remain in service. For example, the original life

given to the Pole 2 primary equipment was 30 years for accounting purposes, but with

further experience with the assets we now anticipate the Pole 2 primary equipment to last

much longer. The nominal life expectancy is a generalisation across the primary equipment,but the life expectancies of different components within the converter stations differ

markedly.

Station InstalledNominal LifeExpectancy

Pole 2 converter station (Haywards) 1991 30 years

Pole 2 converter station (Benmore) 1991 30 years

Pole 3 converter station (Haywards) 2012 40 years

Pole 3 converter station (Benmore) 2012 40 years

Table 3: HVDC Stations Age

Within each HVDC station, the component assets will have varying ages as components have

been refurbished, replaced or enhanced over time.

Electrode stations

The electrode stations at Te Hikowhenua and Bog Roy were installed in 1965 when the HVDC

system was originally installed. Both stations were extended between 1989 and 1993 to

significantly increase their current rating. The various components of the electrode stations

continue to be maintained, refurbished or replaced as required to maintain the required

condition and function of the stations. In particular, there has been an ongoing programme

of total replacement of the buried electrode arms of the Bog Roy land electrode station.

Cables and cable stations

The three HVDC submarine cables were installed between 1990 and 1991.

The two cable stations (at Oteranga Bay and Fighting Bay) were initially built in 1965, and

new cable terminal buildings added in 1991. Their nominal life expectancy is 30 years, from

1991.

Life expectancy is the nominal life established for fixed asset accounting purposes. It

represents the typical average life that is expected from a type of equipment before it is no

longer fit to remain in service. Yet some assets may be useful for much longer. The average

age of the in-service fleet is approximately 22 years as of June 2013, with details of eachcable shown in Table 4.


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Cable Installation Nominal Life Expectancy

Cable 4 1991 35 years



Table 4: Age Profile of Submarine Cables

2.1.5 Spares

We have ample spares for the Pole 2 primary equipment, and a large amount of spares for

Pole 3. The spares are predominantly stored at Bunnythorpe and Addington warehouses

along with storage at the Haywards and Benmore sites. The total number of spares stored

for the HVDC systems is much too large to include in this document and cannot be easily

summarised because of the different types of assets required. Subsection 4.1.2 provides

information on new spares required to be purchased during RCP2.

Converter stations

A very small amount of the HVDC station equipment is compatible with assets on the AC

system, so specialised spares are mostly required. Table 5 shows some of the most

important spares currently kept for the converter stations.

Asset Number Status

Smoothing reactor 2New as of 1991, can be used as spare for Pole 2 orPole 3, although one of the spares has beendamaged.

Circuit breakers Multiple sparesSpares are held for filter bank circuit breakers,transformer circuit breakers, DC circuit breakers, andAC circuit breakers (for Pole 2 and Pole 3).

Capacitor cans Multiple sparesCapacitor cans are specialised and not available offthe shelf, so we have a number of spares for thevarious types used in the HVDC system.

Table 5: Examples of converter station spares

One of the spare smoothing reactors has been damaged and it is likely that it is uneconomic

to repair. We intend to replace the damaged reactor within RCP1.

Electrode stations

We hold approximately 25m3of coking coal in the event that the coking coal surrounding the

electrodes is eroded away due to electrochemical reaction. The electrochemical erosion

mainly occurs during mono-pole operation of the HVDC link at Bog Roy electrode station.Specialised low sulphur coal is required to minimise the corrosion of the electrodes, and this

is difficult to procure at short notice. In addition, as the suppliers mostly supply large

amounts to the steel-making industry, their distribution systems are not set up for small

customers like Transpower.

We recycle the electrode arm materials where possible, and retain one spare electrode arm

at all times.

As other electrode station equipment such as cables, roof bushings, switches, resistors and

capacitors are readily available from suppliers, spares holdings are not required.


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Submarine cables and cable stations

We hold a total of 3.6 km of HVDC submarine cable as spares at the Miramar cable store

(one 2.4 km length and one 1.2 km length). The usefulness of these spares for repair of a

cable fault in deep water is dependent on the ability to quickly cap a damaged cable. To limit

the requirement for spare cable, it is essential to act promptly and prevent water ingress

further than 1.2 km in both directions from the fault.

For details of the contingency planning for submarine cable repairs, see subsection4.3.4.

There are two spares available for the critically important roof bushings at each Cable

Station. There are four roof bushings in service (two at each cable station). They are all the

same sulphur hexafluoride (SF6) pressurised design. They are all interchangeable, and three

of the four current spares can be used to replace any of the four roof bushings, while the

other spare can only be used for Pole 2. We believe that only three spares are necessary, so

one of these spares will be used to replace an Oteranga Bay roof bushing during RCP2 when

it reaches the end of its useful life.

2.2 Asset Characteristics

The HVDC asset fleet can be characterised according to:

safety and environmental considerations

asset criticality

asset condition

maintenance requirements

emerging technologies interaction with other assets.

These characteristics and the associated risks are discussed in the following subsections.

