Upgraded link tipped to cut prices

Equipment for the project is housed near Wellington. Photo / Supplied

The upgraded high-voltage interisland link put into service last night promises to allow for more competition to bring down wholesale prices.

The $672 million project, known as Pole 3, will make it easier to transfer power between the North and South islands.

It replaces 47-year-old equipment that was running at a restricted level after safety concerns forced its temporary shutdown in 2007.

Electricity Authority chief executive Carl Hansen said better interisland transfers would allow more generators to feed the market, and allow greater competition that should bring down wholesale prices.

The creaky grid has in the past proved a headache for NZX-listed Contact Energy because of its inability to transfer North Island power to the South Island when southern lake levels are low.

The project was hit by delays and national grid operator Transpower said it had not been easy.

"Building a new HVDC pole in the middle of an operating power system, and in one of the world's most extreme seismic zones, has been a huge challenge, said Transpower chief executive Patrick Strange.

It was the first time in the world such a major link had been built while still a part of the electricity system.

"Usually, these things are built on a greenfields site, tested, and then hooked into the power system. We didn't have that luxury,"

Pole 3 equipment includes state-of-the-art thyristor valves at either end of the interisland HVDC link that changes the voltage from alternating current to direct current - for more efficient transport over long distance - and back again.

The Pole 3 equipment is housed at Benmore in Otago and Haywards near Wellington.

Transpower's investment programme includes the $824 million North Island grid upgrade completed last year, and the $473 million north Auckland and Auckland upgrade project due to be completed later this year.