RIT-T Project Assessment
TasNetworks has published the Project Assessment Conclusion Report (PACR) for addressing environmental, safety and reliability risks caused by age-related condition issues of the T1 network transformer at Sheffield Substation. Publication of this PACR represents the final step in the Regulatory Test for Transmission (RIT-T) process.
Sheffield Substation is a key part of the 220 kV backbone network in Tasmania that supplies the North West and West Coast planning areas. Sheffield Substation currently has two 220/110 kV network transformers, T1 and T2. T1 is rated at 150 MVA and was manufactured in 1967 and commissioned the following year, making it 58 years old. The T1 transformer is approaching its end-of-life (TasNetworks’ Asset Management Plan considers 60 years as the end of life for network transformers) and therefore faces a significantly higher risk of failure when compared to more recently commissioned transformers. Additionally, the T1 transformer has several design flaws that make it no longer compliant with TasNetworks current network transformer standard. The T2 transformer was manufactured in 1985, making it approximately 40 years old, and faces a substantially lower risk of failure.
Sheffield Substation currently supplies several other substations in North West Tasmania, specifically, Railton, Wesley Vale, Devonport, Sheffield and Ulverstone substations. It is also the location at which several hydro generators connect to the electricity network.
TasNetworks has identified an opportunity to increase market benefits by addressing reliability, financial, environmental and safety risks associated with the ageing T1 transformer at Sheffield Substation. If action is not taken, the condition of the T1 transformer will expose TasNetworks and our customers to increasing levels of risk going forward, as deterioration increases the likelihood of transformer failure.
The higher risk of failure associated with the T1 transformer means there is an increased risk of unplanned maintenance of this asset. In the event of a failure of T1, TasNetworks would be required to conduct emergency works, which would incur substantial resource and labour costs. The risk that there will need to be a reactive replacement of the transformer has also increased. Together, these result in a significant financial risk associated with T1.
In addition, failure of T1 also raises environmental risks through oil leaks and could have serious safety consequences for nearby residents and members of the public, as well as our field crew who may be working on or near the assets.
Furthermore, if both T1 and T2 fail then all the 110 kV substations supplied by Sheffield Substation will be impacted while TasNetworks conducts emergency works and installs a spare transformer, which is likely to take around seven days. There is therefore an increasing reliability risk associated with the ageing transformer, in addition to the risk costs discussed above.
Addressing the condition issues of the T1 transformer will enable us to manage reliability, financial, safety and environmental risks at Sheffield Substation. TasNetworks expects that addressing these issues will result in significant market benefits and, as such, we consider the identified need for this investment to be market benefits under the RIT-T.
Four credible options have been considered
We consider that there are four credible options from a technical, commercial, and project delivery perspective that can be implemented in sufficient time to meet the identified need. Each credible option involves replacement of the ageing T1 transformer. The options vary based on the location of the replacement transformer within the Sheffield Substation and the timing of investment. Specifically:
- Option 1a involves replacing the T1 transformer in its current location by financial year (FY) 2029;
- Option 1b involves replacing the T1 transformer in its current location by FY 2032;
- Option 2a involves installing a new transformer to replace T1 in a new location within the Sheffield Substation by FY 2030 (preferred option); and
- Option 2b involves installing a new transformer to replace T1 in a new location within the Sheffield Substation by FY 2032.
Scenario and sensitivity analysis was undertaken across a range of assumptions, and all options were still equally ranked for the majority of sensitivities. Notwithstanding the equal ranking, we consider Option 2a the preferred option because, in addition to having positive net market benefits it also has several key qualitative benefits supporting it over other options, including maintaining N-1 security during the construction period, lower risk of cascading failure, the temporary addition of a spare transformer for use in emergencies, and lower levels of uncertainty relating to capital costs.
With the assessment indicating that all four credible options are effectively equally ranked, TasNetworks considers that Option 2a is the preferred option, as it has several, additional qualitative benefits. Replacing the transformer at a new location within Sheffield Substation (i.e., Options 2a and 2b) are preferred over replacing the transformer in the same position within the substation (i.e., Option 1a and Option 1b) because:
- it avoids the need for a 75 day outage during construction, which would compromise N-1 security and increase the risk of curtailment of local generators;
- it will reduce the risk of cascading transformer failure at Sheffield Substation, because under Options 2a and 2b the new transformer will be located further away from the existing T2 transformer, whereas the existing T1 transformer is located adjacent to the existing T2 transformer; and
- the T1 transformer will remain at Sheffield Substation, allowing it to be used as a spare in the event of an emergency.
Further, replacing T1 sooner (i.e., Option 2a) is preferred over a later replacement (i.e., Option 2b), as a delay in replacement raises the possibility of:
- uncertain and varying lead times for the procurement of required assets;
- the potential for macroeconomic shocks to increase input costs; and
- future changes to specialised labour costs, above those due to inflation.
These cost pressures are not reflected in the NPV assessment, which has assumed no real costs escalation for the later option (Option 2b).
The PACR is published in TasNetworks website which can be accessed www.tasnetworks.com.au. Parties wishing to raise a dispute notice with the AER may do so prior to 18 May 2026.
In accordance with the requirements of the Rules, a summary of this PACR has been made available on the AEMO website.