South Australia’s electricity transmission specialist

Heywood interconnector

project – expanding the

availability of wind energy

Australian Wind Energy Conference

Rainer Korte

Executive Manager Asset Management

electranet.com.au

18 November 2013

Presentation outline

> What are the details of the Heywood Interconnector

upgrade project?

> What are the projected benefits of the project?

> Future outlook for additional interconnector capacity

> Future outlook for additional wind energy in South

Australia

Slide 2

South Australia’s electricity transmission specialist

Heywood Interconnector

Upgrade Project

electranet.com.au

Bungama

Baroota

Yadnarie

Pt Lincoln

TerminalSleaford

Mt Millar

WudinnaMiddleback

Ardrossan

West

Dalrymple

Wattle Pt

Kadina East

Hummocks

Whyalla Terminal

Cultana Stony

Pt

Playford Davenport

Neuroodla

Mt Gunson

Pimba

Woomera

Olympic Dam

West

Olympic Dam NthLeigh Ck Coalfield

Leigh Ck

South

MokotaRedhill

Clements

Gap

Brinkworth

Pt Pirie

Mintaro RobertstownNorth West Bend

Monash

Berri

Waterloo

Dorrien

Roseworthy

Para

Mannum

MobilongHappy Valley

Morphett Vale

East

Starfish Hill

Keith

Kincraig

Penola West

South East

Blanche

Snuggery

Mayurra

Lake Bonney

Wind Farm

Tailem Bend

SnowtownClare

Nth

Cherry

Gdns

Tungkillo

CanowieHallett PS

Mt Gambier

Back

Callington

Kanmantoo

Canunda

Belalie

Waterloo East

Templers West

South Australia to Victoria

(Heywood) Interconnector

SA to Victoria (Heywood) interconnector context

> Nominal power transfer capability of +/‐ 460 MW

> Power transfer from the south east to Adelaide region is via a 275 kV double circuit line and two underlying 132 kV transmission lines

> Historically has predominantly been used to import power into SA

> However, in recent years the interconnector has also increasingly been used to export wind power from SA

Bungama

Baroota

Yadnarie

Pt Lincoln

TerminalSleaford

Mt Millar

WudinnaMiddleback

Ardrossan

West

Dalrymple

Wattle Pt

Kadina East

Hummocks

Whyalla Terminal

Cultana Stony

Pt

Playford Davenport

Neuroodla

Mt Gunson

Pimba

Woomera

Olympic Dam

West

Olympic Dam NthLeigh Ck Coalfield

Leigh Ck

South

MokotaRedhill

Clements

Gap

Brinkworth

Pt Pirie

Mintaro RobertstownNorth West Bend

Monash

Berri

Waterloo

Dorrien

Roseworthy

Para

Mannum

MobilongHappy Valley

Morphett Vale

East

Starfish Hill

Keith

Kincraig

Penola West

South East

Blanche

Snuggery

Mayurra

Lake Bonney

Wind Farm

Tailem Bend

SnowtownClare

Nth

Cherry

Gdns

Tungkillo

CanowieHallett PS

Mt Gambier

Back

Callington

Kanmantoo

Canunda

Belalie

Waterloo East

Templers West

South Australia to Victoria

(Heywood) Interconnector

SA to Victoria (Heywood) interconnector context

> Flow in both directions has been increasingly constrained by:

– Low thermal capacity of one of the 132 kV lines; this line is also very old and requires significant maintenance

– Inadequate equipment ratings

– Voltage stability limitations in the South East region of SA

– Insufficient transformer capacity at Heywood substation in Victoria

Project drivers

> Increase the maximum available import and export

power transfer capability between South Australia and

Victoria to:

– Enable increased utilisation of wind resources and export

of wind energy from South Australia

– Enable increased imports of lower cost generation into

South Australia, particularly at times of peak demand

– Reduce high wholesale electricity prices at peak demand

times and low to negative prices under low demand, high

wind generation, high export conditions

– Facilitate further generator competition in the wholesale

electricity market

6

Project costs and benefits

7

> Regulatory investment test

(RIT-T) demonstrated net

market benefits of more than

$190m over 25 years

> Regulator (AER) has

reviewed and confirmed

outcomes of RIT-T process

> Project will increase capacity

by about 40% from nominal

460 MW to 650 MW (and

improve capacity utilisation)

> Additional capacity to be

commissioned by July 2016

> Estimated cost is $108m

($63m in SA) ($2011-12)

Market benefits largely arise from changes

in fuel consumption and changes in

generation investment costs

Project scope (SA components)

