Planning Approach

Annual planning review

The NER requires that the annual planning review includes the planning for all assets and activities carried out by Endeavour Energy that would materially affect the performance of its network. This includes planning activities associated with the replacement and refurbishment of assets and negotiated services. The objective of the annual planning review is to identify possible future issues that could negatively affect the performance of the distribution network to enable DNSPs to plan for and adequately address such issues in an appropriate timeframe. This DAPR is the outcome of the annual planning review and summarises the findings of our planning review processes.

The DAPR provides an insight into the planning process as well as providing information to registered participants and interested parties regarding the nature and location of emerging constraints within Endeavour Energy’s sub-transmission and 22kV and 11kV distribution network. The timely identification and publication of emerging network constraints provides an opportunity for the market to identify potential nonnetwork solutions to those constraints and allows Endeavour Energy to develop and implement appropriate and timely solutions.

Network planning process

Endeavour Energy operates in accordance with the legislative and regulatory framework applicable to electricity DNSPs in NSW.

The network planning and development process for the distribution network is increasingly shaped by extensive customer and stakeholder engagement and is carried out in accordance with the NER Chapter 5, Network Connection Access, Planning and Expansion.

Endeavour Energy carries out network planning at both a strategic and a project level. Endeavour Energy’s investment governance process provides continuous review and ongoing assurance that the Company’s capital investment is both prudent and efficient as well as being consistent with the longer term strategic planning objectives.

Endeavour Energy’s planning process is designed to identify the most efficient ways of ensuring the network business meets customer needs and network performance obligations. Endeavour Energy places emphasis on the planning and project identification stage, assessing our customers’ short term and longer-term supply needs, and coordinating these with asset renewal requirements. We are then able to identify and select the optimal solution to meet those needs in a coordinated, risk-optimised way.

All credible options, including non-network alternatives, are considered in determining how to meet our network performance obligations and the objectives of the NEL. A robust selection process is implemented that explicitly trades off alternative expenditure options using quantified estimates of credible option costs and benefits to identify the optimum solution to address the identified need.

In accordance with NER obligations, network investment and non-network options are assessed impartially, using a consistent process for reviewing the costs of each option against the benefits they would deliver. Non-network solutions are evaluated for the extent to which they can facilitate the deferral of network investment or obviate it altogether. This allows various combinations of non-network solutions and deferred investment options to be assessed.

The first stage of the planning process involves gathering the data required to inform the investment process. This includes:

• recorded actual electricity demand
• the preparation of demand forecasts
• the examination of network capacity limits
• the assessment of asset condition and asset performance data
• the forecast of new customer connection requirements; and Ÿ The consideration of applicable statutory and regulatory obligations.

The capability of the network is assessed against key criteria which include:

• Meeting statutory and regulatory requirements relating to the safe operation of the network and to environmental impact;
• Addressing capacity constraints to achieve a level of supply security commensurate with reasonable customer expectations;
• Reliability performance against the reliability performance standards set out in the Licence Conditions;
• Asset condition; and
• Customer connection requirements.

When emerging network limitations are identified, a range of credible options are developed to address the need to ensure that supply security is maintained at a level appropriate to maintain reliability of supply. Options considered include both network and non-network solutions. The costs of these options are compared against the risk costs associated with the base case option of doing nothing.

A review including public consultation with interested stakeholders then selects the most economic option (or options). Each major investment is required to be consistent with Endeavour Energy’s longer-term network plans and network standards as well with the NEO.

This DAPR document forms part of public consultation and provides notification of the expected future network requirements. It also indicates the required timeframe to address these needs to allow for appropriate corrective network investment or non-network alternatives or modifications to connection facilities to be developed and undertaken. Providing visibility of network requirements prior to starting the RIT-D process allows for development of more mature non-network solutions.

Capital investment requirements in the distribution network are forecast in line with network needs and constraints across the network area.

The spatial demand forecast is a critical process which supports the planning and development of the forecast augmentation investment program. The forecasting process is carried out twice a year and is a critical input into the planning process to identify and understand the capacity needs of the network. The summer and winter loading conditions are analysed to provide understanding of the seasonal variations which are important for identifying optimal network solutions.

Losses are considered when comparing credible options. Endeavour Energy complies with RIT-D guidelines and assesses the cost of losses for each option where the losses are materially different between the options. An increase in network losses makes a negative contribution to the market benefits of a credible option, while a decrease in network losses makes a positive contribution.

