Peter McIntyre: Legacy builder

TransGrid managing director and Grid Australia chairman Peter McIntyre talks to Energy Source & Distribution about the challenges of maintaining the New South Wales and NEM transmission network.

Centrally located within Eastern Australia’s National Electricity Market (NEM), New South Wales transmitter TransGrid plays a pivotal role in connecting and sharing load to the majority of Australia’s energy consumers. Having worked with the company and its predecessors for more than 25 years, managing director Peter McIntyre has watched his state’s network grow and evolve into a highly efficient, world-class system. The transmission company recently increased its operating profits by $18.5 million, delivered 16 new capital works projects, maintained reliability above 99.999 per cent and benchmarked as one of the top performers in the world in operations and maintenance performance. Despite so many accolades to his company’s name, Mr McIntyre is still driven to improve TransGrid further.

While highly connected, New South Wales’ major population centres have a huge demand for power, approximately 15000MW worth. On a peak load day almost a third of the NEM’s demand will hit between the Sydney, Newcastle and Wollongong area. Whether the state’s residents are heading to a worst-case peak load scenario or learning how to reduce their power consumption is yet to be seen.

“We are in a really interesting phase at the moment,” Mr McIntyre explained to Energy Source & Distribution.

“Certainly energy consumption has come off the last year or two [but] we are not yet seeing clearly a reduction in the peak demand. The rationale is that, of course, while we are seeing energy down we are still post-GFC. We are in a climate where we still have uncertainty of a potential GFC2 in Europe.”

While growing electricity bills and the global financial crisis have made New South Wales energy consumers more cautious with their energy usage, TransGrid may still be exposed to peak demand on the hottest and coldest days from domestic consumption, new building developments and commercial retail.

“It’s very unclear to date whether that’s the case. Certainly consumption is falling also because of recent price rises and announced rises, such as things like the carbon tax. That does make people more conscious of the need to conserve,” he said.

“But mapping the change to energy to the change to peak demand drives most network investment. We are still waiting to see the evidence for that to come through.”

Rather than take a gamble, TransGrid has instead ensured the state’s future power needs by completing the Western 500KV project. Featured in the Nov/Dec 2011 issue of Energy Source & Distribution, the massive 330kV to 500kV upgrade was delivered on time and under budget, ensuring the state’s network remain adaptive and flexible.

“We are very proud the project strengthened the core network around the Sydney, Newcastle, Wollongong area, which both leads in the longer [term] to both reliability of supply and for end consumers, but also facilitates connection generation and our capability to move that power from the generators into the major load areas more successfully,” the 51-year-old managing director said.

Halfway through its five-year $2.6 billion program, TransGrid has a number of projects underway, including the Western Sydney supply project. Worth more than half-a-billion and on-target for commissioning next year, the project involves the construction of new cables at 330KV and gas-insulated substations.

A significant challenge Australian transmitters face is cost-effectively connecting to remote sources of renewable generation. In recent years New South Wales has seen renewable enquiries in the order of 4500MW. While there has been significant interest around the large costs needed to connect remotely located renewables, Mr McIntyre believes New South Wales is well placed to handle renewable growth.

“Our major renewable currently is wind and luckily for this state, there are a number of sources of low-cost wind fairly close to the major existing transmission network. So proponents can connect in New South Wales fairly cost-effectively because there are sites where they are good wind resource in close proximity to the network,” he said.

Driven by the recent trend towards sophisticated computerised electronic devices, TransGrid is making efforts to develop its secondary systems. This has included installing a travelling-wave locating system to pinpoint faults on the transmission network accurately, typically to within half a kilometre, enabling very quick emergency response, control, and inspection when necessary.

“That’s all very sophisticated, computer-driven analysis software that identifies those faults very quickly,” he explains.

“The downside of having modern sophisticated technology is that the rate of change of technology is very fast, and those devices themselves are not designed for a very long life. A traditional control and protection equipment, you get 30-plus years out of it. Nowadays you may get 10. So that means we are having to get new ways to resolve changing and replacing our control buildings, our control equipment, our protection and monitoring equipment, and introduce having a modular control building.”

Even though transmission networks only make up around 8 per cent of an end-users electricity bill, Mr McIntyre strives to find ways to reduce that figure further.

“Looking forward as a company, we want to keep driving the efficiency of the company, where even though we are a small cost component to the end consumer, we are still an element of that cost. Therefore, we have to always deliver best value for the customers,” he said.

“As we connect new generators and new loads to our network, we want to continually strive to improve our customer focus and service to those major generators and loads that wish to connect to use. And I think those efficiency objectives and that customer focus are probably our major focus areas going forward.”

As chairman of national transmission association Grid Australia, Mr McIntyre looks at a broad range of industry issues, including safety, asset management, technical areas and regulatory structure and operation within the NEM.

“Grid Australia offers the opportunity for all the transmission owners in the NEM to speak with one voice around the things we think are most important,” Mr McIntyre said.

Transmission utilities must balance the efficiency of the NEM, reliability of supply and the cost of transmission, all of which contribute to their determination costs. The Australian Energy Regulator recently recommended a more balanced approach to capital and operating expenditure forecasts that would provide them more discretion when analysing those determinations. Provoking considerable interest within the energy industry, Mr McIntyre joins other energy executives in questioning the Australian Energy Regulators’ arguments.

“I believe the evidence of their decisions in recent years shows that they have in fact exercised their discretion and made their determinations, [which] they seem to say they can’t do,” Mr McIntyre said.

He believes that too much discretion has the capacity to harm investor confidence in New South Wales.

“Discretion is a double-edged sword. If not applied very judiciously it has the capacity to harm investment,” he said.

“What people should be aware of is that despite transmission companies being either government-owned or privately owned, the vast majority of capital inflow to Australia for major investments is overseas capital and it’s critically important that people are making investments in companies with 30, 40-year asset lives. They do expect stability of the regime; they expect reasonable stability of return that they get over time. Even if they are a high-return business, it does need to be a consistent, stable and predictable regulatory regime.”

Significant infrastructure activities affecting the NEM are currently underway. South Australia is looking to improve its interconnector with Victoria, while TransGrid is currently working with Queensland’s Powerlink to evaluate an upgrade of the Queensland-New South Wales interconnector. Those studies are expected to be published later this year. In February Grid Australia submitted evidence to the Australian Energy Market Commission (AEMC) that current transmission arrangements are working, but questioned the effectiveness of the unique arrangements in Victoria.

As an engineer working for an essential service underpinning modern society, Mr McIntyre considers his trade to be an “honest broker of truth”. His favourite quote is from Sydney Morning Herald columnist Elizabeth Farrelly, who expressed her admiration for engineers’ “commitment to truth”.

“If you look at transport, hospitals, the internet, things that people take for granted nowadays, basically they run off electricity. So having that at a first-world standard, efficient-price and an exceptional service standard is very important,” Mr McIntyre said.

“I think engineers that help deliver infrastructure and help manage efficiencies should be proud of what they leave us as a legacy for the community, and we are product of our engineering staff here that have that element of pride in their work.”