1. Install series capacitors on the

two Tailem Bend to South East

275 kV transmission lines, at a

new Black Range site

2. Implement a control scheme to

prevent overload of South East

transformers at times of high

wind energy export

3. Upgrade assets at substations

in the South East region to

allow utilisation of at least full

winter ratings along the 275 kV

interconnector and the

underlying 132 kV transmission

network

4. Decommission two 132 kV lines

that cause thermal limitations

on interconnector capacity 8

Note – Victorian component comprising installation of

a 3rd Heywood 500/275 kV transformer and 500 kV

bus tie is being progressed by AEMO

Project drivers

> Increase the maximum available import and export

power transfer capability between South Australia and

Victoria to:

– Enable increased utilisation of wind resources and export

of wind energy from South Australia

– Enable increased imports of lower cost generation into

South Australia, particularly at times of peak demand

– Reduce high wholesale electricity prices at peak demand

times and low to negative prices under low demand, high

wind generation, high export conditions

– Facilitate further generator competition in the wholesale

electricity market

9

Project options considered

10 Source: South Australia – Victoria (Heywood) Interconnector Upgrade, RIT-T Project

Assessment Conclusions Report, January 2013, p24

A range of options were considered, including a new much larger capacity

interconnector, demand management and a generator control scheme

Option Description Capital Costs

($m 2011-12)

Notional SA

to VIC limit

(MW)

Notional VIC

to SA limit

(MW)

1a 3rd Heywood transformer + 100 Mvar

capacitor + 132 kV works 78 550 550

1b 3rd Heywood transformer + series

compensation + 132 kV works 108 650 650

2a Option 1a + 3rd South East transformer 95 550 550

2b Option 1b + 3rd South East transformer 125 650 650

3 New Krongart – Heywood 500 kV

interconnector + 275 kV works 889 2,400 2,400

4 132 kV works + 100 Mvar capacitor 41 460 460

5 200 MW demand management +

Option 1b deferred by 2 years 233 650 650

6a Control schemes + 500 kV bus tie 22 550 460

6b Control schemes + Option 1b minus

3rd Heywood transformer 84 570/ 690 460

Business case (RIT-T) process

11

Economic business case for upgrade has been

proven through a long and exhaustive public process

Feasibility study (started early 2010 with

final report published in Feb 2011)

Formal RIT-T process

- PSCR consultation report Oct 2011

- PADR draft report Sep 2012

- PACR final report Jan 2013

AER review of RIT-T outcome under

NER 5.16.6 (Apr 2013 to Sep 2013)

Business case (RIT-T) process (cont.)

12

Identify

need for

investment

and

possible

options

Assess

submissions

and makes

adjustments

as necessary

Prepare

project

assessment

draft report

(PADR)

Prepare

project

specification

consultation

report

(PSCR)

Assess

submissions

and

determines

list of credible

options

Undertake

cost benefit

assessment

and

determines

preferred

option

Issue project

assessment

conclusions

report

(PACR)

AER

undertakes

dispute

process if

the outcome

is disputed

12 weeks for submissions

30 business days for submissions 30 business days to raise a dispute

RIT-T process could typically take 12 months or more assuming no

disputes (due to mandated minimum consultation timeframes)

Business case process observations

> The Heywood interconnector upgrade RIT-T process

has set a new benchmark in terms of:

– Comprehensive and rigorous analysis undertaken

– Transparency and extent of consultation with stakeholders

> Some stakeholders took advantage of the Rules 5.16.6

process that followed the RIT-T to re-prosecute issues

that had been raised and dealt with earlier

> Cost of RIT-T process was about $2-3 million

> ElectraNet will apply to the AER at the end of 2013 for

contingent project funding for the SA components of the

project

13

South Australia’s electricity transmission specialist

Future outlook for additional

interconnector capacity and

wind energy in SA

electranet.com.au

SA wind power connections 2001 to 2013

15

ElectraNet has

successfully

negotiated 20 grid

connections in a little

over 10 years

• 3 conventional

generators

• 3 loads

• 14 wind farms

Installed wind capacity

is about 1200 MW with

another 270 MW under

construction

(Snowtown Stage 2)

Generator/ load Connected

Hallet OCGT Power Station 2001

Amcor Bottling Plant load Roseworthy 2002

Cathedral Rocks Wind Farm 2005

Lake Bonney Wind Farm Stage 1 2005

Mount Millar Wind Farm 2005

Wattle Point Wind Farm 2005

Middleback load 2006

Brown Hill Range Wind Farm (Hallett 1) 2007

Snowtown Wind Farm Stage 1 2007

Hallett Hill Wind Farm (Hallett 2) 2008

Lake Bonney Wind Farm Stage 2 2008

Clements Gap Wind Farm 2009

Quarantine OCGT Power Station Expansion Stage 5

2009

Lake Bonney Wind Farm Stage 3 2010

North Brown Hill Wind Farm (Hallett 4) 2010

Port Lincoln OCGT Power Station No. 3 2010

Waterloo Wind Farm 2010

Kanmantoo Mine load 2011

The Bluff Wind Farm (Hallett 5) 2011

SA wind penetration metrics 2012-13

16

Source: AEMO South Australian Wind Study Report 2013

Metric Value for SA

Capacity penetration – installed capacity as a %

of total installed generation 27%

Energy penetration – ratio of annual wind

energy to annual total energy demand 25%

Maximum instantaneous penetration (excluding

exports) – maximum observed ratio of wind

energy to demand at any instant of time

88%

Maximum possible instantaneous penetration –

ratio of installed capacity to minimum demand 116%

These metrics will increase with the commissioning

of the Snowtown 2 wind farm in 2014

Wind power penetration (% energy)