2.2.1 Safety and Environmental Considerations

Safety and environmental considerations are important for asset management as they can

require costly mitigation if not considered early in asset management planning. The most

significant safety and environmental considerations for the HVDC asset fleet are:

Converter valve hallswork at heights:maintenance and inspection of the thyristorvalves and other equipment in the valve halls requires work at considerable heights.

Each valve hall is equipped with an elevating work platform to enable safe access for

work at height.

Converter station fire risk:Converter station explosions/fires have occurredoverseas and are theoretically possible in the valve halls. One of the risk mitigations

is to provide a water deluge system. It is proposed that the fire water supply systems

at Haywards and Benmore substations will be upgraded during RCP2 (see

subsection 4.1.2).

High land and marine voltage gradients at shore electrode station: Marine voltagegradients, caused by erosion of land electrodes and material build-up on sea

electrodes, can potentially affect marine life in the vicinity of the shore electrode

station. However, the design of the Te Hikowhenua shore electrode is such that the

voltage gradient is very low (less than 7 V/m).


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Generation of chlorine gas at shore electrode station: During periods of HVDCoperation when the electrodes at Te Hikowhenua act as an anode, chlorine gas is

generated in the electrode pits. Service providers working in the pits wear gas

monitors and allow time for any chlorine gas to dissipate after opening the lids.

Metal corrosion at land electrode station: A particular problem that one landownernear the Bog Roy electrode station experiences is accelerated corrosion of metal

earthed assets, such as fences and sheds. We actively work with that landowner to

mitigate the effects.

2.2.2 Asset Criticality

Asset management is adapted to recognise the differing levels of criticality to mitigate the

risk of failures at critical sites and corridors and to potentially reduce expenditure on assets

that are less critical. We have established a framework for assigning Asset Criticality for

transmission assets, which classifies the assets as high, medium, or low criticality.

The asset criticality framework is at an early stage of development. At this stage we haveassigned all assets within the HVDC fleet as low criticality because a failure of the HVDC

system will not usually result in interruptions for customers. Yet we recognise that the HVDC

system is a special case where very rare failures can lead to widespread under-frequency

load shedding, and less severe failures can result in a substantial change in electricity prices.

A failure of any part of the HVDC system is generally equally important as it will result in the

failure of a pole and a steep reduction in the capacity of the link. Yet some assets have

redundancy built in, such as the control systems and the multiple filter banks. Other

essential assets have unit spares, such as the converter transformers, available. The neutral

earth circuit is particularly critical to HVDC reliability, because it is common to both poles,

and its failure could result in an outage of both HVDC poles. We take these factors intoconsideration in the planning phase of the asset management lifecycle for the HVDC fleet.

There are scenarios in which the relative criticality of the HVDC link could rise. For example,

if a large amount of generating capacity in the North Island failed (such as the Huntly power

station), the HVDC link could become essential for maintaining electricity supply in the North

Island.2

2.2.3 Asset Condition

The following discussion outlines the condition of the HVDC asset fleet as at 30 June 2013.

Converter stations

The Pole 3 Converter Stations were constructed between 2011 and 2013 and are therefore

in excellent condition. The outages and site access required by the Pole 3 project provided

an opportunity to replace Pole 2 equipment that was nearing the end of its life. So the

individual assets at the Pole 2 converter stations are generally in good condition and the

majority of the main equipment items should achieve their expected design life of 30 years.

Further life-extending refurbishments are possible on some of these items.

2 There is currently sufficient generating capacity for the North Island within the North Island, but the HVDC link is

employed to utilise generation from the South Island with a much lower marginal cost. This generally involves hydroand wind generation compared with thermal generation in the North Island.


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Pole 2 Thyr istor valve water cool ing sy stem

At the time of original commissioning in 1991, it was recognised that the design of the Pole 2

thyristor valves creates a flow of a small electrolytic current in the cooling water pipes of the

valve cooling system. This electrolytic current causes corrosion of the stainless steel

couplings in the valve cooling system. These couplings are critically important componentsthat distribute cooling water to the thyristor valve layers. In the early 1990s, corrosion in

similar components in another HVDC thyristor valve was identified as the probable cause of

cooling water leakage, flashover and failure of the complete thyristor valve. Since

commissioning Pole 2 in 1991, we have monitored corrosion rates annually by sampling 6

out of 194 couplings at each converter station. The water treatment plant is critical to the

thyristor valve cooling systems and the number of instrumentation faults has increased.

There are also other aspects of the water cooling system that are degrading to a condition

that will require replacement and/or refurbishment over RCP2 (see subsection 4.1.2 for our

strategy to respond to these issues).

Pole 2conv er ter transformers

The converter transformers are in a good condition, as expected for their age. Yet the

condition of some components, such as the diverter switches, is deteriorating. The condition

of the tap changers may also be deteriorating, although reliable assessment will require the

detailed evaluation that we have planned for the RCP2 period (see subsection 4.4.3).

The demands of the electricity market require frequent changes in HVDC power transfer.

These changes require frequent diverter switches of the converter transformers. There are

approximately 17,000 diverter switch operations annually on each of the six in-service

converter transformers. The diverter switches operate in oil and the oil quality deteriorates

slightly with each operation. Major diverter switch refurbishments are required at

approximately every 450,000 operations. The Pole 2 converter transformer diverter switcheshave approximately 350,000 operations and are due for refurbishment during the RCP2

period.

