Transpower's HVDC Pole 3 project - the inter-island link - is expected to start testing in late January, a few weeks behind an earlier schedule, but it should still be ready by next winter.
The giant project was originally forecast to cost a maximum $673 million, but would come in "well below" that and more like $600m, according to Transpower chief executive Patrick Strange, despite an extension of the time the project would take.
About 15 months ago, Transpower first announced a big delay to the HVDC (high-voltage direct-current) project, pushing it back nine or 10 months, because of Siemens' struggles with software engineering in Germany. Since then there had been "small delays" to the schedule of a few more weeks.
"We are on track to get it fully commissioned before winter 2013," Strange said yesterday. Testing would start in earnest in late January.
"So it is full steam ahead; we are pretty busy," he said.
There would be hundreds of tests run on the national grid and about a third of those could be done "without disturbing the [electricity] market".
"But for some of the bigger tests, we will need to run 300 megawatts north and for that we will have to alter the market, so we will be contracting in the market to have generators support us to achieve that," he said.
There would also be some "very big tests" for 12 or 24 hours when the link would need to be run at 700MW or more, so they would need co-operation from generators to achieve that power flow, regardless of how much water was in the South Island hydro-power lakes.
Transpower has been talking to generators about that for nine months and they were all prepared for that, so did not expect the testing to see any spikes in prices.
The South Island lakes are pretty full at present, at 122 per cent of average, after being low in early winter. When complete, the Pole 3 project would not only lift the capacity to send power between the two islands, but when the upgrade of the control systems was finished in the coming year, it would mean huge savings in the longer term.
"It will put us well ahead of where we were; it will tie the islands together much more strongly, so we shouldn't see the price separation between the two islands that we have seen of late, at all," Strange said.
For example, yesterday wholesale prices in the South Island were extremely low, about $5 a megawatt-hour, compared with $88/MWh in Auckland.
The industry would also spend less cash providing reserve power, for the benefit of all.
Meanwhile, Strange said the Pole 3 project would be "state of the art" from Siemens, despite a recent technology breakthrough by rival supplier ABB.
The two companies are the dominant players in the field.
Swiss firm ABB said its breakthrough in technology to carry electricity over long distances made desert solar plants and ocean wind farms much more viable. Its new circuit breaker made it easier to send electricity through HVDC lines into the grids that linked power stations to consumers, the engineering company said.
But Strange said comparing the two technologies was "apples and oranges".
The ABB technology was "not appropriate for our DC link at the moment" though it would be of "great interest in future applications".