17

Sources: AEMO South Australian Wind Study Report 2013

Wind in power, 2012 European statistics, February 2013

3

6.9

10.8

12.7

16.3

16.8

25

27.1

0 5 10 15 20 25 30

Australia

Romania

Germany

Ireland

Spain

Portugal

South Australia

Denmark

SA capacity for increased wind power

> Capacity for increased wind is a function of electricity

demand in SA and capability to export to major load

centres in eastern states

> Feasible wind farm connections can be maximised by

optimal siting of new wind farms

> Further capacity for increased wind power will result

from…

– increased demand (e.g. major mining loads)

– current and future initiatives to increase interconnector

capacity

– Economic large scale energy storage solutions (in the

future) Slide 18

Projected 2020 NEM wind generation

19

Source: AEMO Integrating Renewable Energy – Wind Integration Studies Report,

September 2013

Region Existing

wind (MW)

Projected new

wind (MW)

Total 2020

wind (MW)

2012 minimum

demand (MW)

Queensland 0 265 265 4,098

New South Wales 265 2,117 2,382 5,124

Victoria 864 4,090 4,974 3,780

South Australia 1,205 1,350 2,555 1,035

Tasmania 308 1,060 1,368 813

NEM 2,662 8,883 11,545 15,174

Commissioning of the Snowtown 2 wind farm in 2014

will add 270 MW to existing wind capacity in SA

SA energy generation by fuel type

Slide 20

Source: AEMO South Australian Historical Market Information Report 2013, 31 July 2013

0%

10%

20%

30%

40%

50%

60%

2008-09 2009-10 2010-11 2011-12 2012-13

Tech

no

logy

sh

are

Financial year

Coal Gas Wind Interconnectors Rooftop PV Other

• Gas share has historically been 45-50%

• Coal share is declining largely replaced

by wind

SA 2012-13 energy generation by fuel type

Slide 21

Source: AEMO South Australian Historical Market Information Report 2013, 31 July 2013

Gas is clearly significant to

the SA electricity market

Gas prices: historical and forecasts

22

Gas prices are forecast to double by

mid 2020s putting upward pressure

on wholesale electricity prices –

likely to impact on generation mix

Source: AEMO 2013 Planning Consultation Methodology and Input Assumptions, May 2013

Benefits of a larger interconnector

23 Source: South Australia – Victoria (Heywood) Interconnector Upgrade, RIT-T Project

Assessment Conclusions Report, January 2013, p98 (revised central scenario)

Benefits of a larger interconnector (cont.)

24 Source: South Australia – Victoria (Heywood) Interconnector Upgrade., RIT-T Project

Assessment Conclusions Report, January 2013

Chart demonstrates that the benefits of a larger

interconnector are positive in all scenarios considered.

Further interconnector development may be feasible.

$m

NPV

Additional interconnector capacity

> ElectraNet is investigating the feasibility of options to firm up and build on existing and post upgrade interconnector capacity

> Firm up existing capacity through low cost projects funded by early application of Network Capability Component of the AER Service Target Performance Incentive Scheme

– Uprate certain transmission lines

– Apply short-term line ratings

> Further options for incremental augmentation to the Heywood interconnector that could potentially provide 100 – 150 MW additional capacity)

Slide 25

Additional interconnector capacity

> Major new 500 kV interconnector option together with

associated intra-regional works (potentially providing

up to 2,000 MW additional capacity)

> Outcomes of high level investigation will be reported in

June 2014 Transmission Annual Planning Report to

the market

Slide 26

Concluding messages

> South Australia has capacity for more wind generation

connections to the transmission network

> Current Heywood interconnector upgrade (40% increase in

interconnector capacity) will improve this position

> Connecting parties encouraged to work with ElectraNet to

explore and develop win-win outcomes – engage early and

develop a partnership approach

> Understand the NEM environment and look for optimal

outcomes within this environment

> ElectraNet is investigating the feasibility of options to firm

up and build on existing and post upgrade interconnector

capacity

Slide 27

South Australia’s electricity transmission specialist

Heywood interconnector

project – expanding the

availability of wind energy

Australian Wind Energy Conference

Rainer Korte

Executive Manager Asset Management

electranet.com.au

18 November 2013