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Transpower plans to spend $1.1 billion on upgrading the electricity link between the North and South Islands.

The state-owned power grid operator said it had applied to the Commerce Commission for approval to invest in the High Voltage Direct Current (HVDC) link.

The proposal included the replacement of three submarine electricity cables, the addition of a fourth cable to boost electricity transfer capacity, and new cable termination stations on either side of Cook Strait.

An application for additional related work expected to be carried out at the same time will be made separately when the scope of work and necessary investment is further refined, Transpower said.

Chief executive James Kilty said consultation on the cable replacement and the wider programme of HVDC renewal work had shown a high level of support for investing in the electricity link.

“The HVDC link is a key part of our electricity system and helps ensure Aotearoa’s power supply is reliable and stable,” he said.

Moving ahead with the project would support competition among electricity generators and would keep downward pressure on power prices.

“The HVDC link will have an increasing role in balancing out the more variable electricity generated by solar and wind farms by moving power from hydro generation, thermal back up plant, and batteries to communities and businesses across New Zealand when needed,” he said.

The HVDC link was first put into service in 1965, and the original undersea cables were replaced in 1991 with an expected life of 40 years.

Underwater surveys had shown the cables were beginning to deteriorate as expected, meaning they must be replaced by the early 2030s.

Transpower plans to seek approval in 2026 for a related piece of work to replace the highly specialised system that controls the electricity flow, and is also continuing to investigate options for removing the existing cables from the sea floor once the new ones are in place.

The company expected this work would be completed around the same time as the cable replacement, in the early 2030s.

Transpower said it did not anticipate an impact on electricity supply to consumers while the upgrades happen.

The $1.1b investment would be gradually recovered through Transpower transmission charges, beginning when the upgrades go into service in the early 2030s and spread over the expected 40-year life of the assets.

Transmission charges make up around 8% of consumers’ electricity bills.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.