The case for change

Objectives and potential trade-offs

13. Our overall objective is to ensure low voltage networks continue to be operated safely and cost-effectively. In the future, achieving this will require managing trade-offs between 3 goals:

1. Reducing the curtailment of distributed energy resources (DER)

   Solar PV and EVs could make valuable contributions to the security of the electricity system, give households greater control over their energy bills, and play a significant role in helping reduce carbon emissions.

   However, unless there is additional investment to low voltage network infrastructure, the increasing generation from solar PV (and potentially demand from EVs) may need to be curtailed at times to keep voltages within the regulated ±6% range. This would cause opportunity-costs and disruption to owners of DER and may discourage other consumers considering investing in them. Ultimately reducing the resources available to generate electricity could harm the security and cost of the electricity system, while limiting the use of EVs would disrupt the Government’s plans to reduce transport emissions.

2. Mitigating costly upgrades to low voltage network infrastructure

   The curtailment of DER could be managed by altering network topography (re-designing low voltage networks) or installing additional equipment to manage fluctuations in voltage more dynamically. We have not sought to estimate the costs of such network upgrades, but they would exacerbate the upward cost pressures already anticipated from investments needed to enable electrification and to improve network resilience to extreme weather.

3. Maintaining the safety of low voltage networks

   Appliances are designed and optimised for a certain input voltage. NZ’s appliance standards have been aligned with international standards for many years, including the wider voltage ranges permitted in Australia and Europe. It is therefore likely that newer appliances sold in New Zealand are designed for a supply voltage of 230 Volts ±10%. It is also likely that older appliances can tolerate the upper end of this voltage range, if designed to operate at the higher nominal voltage of 240 Volts +6% that was historically used in parts of Australia (and still used in Western Australia).

   However, allowing higher or lower supply voltage could adversely affect the performance of some appliances or shorten their life. Through this discussion paper we are seeking evidence of the risks to appliances, so we can properly assess the cost and safety implications of the proposal on households and businesses.

14. If the regulated voltage range remains at ±6%, a greater amount of DER curtailment and/or network investment is likely to be required. However, if the voltage range can be expanded without materially risking the safety of the supply to homes and businesses, it may be possible to mitigate or delay those impacts. Gathering evidence on the safety risks of expanding the voltage range is therefore the focus of this discussion document.

DER will likely be curtailed with current voltage ranges

Voltage constraints are likely to impact solar PV generation

15. With current voltage ranges and infrastructure, it is likely that the increasing demands on low voltage networks will be managed by curtailing distributed generation.

16. The term ‘hosting capacity’ is sometimes used to describe the amount of generation, or the amount of additional peak demand, that can be accommodated in a low voltage network before remedial actions are needed. That remedial action may be required to avoid exceeded the permitted voltage range (voltage constraints) or avoid exceeding physical operating limitations (thermal constraints).

17. High levels of demand can result in electrical currents causing the temperature in parts of the network (usually the network transformer) to exceed their design rating. This is sometimes called meeting a thermal constraint, and preventative action is required to avoid asset damage (e.g. transformer fire). High levels of generation can also reach a thermal constraint, in principle. Most low voltage networks in New Zealand can host small additions of generation and demand but do not have enough hosting capacity to accommodate a high penetration of solar PV and EV charging.

18. For most low voltage networks in New Zealand, increasing rooftop solar generation is expected to be limited by voltage constraints. Some solar PV systems may already be affected by a voltage constraint that limits their output. Electricity distributors set performance requirements for connected generation to ensure they do not cause power quality (including voltage) to move outside the regulated requirements, which could adversely affect other network users. Distributors typically place restrictions on generation output, which reduces the value of the PV system to the owner and reduces the volume of energy available to the whole power system.

19. If regulated voltage limits can be safely increased, solar PV systems could deliver more value for their owners and more generation for the system as a whole. Distributors could adjust their operational requirements for distributed generation. This would increase the flexibility of networks, which might enable investment in network infrastructure to be delayed or not required at all. This would provide benefit for all consumers as system costs would be reduced.

Modelling the impact of voltage limits on solar PV utilisation

20. To inform this discussion paper, MBIE engaged consultants ANSA^[1] to model the impact on solar PV generation of increasing the regulated upper voltage limit from +6% to +10%. ANSA’s report, published alongside this paper on MBIE’s website, draws on modelling of a large number of individual low voltage networks operated by 3 of New Zealand’s electricity distribution networks (Aurora Energy, Orion and Wellington Electricity). This includes both the increase in PV hosting capacity (kW) of low voltage distribution networks, and the additional energy (kWh) that might be produced and/or exported across PV systems. ANSA extrapolated the results from the modelled low voltage networks to estimate impacts at a national level.

21. ANSA’s modelling suggests that at a national level raising the upper voltage limit from +6% to +10% could:

1. Triple hosting capacity for residential customers and double it for commercial customers, presuming 10% installed solar PV. The increases in hosting capacity diminishes as solar PV penetration rises, because the thermal limits of distribution transformers increasingly become the constraint.

2. Increase PV generation output by about 24% for commercial connections with 20% uptake and 3% for residential connections with 30% uptake. The combined increase is about 507 GWh more generation rising to 825 GWh if residential solar PV uptake rose to 50%. More information on the potential additional energy that could be generated is illustrated in figure 1.

3. Enable even more distributed power generation (1,406 GWh at 40% residential PV penetration), if households and distribution networks responded by installing larger solar PV installations (5 KW compared to the current average of 4 KW in capacity).