Probabilistic planning approach

Endeavour Energy applies probabilistic planning techniques to assess supply security constraints. Deterministic (N-1) criteria are used only as a trigger for further investigation. The probabilistic planning approach includes:

• an assessment of the likelihood of failure of network elements
• an assessment of the consequence in the failure event. This includes expected outage duration and expected unserved energy. The unserved energy can be monetised by applying a Value of Customer Reliability (VCR).  Safety risks are also assessed and monetised by applying a value of statistical life (VSL)
• consideration of back-up capacity at other voltage levels (for example HV distribution feeder capacity when analysing zone substation contingencies)
• a sensitivity analysis for key parameters such as load growth, cost, rate of return and discount rate, and
• a determination of economic timing for network augmentation and renewal and the net present value of options based on demand forecasts and the economic benefits provided by each option.

For greenfield residential development, probabilistic techniques tend to result in a staged approach to provision of supply capacity including the use of distribution feeders, single transformers and temporary and mobile substations being adopted.

Planning and investing

Growth in Endeavour Energy’s network is being driven principally by new customer connections arising from greenfield development across our regions, but principally across Western Sydney and Greater Macarthur in Sydney’s north-west and south-west priority growth areas. Augmenting the network to provide for the growth in demand in these areas at the right time is important to ensure that development can proceed and that significant infrastructure investment by the State Government in water, roads and rail in greenfield areas are not left stranded.

Endeavour Energy evaluates staged options for network augmentation and/or extension in response to developer requests for supply. Further augmentation is undertaken when load growth projections are realised. In some cases, the minimum viable solution may involve a temporary mobile substation that can be moved on to the next greenfield development when its capacity has been outgrown. As the cost and capability of emerging technology solutions improve there is potentially a larger role to play for these technologies in the staged approach of network augmentation.  The staged approach to network augmentation provides more optionality for consideration of non-network solutions to meet network needs.

Endeavour Energy has plans in place to utilise mobile or temporary substations where appropriate. The ability to stage investment in infrastructure for growth depends on the rate of growth. In an area which is expected to see a rapid increase in new load (e.g. commercial and industrial subdivisions, or a large new town centre) a staged option may not be economically efficient. Conversely, an area with a lower projected rate of growth (low-density residential only), the onset of the risk of insufficient capacity can take longer thereby facilitating the exploration of lower-cost operational and non-network options to manage this risk.

In general Endeavour Energy identifies limitations in its network capability against an ‘N-1’ level of supply security at the sub-transmission and zone-substation level, however small or temporary substations (noted above) may operate in a ‘non-secure’ manner. This approach only serves to identify preferred future network development options should future limitations be unable to be mitigated through operational response (such as load transfer) or demand management initiatives.

The actual investment timing is confirmed through a probabilistic assessment of the network risk and the optimisation of the economic benefits of any proposed development.

Non-network strategies play a significant role in Endeavour Energy’s plans to service the growth in demand, especially in constrained supply areas. Demand management and non-network strategies have a higher likelihood of success in brownfield development locations compared with greenfield release areas due the potential to reduce load from the existing customer base.

Planning and investing for asset renewal

Endeavour Energy takes a risk-based approach to asset renewal planning that matches the investment in the network to the risks posed by individual assets or groups of assets approaching the end of their useful lives.

Risks to the safety of personnel and to the continuity of the electricity supply to our customers as a result of asset failures are quantified and decision is made to retire from service assets which present excessive risk. Assets proposed to be retired are assessed for the ongoing need for the service they provide.  Where that service is still required, an assessment is made as to whether that can be provided by a credible non-network solution or whether replacement of the asset is required.  Where asset replacement is required the optimum timing of the replacement of the asset is based on the balance between the annualised cost of replacement and the annualised cost of servicing the asset.

Furthermore, the risk to the operational management of the network arising from multiple asset failures occurring during a short period of time is factored into the assessment of whether particular classes of assets should be considered for replacement as they near their end of life or whether they are only replaced after they fail in service.

These considerations lead to an approach where an asset group that has non-catastrophic failure modes and an adequate level of network redundancy are more likely to be renewed in a reactive manner after failure. Other asset groups whose failure modes present safety or unacceptable supply security risks, or where the cost of reactive replacement significantly outweighs the cost of planned replacement, are renewed in a planned manner prior to their failure.

Further, some individual programs and projects within the asset renewal investment program are informed by advanced condition monitoring technology allowing for the targeted and efficient replacement of assets just prior to failure.  This technology and the transition to the risk-based economic assessment of the value of each of the elements of our renewal program is resulting in significant reductions in renewal expenditure compared to historic values whilst maintaining risk and performance outcomes.

Planning and investing for reliability

Endeavour Energy has adopted a Reliability Strategy of maintaining existing levels of reliability, and rectifying poor-performance outliers that have been identified as per Endeavour Energy’s Licence Conditions. Targeted investment leverages new technology such as distribution feeder automation schemes, where analysis shows that these can be are a cost-effective way of improving the Company’s response to faults meeting our customers' expectations for network reliability.

Recent changes to planned projects

Significant changes to planned projects compared to the previous DAPR are detailed in table below.