4. Transmission and distribution#

In TIMES-NZ, we model transmission and distribution through separate network processes. Transmission process represents all Transpower transmission assets, and the Distribution process represents all assets owned and operated by Electricity Distribution Businesses (EDBs). For each of these we include assumptions on existing capacity, associated losses, costs of new installed network capacity, and operating costs. TIMES-NZ operates on a 2-region model (North and South Islands), and the HVDC link is represented separately.

These assumptions are represented in Table 78.

Table 78 Transmission and distribution network assumptions#

Assumption

Transmission assets

Distribution assets

Existing capacity GW (North Island)

5

4.74

Existing capacity GW (South Island)

2.5

2.07

Investment cost ($m 2023 NZD/GW)

700

2,371.10

Fixed OM costs ($m 2023 NZD/GW/year)

108

296.2

Efficiency

98.50%

94.60%

4.1. Transmission#

The efficiency data and existing capacity are by assumption. Capacity represents an assumed maximum total load at any given moment, and efficiency represents losses on the grid. Fixed costs are based on CAPEX and OPEX costs from Transpower’s Regulatory Control Period 4 proposal[1], and include asset replacement.

High level investment costs have been provided by Transpower and are based on actual costing for a small number of recent grid backbone enhancement projects. However, there is considerable variation in transmission investment costs depending on the specifics of the network and the overlay of demand and generation. True investment costs may be significantly lower or higher, depending on the project. Note that HVDC costs and efficiency are excluded from the above, as these are represented separately.

4.2. Distribution#

Distribution capacity, cost, and efficiency data is taken from the Commerce Commission’s information Disclosure Requirements for EDBs[2]. Cost figures used are 2021-2023 averages, rebased to 2023 NZD. For some parameters required for the modelling, there are not clear real-world analogues, so some assumptions are made. These are described below.

Existing capacity in TIMES-NZ is defined as the maximum demand the network can handle at any given moment. The closest available analogue in the data is Maximum Coincident System Demand (MCSD), or the maximum load the system experienced. This figure was 6.81GW in 2023. We distribute this capacity figure across islands by EDB. True maximum possible demand is likely higher than this figure, as there is some slack in the system. However, by setting capacity equal to MCSD, the model will continually invest in expanding the network as peak demand grows.

Investment cost in TIMES-NZ is defined as the cost of increasing maximum possible load. For this figure we use the EDB’s capital expenditure on System Growth, averaged over 2021-2023 ($186m). The denominator is the increase in MCSD, also averaged over 2021-2023 (78MW).

Fixed OM costs in TIMES-NZ are defined as the cost of maintaining existing capacity. For this figure we use the are the remaining EDB expenditure on OPEX, and the sum of CAPEX components excluding system growth. The expenditure is then divided by the existing capacity assumption to estimate maintenance costs based on the size of the network.

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