Transpower has begun discussions with interested parties on a multi-million-dollar demand-side initiative in the Upper North Island in New Zealand to help defer investment in new assets.

The project, to which approximately $10 million initial funding has been allocated, is part of the $110 million upper North Island Reactive Support program approved by the Electricity Commission last month to bring greater reliability in the region.

At a meeting for this week, Transpower set out its expectations for the initiative.

"This is a smart investment. We are looking for interruptible load we can reduce temporarily under severe conditions: particularly during very hot summer days in the region." said Transpower Chief Executive Patrick Strange. "Businesses will be paid to participate, and agree that their non-essential electricity usage can be reduced automatically under certain conditions."

The benefits to the grid are significant, and allow Transpower to defer investment in new assets. The initiative will also provide valuable headroom to meet demand during construction of existing infrastructure upgrades.

The project will provide funding for some of the intelligence the grid will progressively need to meet New Zealanders' electricity requirements in the future, leading to an environment where consumers will have greater control over domestic consumption.

"We had a limited trial of similar technology recently in the South Island, and it was very successful," said Strange. "The upper North Island project is a more advanced initiative; businesses which choose to participate can have their supply adjusted remotely, under agreed conditions. The key investment that we’re seeking to encourage through our funding is in the technology needed to undertake that remote control. It is not unlike remote hot water ripple control – but much smarter and involving much more load."

In addition to the demand-side project, the $110 million upper North Island Reactive Support program will include the installation of two Static Var Compensators, or STATCOMs, one each in Auckland and Northland. STATCOMs are electronics-based equipment that absorb (when transmission voltage is too high), or provide reactive support on a transmission network (when transmission voltage is too low).

The new STATCOMS are planned to be installed in Auckland and North Auckland in 2013 and 2014 respectively.