The condition of the transformer oil is very important to the performance of the

transformers and for maximising their useful lives. It is also an important consideration

because of the scaleeach converter transformer bank contains 240,000 litres of oil. The

condition of the transformer oil was recently assessed, showing that it is in very good

condition. It is clear, of a normal colour, has low moisture levels, is not acidic, and shows no

signs of sludge. Even so, the dielectric breakdown voltage is becoming lower than ideal. We

expect that the condition of the oil will remain reasonable through RCP2, although we will

continue to monitor it to identify if any filtering of the oil is required.

Pole 2 f i l ter bank circu i t breakers

Frequent changes of HVDC power transfer also require frequent switching of the Pole 2 filter

bank circuit breakers. There are 10 circuit breakers and they operate between 150 and 750

times each year. The original circuit breakers had design lives of 2,000 operations or 35 years

in service.

Four of the original circuit breakers were replaced (two in 2005 and two in 2012) with

10,000 operation breakers. Other circuit breakers were refurbished to extend their lives to

cover the next 2,000 operations. As of March 2013, of the 10 circuit breakers four have less

than half of their life expectancy operations remaining while the other six have most of their

maximum operations remaining. A number of the circuit breakers are expected to reach


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their maximum number of operations during RCP2, and their replacement and

refurbishment is discussed in subsection 4.1.2.

Pole 2 Reactors

The reactors in the HVDC Pole 2 system are all air-cored. They were commissioned in 1991and are in good condition.

Electrode stations

The condition deterioration of the electrodes depends on the cumulative amount of

electrode current passed through them over time. When the HVDC link is in balanced

current operation, the electrode current is very small and there is only very slow

degradation of the electrodes. During unbalanced operation, and particularly during mono-

pole operations, there can be significant currents and rapid degradation.

Bog Roy electrode stat ion

The Bog Roy electrode generally operates as an anode during current flow because theHVDC flow is usually northwards. During anode operation, electrolytic action erodes the

steel rods buried in the ground that make up its electrode arms. There has been significant

erosion and breakage of the electrode arms. The eroded arms have to be replaced and it is

essential to monitor the electrode condition to determine their priority for replacement. The

land electrode erosion rate at Bog Roy during mono-pole operation is 15 to 18 times higher

than during balanced operation.

After Pole 1 was decommissioned, and prior to the commissioning of Pole 3, the HVDC link

was operating in mono-pole operation for an extended period. This led to significantly

increased rate of deterioration of the electrodes, involving more frequent maintenance and

progressive replacement of the buried electrode arms.The strategy for further refurbishment of the Bog Roy electrode arms is set out in

subsection4.1.2.

Te Hikow henua electrode stat ion

The Te Hikowhenua land electrode provides a return path to earth for DC current when only

one HVDC pole is operating or when current flow between the two poles is unbalanced.

The electrode operated as a cathode for an extended period following the decommissioning

of Pole 1, when the HVDC system was in a mono-pole configuration and only Pole 2 was

operating. The long periods of operation as a cathode led to the build-up of a thick layer of

magnesium and calcium hydroxide on the 42 four metre-long high silicon chromium iron

electrodes that are buried in the beach. This build-up of deposits degraded the electrode

performance, and required regular maintenance.

All the sea electrodes were replaced in 2007, so they are (as of 30 June 2013) in good

condition aside from the continued accumulation of magnesium and calcium hydroxide

during any periods of operation as a cathode. Following the commissioning of Pole 3 this will

no longer be such a significant issue.

Cables and cable stations

Oteranga Bay cable stat ion

The HVDC cable station at Oteranga Bay faces severe environmental conditions, with regulargale-force and storm-force winds. In storm conditions, heavy salt deposition occurs. This


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location rates as one of the most demanding operational HVDC sites worldwide in terms of

environmental conditions, and cannot be directly simulated by any HVDC electrical

equipment tests. The high wind speed and constant wind-borne salt pollution significantly

reduces the life of the roof and cladding of the cable station buildings, and places high

stresses on the HVDC roof bushings.

The extreme environmental conditions have led to severe corrosion of the exterior walls and

roof cladding of the cable station building, particularly around the edge of the building, and

the building is no longer weather-tight. This is a particular issue during high winds. Water is

also entering the building due to the failure of corroded flashing, which consists of thinner

material than the main roofing material.

The strategy for the roof and cladding of the Oteranga Bay building is set out in

subsection4.1.2.

The Oteranga Bay Pole 2 350 kV roof bushings have previously been replaced at

approximately 4-year intervals because of the harsh environment. The replacements have

included several different types of bushing as we have attempted to find a design that suitsthe environment. The latest roof bushing is a composite bushing designed to withstand wind

speed up to 300 km/h and has improved material properties. It has been in service since

February 2006. The roof bushings require regular extensive cleaning (annually and after

large storms) to maintain their hydrophobicity, as there have been several incidents of

arcing due to salt deposition in the past.

Fight ing Bay cable stat ion

The Fighting Bay cable terminal station has a much less severe climate than the Oteranga

Bay site, and consequently there are less stresses on the insulation of the roof bushings.

