Capital expenditure workshop 26 October 2016 Disclaimer please - PowerPoint PPT Presentation

Capital expenditure workshop 26 October 2016

Disclaimer – please note that some sections of this presentation have been amended due to the presence of commercially sensitive material.

Agenda 1. Welcome and objectives Tony Meehan, EGM, Business Growth and Revenue, TransGrid 2. TransGrid’s forecasting approach Gerard Reiter, EGM, Asset Management, TransGrid 3. Powering Sydney’s Future Nalin Pahalawaththa, GM, Power System Analysis, TransGrid Lunch break 4. Sydney East Transformer Lance Wee, GM, Asset Strategy, TransGrid Break 6. Probabilistic investment forecasting Nalin Pahalawaththa, GM, Power System Analysis, TransGrid Close Tony Meehan, EGM, Business Growth and Revenue, TransGrid

Welcome and objectives > Inform you on TransGrid’s capital forecasting approach > Consult on Powering Sydney’s Future, Sydney East Transformer and understand your needs and views > Collaborate and discuss what you think we should consider when thinking of customers > Hear your thoughts on if we have our priorities right and if there anything missing What are you hoping to get out of today’s workshop? 4 / TransGrid Capital Expenditure Workshop

An overview of TransGrid’s capital forecasting approach Gerard Reiter, EGM, Asset Management, TransGrid

What is capital investment? Augmentation Replacement Market benefits Others New or upgraded Updating infrastructure which New or upgraded Non network infrastructure, infrastructure to cater for is wearing out infrastructure to expand including commercial growing demand generator access and property and IT systems competition All assets have a lifecycle – they are planned, built, operated, maintained and then renewed or replaced 6 / TransGrid Capital Expenditure Workshop

TransGrid’s Asset Management System Social licence NSW & ACT NSW government NER requirements transmission licences reliability standards Corporate Plan Asset management policy and strategies describe in detail how we manage assets ISO: 55001 asset management ˃ Service level The Network Monitoring of the asset Build agreements Acquire Operate Investment operation and ˃ Asset management Process manages maintenance committee governance projects from planning Asset determines renewal Plan structures to delivery Design needs Maintain ˃ Network performance monitoring Renew Replace ˃ Asset Management Reuse Dispose Program of Work Lifecycle of assets 7 / TransGrid Capital Expenditure Workshop

Our approach to CAPEX and OPEX 8 / TransGrid Capital Expenditure Workshop

Investment framework Ensuring calibration of risk tool 9 / TransGrid Capital Expenditure Workshop

What is reliability? Reliability generally refers to the extent to which customers have a continuous supply of electricity. 10 / TransGrid Capital Expenditure Workshop

NSW transmission reliability standards ˃ The NSW Government will set a new reliability standard to apply to TransGrid’s network from 1 July 2018 ˃ In late August 2016, IPART provided its recommendation to the NSW Minister for Industry, Resources and Energy ˃ There has been additional work required to develop a recommended standard for the Inner Sydney area ˃ IPART are consulting separately on the inner city and will provide the Minister with a recommendation in December 2016 11 / TransGrid Capital Expenditure Workshop

The importance of reliable transmission ˃ Affects a large geographical area ˃ Result in a significant commercial impact ˃ Safety could be compromised ˃ Lead to critical services not being available We are mindful of the cost to customers and consumers 12 / TransGrid Capital Expenditure Workshop

Discussion > What are your initial thoughts on our risk based approach? > What are your thoughts on the current reliability levels of the network?

Powering Sydney’s Future Nalin Pahalawaththa, GM, Power System Analysis, TransGrid

Powering Sydney’s Future ˃ PSF has been considered prior to the current regulatory period ˃ The condition or performance of cables were not confirmed ˃ The load growth had been expected to be moderate ˃ The proposal has been postponed until the next regulatory period ˃ PSF consultations highlighted that the consumers value reliability of supply to Sydney inner metro and CBD 15 / TransGrid Capital Expenditure Workshop

Background ˃ The Inner Sydney transmission system is defined as TransGrid’s 330kV cables 41 and 42, and the 330/132kV BSPS, together with Ausgrid’s 132kV transmission network that links those supply points. ˃ Total demand within the area amounts to about 1600MW. ˃ CBD area is mostly supplied from Haymarket BSP, and Ausgrid’s network provide supply redundancy. ˃ Total demand within the CBD area amounts to about 900MW. 16 / TransGrid Capital Expenditure Workshop

