Appendix I: Waikato SOE Assets
Waikato Hydro System
Waikato SOE will own an eight station hydro cascade system on the Waikato River. It will also own and operate the Lake Taupo Control Gates, which regulate both the flows into the hydro system and also control Lake Taupo level over a 1.4 metre range. The hydro stations are of varying age, design, and capability. This presents a unique and ongoing optimisation problem, as the respective hydro lakes are invariably trending in different directions at any point in time, and flows from one station to the next are rarely the same. The location of the Taupo Gates and the hydro stations on the Waikato River are outlined in Figure 2.
The system has a total capacity of 1040 MW and produces 4400 GWh annually on average, as well as producing other related products such as frequency keeping reserve and reserve designed to cover system contingencies. The entire system (including all 39 individual generation units, auxiliary plant, civil structures including spill gates and the Taupo control gates, and flow and lake levels) is controlled on a 24 hour basis in the Waikato Hydro Control Centre situated in Hamilton.
The hydro system runs according to the results of a continuous half-hour auction, the New Zealand Electricity Market. Buyers and sellers bid and offer into this market continuously, and the market is cleared every half-hour. Generators are cued in price order, cheapest first, with the offer price of the last MW required to satisfy demand setting the marginal price. The marginal price is paid to everyone who is generating at that time. Offering tactics are designed to complement an overall trading strategy.
The hydro system is operated in block mode, and therefore it is treated as a single virtual generator by the market. This block consists of 39 individual generating units and, accordingly, the system has well diversified reliability risk.
The main operational attributes of the system are firstly flexibility and secondly its low operating cost.
The Waikato Hydro system is totally dependent on the use of public resources which have many competing and interdependent uses. Permitting the generation activities is a key and ongoing process. The Taupo Waikato resource consents renewal project has been formulated and work is underway. The overall objective of the project are to obtain resource consents that have 35 year authorisations for all the activities carried out in the Waikato Hydro system with reasoned and practical conditions which provide net commercial and environmental benefits. This will provide certainty for the company and the community as well as a considered platform for effective long term environmental management.
In addition to the Waikato Hydro system, which will form the core of the business, Waikato SOE will have the following production assets and projects:
Marsden A and B Power Stations
There are two power stations at the Marsden site: Marsden A commissioned in 1968 and Marsden B completed in 1979. After being completed, Marsden B immediately went into long term storage.
Recent decommissioning and demolition of Marsden A has seen the removal of oil storage tanks, boilers, turbines and chimneys. The only residual function for Marsden A power station is provision of voltage support to the high voltage transmission network. This is provided under contract to TransPower. A generator unit is run to smooth the fluctuations in the voltage and boost the power on up through the system to destinations north.
The contract between ECNZ and TransPower expires in September 1999. The future of Marsden depends on whether the contract is renewed. Rather than renew the contract, TransPower may install capacitor banks in the switchyard to provide voltage support.
The future value of Marsden lies in redevelopment opportunities. Clean coal technology is considered the most likely redevelopment option at this stage. Factors contributing to the importance of the site include:
- to Northland Port for access to fuels;
- infrastructure and easements (e.g. roads, transmission lines, switchyard, structures, level site);
- to seawater cooling; and
- close to centres of demand.
In addition, ECNZ owns land in the vicinity of the existing site, which could be used for fuel/ash storage and a transport corridor for future thermal generation.
Mokai Geothermal Project
Waikato SOE has the contract for the operation and maintenance of the 50 MW Mokai geothermal development, which is owned by the Tuaropaki Maori Trust. In addition, a hedge contract and a subordinated debt facility to facilitate development of the project has been entered into. Presently, the Mokai development is at a planning stage and construction has not begun.
Wayang Windu Geothermal Project, West Java, Indonesia
Waikato SOE is a minority shareholder in this project, which is owned by Mandala Nusantara Limited, and also is the operations and maintenance contractor to the project. The first stage (110 MW) is nearing completion. The geothermal resource has a development potential of at least 330 MW.
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