Both of the roof bushings have recently been replaced with polymer bushings so are in good

condition. The building cladding is currently in good condition and does not require anyrefurbishment or replacement in the foreseeable future.

Submar ine cables

Surveys using an ROV show that the three power cables are in good condition and generally

well supported by the seabed. Due to the nature of the marine environment, corrosion of

areas of exposed armouring on the cables is expected, with cathodic protection needed on

the cables.

Yet the ROV surveys and diving inspections have shown virtually no corrosion of the

armouring to date. No further natural cathodic protection investigations are planned, and

neither is any further prevention action planned at this stage because the evidence showsthat, at present, corrosion does not appear to be a significant issue. Currently, cables 4 and 5

are undamaged and in good condition while cable 6 has had one fault repair undertaken.

2.2.4 Maintenance Requirements

This subsection describes the maintenance requirements of the HVDC asset fleet, including

the underlying drivers and rationale. These requirements have informed the maintenance

strategies discussed in section 4.4. This subsection also sets out a high-level overview of

historic maintenance expenditure for these activities.

The most common types of maintenance carried out on these assets are:

preventive maintenance, including:- line patrols and condition assessments


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- servicing

corrective maintenance, including:

- fault response

- repairs

maintenance projects.

Maintenance projects are programmes of works (essentially made up of small projects) used

to address repetitive issues identified through preventive and corrective maintenance.

The Maintenance Lifecycle Strategy provides further details on our approach to the above

maintenance works, and the specific maintenance requirements are included in the relevant

service specification documents.

Preventive maintenance

The following sections discuss the preventive maintenance works on each major asset type.

Converter stat ions

Preventive maintenance of the converter station assets is planned on a regular basis, with

the frequency dependent on the type and known condition of the asset. We schedule an

annual maintenance outage in summer when demand for inter-island HVDC transfer is

relatively low. The majority of maintenance works are carried out then. Regular condition

assessments undertaken for the converter station assets may include:

periodic visual inspections

thermographic checks

out-of-service diagnostic inspections

transformer dissolved gas analysis (DGA)

continuous monitoring of the performance of the HVDC cooling systems via thevalve cooling control systems

thyristor diagnostic inspection in line with manufacturer requirements

frequent inspections of filter bank circuit breakers because of the high frequency ofswitching required.

Electrode stat ions

The Te Hikowhenua electrode station has undergone 3-monthly lifting inspections of the

2 pilot electrodes and 6-monthly lifting and cleaning of salt deposits on all electrodes while

the system has been operated as mono-pole. With the operation of Pole 3 and return to

bipolar operation, cleaning will only be carried out as required.

Cable stat ion s

Preventive maintenance of the cable terminal stations is usually planned around annual

shutdowns.

Regular condition assessments undertaken on the roof bushings include:

visual and UV camera inspection

monitoring of corrosion in the sealing and central flange area


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hydrophobicity testing

monitoring of internal bushing gas pressure and top-up intervals

bushing gas analysis.

Roof bushings are also regularly cleaned to maintain hydrophobicity at a required level.

Submar ine cables

Maintenance of submarine cables is complicated by the marine environment, requiring

specialised equipment and techniques such as the ROV and divers.

The submarine cables can be severely damaged by contact with fishing trawling devices or

ship anchors. So preventive maintenance of the submarine cables includes regular patrolling

of the area by vessel and helicopter to identify and deter ships (particularly trawlers) from

operating illegally in the vicinity of the submarine cables. The marine patrol enforces the law

prohibiting fishing and anchoring within the CPZ and educates ship operators in the area on

CPZ law. The Ministry of Transport undertakes prosecutions for illegal fishing activity in theCPZ, based on evidence provided by the patrol vessel. One third of each cable is condition

assessed each year using an ROV and diver (so every cable is assessed in any 3-year period).

This has been dependent on the weather and the availability of resources. At times,

condition assessments have been delayed when resources have been diverted to repairs to

the HVDC or fibre optic cables.

Also, there is a need to move sandbags and other protective equipment every 2 to3 years

because the seabed conditions change over time. An electrical cable test is undertaken every

10 years, with the last one being carried out in 2011.

Corrective maintenance

We carry out a wide range of corrective maintenance due to the diverse types of assets

included in the HVDC fleet. Corrective work ranges from the relatively simple replacement of

failed assets, such as capacitor cans, through to major repairs and replacement of complex

assets, such as the converter transformers and submarine cables.

In some cases, corrective work requires the involvement of overseas technicians and

experts, particularly those from the original equipment manufacturers.

One of the largest and most complex cases of corrective maintenance is submarine cable

repair. In 2005 we repaired a submarine cable fault in shallow water in Oteranga Bay. This

was a large and complicated procedure supported by overseas expertise, and required

maintenance support equipment to be custom-built for the procedure, including the retrofit

of a barge.

The repair of a cable fault in deep water would be more difficult and complicated, requiring

specialist vessels and equipment from overseas. It is important to quickly cut and cap the

cable in the event of a cable fault, to prevent excessive water ingress. In deep water, the

water ingress could be relatively rapid, reaching a length beyond the length of spare cable.