Figure 1 – Estimates of the additional energy that could be exported from solar PV if the upper voltage limit was expanded from +6% to +10%

Estimated additional energy exported

22. While the increase in energy exports is estimated by ANSA to be modest at low penetration levels, the additional PV hosting capacity (kW) provides several additional benefits when PV systems are paired with battery storage:

a. It enables PV systems with batteries to export at higher capacity at times when energy or network capacity is scarce, such as during peak demand. This could potentially help alleviate network voltage and loading constraints, as well as provide further benefit to battery system owners (‘value stacking’). However, there is a question over the impact this may have on voltage levels and overvoltage constraints at these times, and how battery exports should best be managed and controlled.

b. It also enables PV systems with batteries to export at higher capacities to provide more instantaneous reserves. This will again benefit owners of such systems through access to another source of revenue, and may lower the cost of reserves.

23. ANSA also notes that raising the upper voltage limit would avoid network expenditure to upgrade conductors to relieve voltage constraints. Over the many thousands of low voltage networks in New Zealand, this could amount to a substantial avoided investment.

Increasing load is more likely to be limited by thermal than voltage constraints

24. Electricity demand in low voltage networks typically conforms to predictable patterns on a daily, weekly, and seasonal basis. Demand is typically lower overnight, peaking in the morning and again in the evening, and is usually higher in winter than in summer.

25. Experts, including from ANSA, have indicated that networks will primarily be limited from supplying larger loads (for example from increased EV charging during peak demand) by thermal constraints, rather than undervoltage. As a result, we do not expect that decreasing the lower limit from -6% to -10% will have an impact on EV hosting capacity as it would be solar PV, similar to the modelling for the upper limit. We are however keen to hear any evidence to the contrary (see question 2).

26. This also implies that distributors will generally have limited incentives to raise voltage by changing network transformer taps as a measure to increase hosting capacity for EVs. The pattern of electricity demand influences how low voltage networks are designed (for example the number of consumers supplied from a single distribution transformer) which largely determines how voltage is managed within the regulated range. In general, with one-way power flows, voltage at the transformer is set closer to the regulated maximum (+6%) than the regulated minimum (-6%) so that the voltage at the point of supply furthest away, when demand is at its peak (typically around 6pm in winter), will be above the regulated minimum (-6%).

Figure 2 – Illustration of how voltage may vary along a network to keep supply within ±6%

Other options to manage voltage constraints are likely be costly

27. Voltage constraints on the use of distributed energy resources could be managed without expanding permitted voltage ranges by reconfiguring low voltage networks, installing additional equipment, or managing demand for electricity. However, as the table below summarises, these options are likely to be expensive, inconvenient, or ineffective. As the Government is keen to reduce costs and disruptions for electricity consumers these are not the focus of this discussion paper. However, we will still carefully consider any evidence provided to support alternatives to expanding the regulated voltage range (see question 8).

Many countries have safely expanded their voltage ranges

New Zealand's voltage range is now an outlier

28. Our voltage range of 230 V ± 6% is now an outlier compared to many international counterparts. Historically, different countries have adopted different standards for low voltage supply and for electrical appliances. For example, electricity is supplied in the US and Canada at nominal voltage of 110-120 Volts, and frequency of 60 Hertz. Electricity is supplied in the UK, Europe, India, Australia, and NZ at a nominal 230 Volts and frequency of 50 Hertz. As a result, appliances designed for the US and Canada, where the nominal mains supply is 110 or 120 Volts and frequency of 60 Hertz, cannot safely be used in countries with a nominal voltage of 220, 230, or 240 Volts and frequency of 50 Hertz.

29. Some countries have changed their regulated supply voltages over time. These changes have been carefully considered because some appliances may not operate safely or efficiently outside of their design range. For example, lights can flicker, and motor-based appliances can malfunction if operated below a minimum design voltage. Similarly, operating some appliances above their maximum design voltage can result in appliance damage or shorter lifespan.

30. In recent decades, there has been more harmonisation of supply voltage and appliance standards. This enables appliances sold in one country to be used safety and effectively in another country, expands global trade in electrical appliances, and generally reduces costs for consumers. In particular, the UK and most European countries have harmonised single-phase AC supply to 230 ±10%, which accommodates the previous ranges in those countries, including 220 ±6% and 240 ±6%. Australia (except Western Australia) has a single-phase nominal voltage of 230 with a range of +10% to -6%. We are not aware of any evidence that changing the voltage range in these countries resulted in noticeably more appliance failures.

New zealand’s appliance standards are already aligned with other countries

31. NZ’s appliance standards have been aligned with international standards, including design requirement for voltage ranges of 230 ± 10%, for many years.  A supply voltage range of ± 10% should safely be tolerated by all appliances in NZ that comply with regulated standards.

32. It is possible that some old appliances in NZ were designed for a narrower voltage range (e.g. ±6%) and these appliances could be adversely affected if operated outside their design range.  We consider this risk to be very small, but we are looking for any evidence in submissions about the number and type of such appliances if they exist (see questions 5 to 8).

33. Also, while many countries have harmonised on a supply voltage range of 230 Volts ±10%, Australia has not. Western Australia currently has 240 Volts ± 6%, while all other states and territories have 230 Volts with an upper voltage limit of +10% and a lower voltage limit of – 6%. This means a proposed range for NZ of ±10% would align with the upper limit in Australia but not the lower limit. Australia is a key trading partner and many electrical appliances sold in Australia are also available in NZ. This suggests we should think more carefully about adopting a lower limit of -10%. We welcome submissions about potential costs or risks if NZ were to adopt a regulated lower supply voltage limit of -10% while Australia’s lower limit is -6%.

Footnote

^[1] ANSA specialises in modelling and insights for the grid connection of electric vehicles, solar power, and other low carbon technologies.

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