Vector Annual Report 2017

LEADERS Philosophy

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BOLDLY APPROACHING CHALLENGES

We won’t answer the issues of tomorrow by relying on industry models that just look to what’s been done before.

Attitudes continue to hold this industry back and therefore hold back the potential for consumers. For some time, our collective view as a board and management team has been that Vector has a responsibility to deliver all customers real choices and to make meaningful contributions towards decarbonising the economy. While some energy businesses are starting to recognise the need to shift thinking in the sector, others remain committed to protecting their legacy models. We believe that meeting the future needs of Auckland is not about continuing to invest in bigger traditional assets. integration. Distributed generation, customer- owned distributed energy resources, smarter distribution technology and advanced analytics give us access to new options and choices. The challenges of tomorrow lie in how we build revolutionary energy systems that are highly effective, faster, smaller, more economical and provide environmental and social benefits. Greater understanding To find those systems, we’ve gone looking for new convergences. Through our relationship with mPrest, for example, we’ve used learnings from defence systems to achieve new levels of synergy, machine learning and rapid and cumulative decision-making. Equally, We believe we have to reinvent ourselves as agents of change and facilitators of

Simon Mackenzie — GROUP CHIEF EXECUTIVE

Michael Stiassny — CHAIRMAN

with PowerSmart, we’ve identified that solar/battery microgrids already offer compelling economic and environmental benefits to remote communities and over time will increasingly disrupt traditional supply- demand economics across our industry. Much more nimble Feedback from our customers clearly underscores the need for us to move forward with flexibility and careful investment. Average household energy consumption is declining, as people renovate, building standards improve, we incorporate more energy efficient appliances and lighting into our homes and businesses, and responsive technology delivers new energy solutions. That’s why we’re investing in assets that can be moved around as required and are not sunk or tethered to one location. One example is a battery that can be deployed in one area to meet a period of need and then redeployed in another area as consumer usage rises or falls. These assets also provide a logical solution to the need for affordable, innovative infrastructure development to support Auckland’s growth. The Tesla Powerpack battery storage system we installed at the high voltage substation in Glen Innes has reduced peak demand by up to 13%. That in turn has enabled us to defer or avoid significant investment that would otherwise be required.

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