This would necessitate purchasing replacement cable. Procurement of submarine cable can

take 2 to 3 years. Repairs will generally need to be made in relatively calm weather, and may

not be possible in winter. Depending on the time of the year and the complexity of the

repair, it could take between 3 and 9 months to repair a cable.


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Maintenance projects

Maintenance projects typically consist of relatively high value planned repairs or

replacements of components of larger assets. Maintenance projects would not be expected

to increase the original design life of the larger assets. Maintenance jobs are typically run as

a project where there are operational and financial efficiencies from doing so. The drivers

for maintenance projects include asset condition, mitigating safety and environmental risks,

and to improve performance.

A number of maintenance projects have been undertaken for the HVDC fleet, including:

Haywards maintenance projects:

- reactor painting

- busbar corrosion

Benmore maintenance projects:

- Supervisory Control and Data Acquisition (SCADA) cards repairs

- valve busbar corrosion.

The maintenance projects planned for the RCP2 period are described in subsection 4.4.3.

2.2.5 Interaction with Other Assets

The HVDC system is mostly physically separate from the rest of the transmission system

assets. However, a number of assets in or associated with the converter stations (including

synchronous condensers, AC power transformers, AC switchyard equipment and

Transmission Lines) are covered by other asset strategies. These assets need to be managed,

taking into account any interactions with the HVDC system and any additional performance

or spares holding requirements.

The HVDC system is reliant on reactive power assets, particularly the Haywards synchronous

condensers and STATCOM and the transmission circuits around them.

2.3 Asset Performance

This section describes the historic performance of the HVDC fleet together with any risks and

issues.

2.3.1 Reliability Performance

Achieving an appropriate level of reliability for our asset fleets is a key objective, as itdirectly affects the services received by our customers.

Failure of the assets within the HVDC asset fleet can lead to an outage of the inter-island

connection or a portion of the connections capacity.In many cases this would lead to a

large price discrepancy in the electricity market, between the North Island and the South

Island.


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Major failures

Converter stat ions

There have been no major failures at HVDC stations between 1990 and 2012. We define

major failures as those that have caused a long-term (greater than one week) outage of atleast one pole.

Electrode stat ions

There have been no failures of the electrode stations significant enough to cause an outage

of the HVDC link.

Submar ine cables and cable stat ions

HVDC submarine cable performance has been very reliable, with only one failure due to an

internal electrical faultin Cable 6 in October 2004. There have been no failures

attributable to mechanical damage. The 2004 cable failure reduced the capacity of the HVDC

link from 1,040 MW to 886 MW. The failure occurred in shallow water in Oteranga Bay, andthis meant it was feasible to undertake repairs by converting a locally available barge. The

repairs to Cable 6 took almost six months.

The greatest risk to the cables is damage caused by boats illegally fishing or anchoring in the

area. While the current cables have not failed due to boat activity, it is suspected that the

failure of one of the old decommissioned cables in 1991 (Cable 2) was caused by a fishing

operation. The Maintenance section (section 4.4) describes the activities that will be

undertaken to reduce the risk of this occurring.

The original Pole 2 350 kV porcelain roof bushing at the Oteranga Bay Cable Station failed in

service in 1996 after only four years of service, damaging the building and causing a lengthy

forced outage. Replacement roof bushings using composite technology have been installedand, although there have been problems with deteriorating condition, there have been no

further major failures.

Availability

The availability of the HVDC link varies from year to year, depending on the number and

length of planned and forced outages. The availability from 2003/04 to 2011/12 is shown in

Figure 2.

Figure 2: HVDC Annual Availability

75%

80%

85%

90%

95%

100%

2003/04 2005/06 2007/08 2009/10 2011/12

HVDC AVAILABILITY


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Pole 1 was generally less reliable than Pole 2 towards the end of its operation. Pole 1 was

decommissioned in September 2007, which is why the availability is higher after 2007 when

the data only relates to Pole 2. In 2010/11 and 2011/12 the availability was lower than

previous years because a relatively large number of planned outages were required for the

construction of Pole 3.

2.3.2 Safety and Environmental Performance

Subsection 2.2.1 described the characteristics of the HVDC assets that impact safety and

environmental performance. This subsection reports on the actual safety and environmental

performance of the fleets.

There have been no major safety incidents involving the HVDC fleet in recent years.

The number and nature of environmental incidents involving the HVDC assets have not been

clearly recorded in the past, although recording and management of this information has

begun recently so future versions of the fleet strategy will be able to provide improved

environmental performance data.

2.3.3 Risks and Issues

This subsection briefly discusses the most significant risks and issues facing the asset

management of the HVDC asset fleet.

Strategies to manage these risks and issues are set out in chapter4.

Submar ine cables r isk posed by m ar ine vessels

The main risk to the submarine cables is damage caused by fishing activity where heavy

trawl nets and associated equipment makes contact with the cables. There is also potential

for anchor damage from large and small vessels to place the cables at risk.

The Submarine Cables and Pipelines Protection Act 1996 provides legal protection for a CPZ

across Cook Strait. In 1995 we started marine patrols of the Cook Strait CPZ, initially focusing

on the hoki fishing season from June to September. Incidents of damage to the submarine

fibre optic cables, and efforts by fishermen to circumvent the part-time patrol led to full-

time patrolling, which has now been in place for some years.