Transmission network - what are we looking at? Year Commissioned (oldest Feeder Age in 2016 (years) Feeder Route Length (km) Committed Retirement cable section) 41 1979 37 Derated to 426MVA 19.7 42 2004 12 27.5 92L/3 1970 46 10.8 2017/18 92M/1 1970 46 10.8 2017/18 91M/1 1973 43 19.5 2016/17 1966 50 11.9 Proposed 2018/19 – possible delay 928/3 929/1 1966 50 12 Proposed 2018/19 – possible delay 92X 1968 48 14.5 Proposed 2023 – following new cable 1968 48 14.5 Proposed 2023 – following new cable 92C 91X/2 1972 44 13 Proposed 2023 – following new cable 91Y/2 1972 44 13 Proposed 2023 – following new cable 90T/1 1981 35 3.8 Proposed 2023 – following new cable 9S2 1988 28 5.2 Proposed 2023 – following new cable 9SA 1973 43 5.7 Remediation Planned 92P 1973 43 5.5 Remediation Planned 17 / TransGrid Capital Expenditure Workshop

Need Environmental risks Reliability risks Ausgrid environmental risk costs have been reviewed by WolfPeak 18 / TransGrid Capital Expenditure Workshop

Cable Conditions – Ausgrid cables 2008 Rating 2015 rating Difference Circuit From To kV Amps Amps MVA 91M/1 Beaconsfield BSP Peakhurst STS 132 980 800 -41 91M/3 Beaconsfield BSP Bunnerong STSS 132 980 800 -41 92C St Peters Chullora STSS 132 595 455 -32 91B/1 Beaconsfield BSP St Peters 132 595 440 -35 92X St Peters Chullora STSS 132 595 455 -32 91X/1 Beaconsfield BSP Marrickville 132 595 435 -37 91X/2 Marrickville Chullora STSS 132 595 440 -35 91Y/1 Beaconsfield BSP Marrickville 132 595 435 -37 91Y/2 Marrickville Chullora STSS 132 595 440 -35 928/3 Lane Cove STSS Dalley St 132 650 530 -27 929/1 Lane Cove STSS Dalley St 132 585 530 -13 9SA Beaconsfield BSP Campbell St 132 1105 565 -123 9SB/1 Beaconsfield BSP Surry Hills Annex 132 1105 565 -123 90T/1 Green Square Haymarket BSP 132 1190 970 -50 9S2 Beaconsfield BSP Haymarket BSP 132 1230 985 -56 9SE Beaconsfield BSP Green Square 132 1190 995 -45 9S6/1 Haymarket BSP Pyrmont STS 132 1230 935 -67 9S9/1 Haymarket BSP Pyrmont STS 132 1230 1000 -53 19 / TransGrid Capital Expenditure Workshop

Network capacity and forecast load 2500 2000 1500 MW 1000 500 92L and 91M One new 92M 330kV retired at the cable to retire end of 0 2016 Cable 41 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 H-L range N-2 Modified Capacities hist raw hist POE50 Ausgrid 2016 POE50 H dev Ausgrid 2016 POE50 M dev Ausgrid 2016 POE50 L dev Ausgrid 2015 POE50 M dev BIS Shrapnel POE50 Forecast 20 / TransGrid Capital Expenditure Workshop

Methodology ˃ Cable failure frequency model – Crow-AMSAA model: statistical model that predicts how often a cable might fail ˃ Reliability model possible impacts based on failure consequences such as time, day, season, costs and previous outages 21 / TransGrid Capital Expenditure Workshop

Forecast unserved energy 900.00 800.00 700.00 600.00 N-5 EUE (MWh) 500.00 N-4 EUE (MWh) N-3 EUE (MWh) 400.00 N-2 EUE (MWh) 300.00 N-1 EUE (MWh) 200.00 100.00 0.00 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 2025/2026 2026/2027 Forecasts of unserved energy in Inner Sydney, 2017/18 to 2026/27 22 / TransGrid Capital Expenditure Workshop

Process Activity 2016 2017 2018 2019 2020 2021 2022 RIT-T process Project delivery (network solution) New IPART reliability standard need date Need date based on economic benefit Non-network solutions responses to assist managing risk of unserved energy until project delivered 23 / TransGrid Capital Expenditure Workshop

Potential non-network options Embedded generation Storage Curtailment of load Alternatives to network augmentation which address a potential shortage in electricity supply 24 / TransGrid Capital Expenditure Workshop

Potential non-network options Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Embedded generation Storage Curtailment of load Alternatives to network augmentation which address a potential shortage in electricity supply 25 / TransGrid Capital Expenditure Workshop