About Us | Contact Us | Subscribe | Visit transpower.co.nz

Asset Management Review

From Patrick Strange, Transpower's Chief Executive

Upon joining Transpower late in 2007, one of the first issues the managers and I identified was the increasing age of Transpower’s assets.

Much of the existing equipment was put in place in the last major transmission build in the 1960s and 1970s. It was built to accommodate years of load growth – and was initially lightly loaded as a result. Now, demand for electricity is continuing to increase and the equipment safety margins are getting smaller. It is also getting harder to service the equipment as it ages due to the increased challenge of finding appropriate times to take the equipment out of service, because of the increased loadings.

Age of assets is not, in itself, a major problem – 60 year old transformers in fair condition are not unknown.  But given the consequences of equipment failure, and the loss that communities suffer when power outages occur, an enhanced maintenance and monitoring scheme, complemented by a long-term replacement programme, is clearly required. Further, the need for procurement of carefully chosen strategic spares to react to an increasing rate of unexpected failures is clear.

The situation has been made more pressing by very low rates of reinvestment from 1990 until recent years. The expectation in the late 1990s was that there would be widespread uptake of emerging small scale generation technologies sited close to load.  Transpower’s management envisaged that the development of this technology would, over time, mean that the National Grid would become increasingly under-utilised.  As a consequence, it was perceived that minimal reinvestment should be undertaken in long life assets like towers or transformers, as they would only be needed for a finite period.  

However, this scenario did not develop. Instead the need for a more reliable and robust National Grid has become apparent. This would be true even with current levels of renewables but is especially so with the increasing focus on the development of renewable energy such as wind – which is often in remote areas a long way from where it is needed.

Transpower has moved from a long period of very low investment, over the last 20 years, to a concentrated period of high reinvestment in the transmission grid.  Between 1995/96 and 2004/05, capital expenditure on new build and asset renewal averaged around $100 million per year.  However, over the next decade Transpower expects to spend $3 to $5 billion to meet future electricity demand. 

The legacy of this period of low investment is evident through an ageing grid which now needs replacement.  The challenge, which is well understood by Transpower’s engineers, is to recover from this period of low investment and implement a progressive asset management programme to preserve the integrity of the National Grid.    

We need to challenge ourselves to adapt and develop our maintenance programme – and spares policy – to focus on getting the best out of our aging assets.

As part of our strategy to address this issue, we decided to test our views and practices by commissioning a comprehensive review by experienced international engineers. DuPont were selected due to their long term experience in sustainable infrastructure maintenance; track record of success; international reputation and technical expertise.

Their report is enclosed. There are, frankly, no surprises, although there are some thought-provoking suggestions on some of our practices which our engineers and contractors will be considering.

Some of their recommendations we already have in train. The new Grid Performance division, separated out in our recent reorganisation to give focus to this area, has already sought and gained approval for the procurement of strategic transformer spares.

We agree with all of the principal recommendations of the DuPont report. Our response will obviously include significant equipment renewal and refurbishment – our replacement capex has been extremely low until recently. But equally importantly, we need to increase our focus on our asset management, asset monitoring and maintenance approach and techniques. This will be a top priority for us, and one we see critical to achieving our ongoing purpose of maintaining and operating a reliable and secure National Grid. We will be working very closely with our contractors on this.

A detailed action plan has been put in place and includes: 

We will be keeping people updated as we progress on our near and long-term plans to meet this issue.