There are about 4,000 vessel movements in the vicinity of the cables every year. Roughly

300 of these are of interest for gathering of evidence of possible infringements, and around

20 require follow-up. Information about alleged infringements is passed to the Ministry of

Transport. There is a prosecution every 1 to 2 years. The marine patrol service includes

continuing efforts to communicate with the fishing industry to help mitigate risk.The cables are laid separately to minimise the likelihood of all three cables being damaged in

one incident.

Consequences of subm ar ine cable fai lure

There is no backup for the submarine power cables and restoration times range from at least

6 months for a repair to 24 months for total replacement. Failure of any one power cable

can result in a reduction in HVDC cable capacity to 1000 MW (there are 3 cables, each rated

to carry 500 MW). The current total capacity of the link is 1,000 MW due to other

constraints, but this is due to increase to 1,200 MW by the end of 2013 when the new

Haywards STATCOM is commissioned. So a cable failure in the immediate future would

reduce redundancy but not reduce the capacity of the link. It should also be noted that 84%of the time the transfer on the HVDC link is less than 500 MW.


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Severe environment at Oteranga Bay cable stat ion

The HVDC cable station at Oteranga Bay faces severe environmental conditions, with regular

gale-force and storm-force winds from north and south. The high wind speed and constant

windborne salt pollution significantly reduces the life of the outdoor roof bushings.

The harsh environment also affects the speed of deterioration of the station building

cladding. As outlined in subsection 2.2.3, the building cladding at Oteranga Bay is currently

in poor condition and needs to be replaced in the next five years.

In response to the extreme environmental conditions, maintenance activities for the

Oteranga Bay cable station are more regular to identify any rapidly accelerating corrosion. In

addition, the design of new assets for the site must carefully consider the environmental

factors. For example, we are planning to replace the current corroded roof cladding with

aluminium cladding, which has superior corrosion resistance compared to most cladding

options.

The strategy for the Oteranga Bay cable station building is set out in subsection4.1.2.

Cable stat ion s roof bush ings

HVDC transfer depends heavily on the performance of the roof bushings at the cable

stations. The cable stations are located in remote areas and have difficult access for the

heavy lifting equipment that is required for bushing replacement. If there is an emergency

that requires a bushing replacement at short notice, a forced outage will be required for at

least three days.

Pole 2 VBE and TCUs

Once stage 2 of the Pole 3 project is complete, the Pole 2 VBE and TCUs will be the only 1990

vintage controls left in the HVDC system because the other parts of the control system are

being replaced as part of the Pole 3 project. The VBE and TCUs are critical parts of the

control system and are nearing the end of their useful lives as they have a design life of

approximately 20 years. We have very limited spares for this equipment and there is a risk

that failure rates will start to increase due to age-related condition deterioration. It is

becoming increasingly difficult to procure spares because of the age of the equipment.

The strategy for the Pole 2 VBE and TCUs is set out in subsection4.1.2.

Pole 3 seism ic resil ience

The new Pole 3 equipment has been designed to withstand higher-intensity earthquakes

than Pole 2 (1 in 2,500 compared to 1 in 1,000 year event). In addition, the seismic resilience

of Pole 2 equipment was estimated by analysis alone, while Pole 3 equipment had its seismicresilience estimated with the use of shake table testing.

In the event of a relatively large earthquake, it is expected that Pole 3 could continue to

operate while Pole 2 may not. Yet Pole 3 is dependent on several parts of the Pole 2 system

(that lack readily available spares). In particular, the Haywards switchyard B insulators and

disconnectors are a seismic risk for Pole 2 and Pole 3.

The strategy for improving the seismic performance of Pole 2 equipment is set out in

subsection4.1.2.

Pole 2 Thyr istor valve water cool ing sy stem

The Pole 2 thyristor valve uses stainless steel couplings in its cooling water distributionsystem. In the early 1990s, corrosion in similar components in another HVDC thyristor valve


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was identified as the probable cause of cooling water leakage, leading to flashover and

catastrophic failure of the complete thyristor valve. Condition assessment of the stainless

steel couplings in the Pole 2 valves has identified increased corrosion and accumulation of

aluminium hydroxide.

Since the time of Pole 2 commissioning in 1991, there has been annual monitoring of

corrosion rates by sampling of 6 out of 194 couplings at each converter station. Programmes

of complete replacement of these couplings have been undertaken, and annual condition

monitoring continues, to ensure that this risk is managed.

HVDC capaci ty c onstra ints

The commissioning of the Pole 3 converter stations has substantially increased the capacity

of the inter-island HVDC link to 1,000 MW. Yet the capacity of the link is still constrained by

several factors, including voltage stability, capacity of existing submarine cables, and the

overload capability of Pole 2.

The capacity will be extended to 1,200 MW by 2014, on completion of Stage 2 of the Pole 3project.

Long-term future studies, as outlined in subsection4.1.1,will assess the economic case for

further investment to relieve other constraints so as to provide additional inter-island HVDC

capacity.


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3 OBJECTIVES

Chapter 3 sets out asset management related objectives for the HVDC fleets. As described in

section 1.4, these objectives have been aligned with our corporate management objectives,

and higher-level asset management objectives and targets as set out in the Asset

Management Strategy.

Our overarching vision for the HVDC fleet is to provide an energy balancing system that

matches generation and demand in the North Island and the South Island. In addition, the

HVDC link facilitates the transfer of renewable energy from the South Island generation

centres to the North Island load centres. Further objectives have been defined in the

following five areas:

Safety

Service performance Cost performance

New Zealand communities

Asset management capability.

These objectives are set out below, while the strategies to achieve them are discussed in

chapter 4.

3.1 Safety ObjectivesWe are committed to becoming a leader in safety by achieving injury-free workplaces for our

employees and to mitigate risks to the general public. Safety is a fundamental organisational

value and we consider that all incidents are preventable.

Safety Objectives for HVDC Fleets

- Zero medical treatment injuries arising from the maintenance or operation of theHVDC assets.

- Ensure that risks to the public from the operation of HVDC ground electrodes are aslow as reasonably practical.

3.2 Service PerformanceEnsuring appropriate levels of service performance is a key underlying objective. The overall

service performance objectives for the Grid in terms of Grid Performance (reliability) andAsset Performance (availability) are set out in the Asset Management Strategy.

Grid performance objectives state that a set of measures are to be met for Grid Exit Points

(GXPs) based on the criticality of the connected load. In addition, asset performance

objectives linked to system availability have been defined, including a target of 97.5% HVDC

system availability during RCP2.


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Service Performance Objectives for HVDC Fleets3

Availability

- Pole 3 forced energy unavailability: 0.5% or less.

- Pole 2 forced energy unavailability: 0.5% or less.

- Pole 3 scheduled energy unavailability: 1.0% or less.

- Pole 2 scheduled energy unavailability: 1.0% or less.

Outage rates

- Pole 3 forced outage rate: 5 outages or less each year.

- Pole 2 forced outage rate: 5 outages or less each year.

- Bi-pole forced outage rate: 0.1 outages or less each year.

Grid effects

- Minimal harmonic distortion.

- Minimal interference to customer ripple control systems.

3.3 Cost PerformanceEffective asset management requires optimising lifecycle asset costs while managing risks

and maintaining performance. We are committed to implementing systems and decision-

making processes that allow us to effectively manage the lifecycle costs of our assets.

Cost Performance Objectives for HVDC Fleets

- Minimise whole-of-life cost in asset management decision making (such as evaluationof replacement versus refurbishment, and capital versus maintenance expenditure).

- Minimise cost of major submarine cable repairs by maintaining necessary resourcesto undertake a prompt cut and capoperation in the event of a fault.

3.4 New Zealand CommunitiesAsset management activities associated with the HVDC fleets have the potential to impact

on both the environment and on the day-to-day lives of various stakeholders. Relationships

with landowners and communities are of great importance to us and we are committed to

using asset management approaches that protect the natural environment.

New Zealand Community Objectives for the HVDC Fleets

- No noise complaints from the public regarding the converter stations.

- No significant release of oil to the environment.

- SF6emissions as low as reasonably practical.

- Reduced corrosion impacts of the Bog Roy electrode on the neighbouring farm.

3

These targets only cover the performance of the converter stations, and exclude outages of the HVDCassets caused by faults in other fleets, such as faults in the transmission line conductors.


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- Effective relationships with landowners of the access routes to cable terminal andelectrode stations.

- Effective relationships with the fishing industry in relation to the CPZ.

3.5 Asset Management CapabilityWe aim to be recognised as a leading asset management company. To achieve this, we have

set out a number of maturity and capability related objectives. These objectives have been

grouped under a number of processes and disciplines that include:

Risk Management

Training and Competency

Asset Knowledge

Continual Improvement and Innovation.

The rest of this section discusses objectives in these areas relevant to the HVDC fleets.

3.5.1 Risk Management

Understanding and managing asset-related risk is essential to successful asset management.

We currently use asset criticality and asset health as proxies for a fully modelled asset risk

approach.

Asset criticality is a key element of many asset management systems. We are currently at an

early stage of developing and implementing the approach as we work towards formal and

consistent integration of asset criticality into the asset management framework.

Asset health has not yet been implemented for the HVDC fleets.

Risk Management Objectives for HVDC Fleets

- Up-to-date assessment of spares requirements and current availability.

- Reduced likelihood of a bi-pole fault.

- Development of criticality framework to differentiate HVDC assets.

3.5.2 Asset Knowledge

We are committed to ensuring that our asset knowledge standards are well defined to

ensure good asset management decisions. Relevant asset knowledge comes from a varietyof sources including experience from assets on the Grid and information from the

manufacturers. This asset knowledge must be captured and recorded in such a way that it

can be conveniently accessed.

Asset Knowledge Objectives for HVDC Fleets

- Comprehensive understanding and experience of Pole 3 assets recorded.

3.5.3 Training and Competency

We are committed to developing and retaining the right mix of talented, competent and

motivated staff to improve our asset management capability. This is particularly importantfor the HVDC fleet because of the specialised nature of the knowledge and work required.


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Training and Competency Objectives for HVDC Fleets

- Service providers suitably qualified for work on specialised HVDC assets.

3.5.4 Continual Improvement and Innovation

Continual improvement and innovation are important aspects of asset management. A large

source of continual improvement initiatives will be ongoing learning from our asset

management experience.

Continual Improvement and Innovation Objectives for the HVDC Fleets

- Development of understanding in regards to HVDC and dynamic and variable linerating.

- Improved long-term strategic planning approach to capital investment, such as thetiming for the fourth submarine cable.


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4 STRATEGIES

Chapter 4 sets out the specific strategies for the management of the HVDC fleet. These

strategies are designed to support the achievement of the objectives in chapter 3 and reflect

the characteristics, issues and risks identified in chapter 2.

The strategies are aligned with our lifecycle strategies below and the chapter has been

drafted to be read in conjunction with them.

Planning Lifecycle Strategy

Delivery Lifecycle Strategy

Operations Lifecycle Strategy

Maintenance Lifecycle Strategy

Disposal Lifecycle Strategy

This chapter also discusses personnel and service provider capability related strategies which

cover asset knowledge, training and competence.

Scope of Strategies

The strategies focus on expenditure that is planned to occur over the RCP2 period (2015

2020), but also include expenditure from 1 July 2013 to the start of the RCP2 period and

some expenditure after the RCP2 period (where relevant). Capex planned for the RCP2

period is covered by the strategies in sections 4.1 and 4.2, and opex is covered by the

strategies in sections 4.3 to 4.6. The majority of the capex consists of asset replacements,

which is described in subsection 4.1.2.

4.1 Planning

This section describes our strategies for the Planning lifecycle.

Planning activities

Planning activities are primarily concerned with identifying the need to make capital

investments in the asset fleet. The main types of investment considered for this fleet are

enhancement, development, replacement, and refurbishment works.

We support the planning activities through a number of processes, including:

Integrated Works Planning (IWP)

cost estimation.

The planning lifecycle strategies for the HVDC fleet are described in the subsections below.

Capital investment drivers

Categories of capital investment generally have specific drivers or triggers that are derived

from the state of the overall system or of individual assets. These drivers include demand

growth, compliance with Grid reliability standards and failure risk (indicated by asset

criticality and condition). Specific examples that drive capital investment in the HVDC asset

fleet include:


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asset replacement, driven by condition

increased capacity requirements, driven by demand for HVDC energy transfer

enhancement of existing assets, driven by safety and performance.

4.1.1 Enhancement and Development

This subsection describes enhancement and development investments for the HVDC fleet.

Enhancement and development investments in HVDC assets have been undertaken in

response to a number of drivers including supply and demand forecasts, and the need to

maintain appropriate levels of availability.

Supply and demand forecasts determine the required capacity and associatedinvestments for the inter-island link.

The need to maintain appropriate levels of availability sometimes involves newimproved equipment, while in other cases it involves auxiliary and maintenance

equipment to help support the reliability of the HVDC equipment.

The strategies below consider the long-term implications for these drivers as we extend our

planning horizon as part of our programme of asset management improvement.

Pole 3 Project

Continue the Pole 3 project, including stage 2 in 2013/14 and the investigation

of stage 3.

With the addition of Pole 3 in 2013, we have substantially increased the capacity of the

inter-island HVDC link to 1,000 W, although the link is still constrained by several factors,including voltage stability, capacity of existing submarine cables, and the overload capability

of Pole 2. Stage 2a major capex proposal (MCP)of the Pole 3 project involves replacing

existing Pole 2 control system (task completed), and improving voltage stability by adding

filter banks and a STATCOM, which will increase the HVDC capacity to 1,200 MW. Stage 2 is

due to be commissioned by 2014.

Stage 3 of the Pole 3 project is currently being considered as a potential MCP. This would

include at least one more submarine cable, a second STATCOM, and additional filter banks,

which would allow the HVDC link to operate at 1400 MW. Stage 3 is unlikely to begin before

the end of RCP3 as supply and demand forecasting suggest that current capacity is expected

to be sufficient until 2030. This is dependent on a number of factors, such as overall South

Island demand. Currently, the majority of generation projects being planned until 2020 arebased in the North Island, where the majority of demand growth is expected.4

One aspect outside the MCP is the upgrade of the RTDS with new processor cards during

RCP2, which is forecast to cost approximately $100,000.

4.1.2 Replacement and Refurbishment

Replacement is expenditure to replace substantially all of an asset. Refurbishment is

expenditure on an asset that creates a material extension to the end of life of the asset. It

does not improve its attributes. This is distinct from maintenance work, which is carried out

4

A list of all publicly known generation projects is maintained and provided by the Electricity Authority, available fromwww.ea.govt.nz/industry/monitoring/forecasting/long-term-generation-development/list-of-generation-projects/
http://c/Users/Public/Documents/Write%20client%20work/Transpower/00%20WORKED%20ON%20DOCUMENTS%20AND%20STYLE%20SHEETS/Fleet%20Strategies/www.ea.govt.nz/industry/monitoring/forecasting/long-term-generation-development/list-of-generation-projects/http://c/Users/Publi