ELECTRICITY ASSET MANAGEMENT PLAN 2019-29
Electricity Asset Management Plan 2019-2029
4 Vector Limited://
TABLE OF CONTENTS
SECTION 1 INTRODUCTION
9
Executive summary
10 12 16 17
Mega trends: Our operating environment is changing
Putting customers at the centre
Harnessing the power of emerging technologies Planning our network in a sustainable way Embracing scenario modelling to 2050 Delivering for our customers with urgency A data driven approach to serving our customers
20 22 25 29 33 35 37 39 42 44 47 49 50 52 54 57 60 65 66 68 70 72 74 75 91 97 31 41 51 71
Talking to our customers
Greater understanding leads to better solutions
SECTION 2 CUSTOMERS, STAKEHOLDERS AND SERVICE LEVELS
2.1 Stakeholder requirements 2.2 Customer experience
2.3 Safety
2.4 Reliability 2.5 Resilience
2.6 Cyber security and privacy
SECTION 3 ASSET MANAGEMENT SYSTEM
3.1 Asset management values and objectives
3.2 Asset management scope
3.3 Asset management organisation and governance
3.4 Key documents
3.5 Asset management system 3.6 Asset investment process 3.7 Asset management improvement
3.8 Enabling the asset management system through information systems
3.9 Data information management 3.10 Cyber security and privacy
3.11 Sustainability
3.12 Emergency response and contigency plans
SECTION 4 OUR ASSETS
4.1 Our network management strategies
4.2 Subtransmission 4.3 Zone substations
4.4 Distribution feeders HV 4.5 Distribution feeders LV
105 112 116 126 132 134
4.6 Distribution ground mounted substations
4.7 Secondary systems
4.8 Communications networks
4.9 Overview of our digital network assets
Electricity Asset Management Plan 2019-2029
5 Vector Limited://
SECTION 5 MANAGING OUR ASSETS LIFECYCLE
139 141 172 214 226 231 232 233 234 234 241 242 245 249 252 259 262 266 267 269 272 273 274 282 283
5.1 Network development
5.2 Operate, maintain, renew and replace
5.3 Non-network assets
5.4 Other information system, process and data investments
SECTION 6 DELIVERING OUR PLAN
6.1 Prioritising our works portfolio
6.2 Our resource requirements and constraints
6.3 Delivering our projects
6.4 Investment plan
SECTION 7 APPENDICES
Appendix 1 Glossary of terms
Appendix 2 Key Asset Strategies and Standards
Appendix 3 Typical Load Profiles
Appendix 4 AMP Information Disclosure Compliance Appendix 5 Significant Changes from 2018 AMP Appendix 6 Forecast Capital Expenditure (Schedule 11a) Appendix 7 Forecast Operational Expenditure (Schedule 11b)
Appendix 8 Asset Condition (Schedule 12a) Appendix 9 Forecast Capacity (Schedule 12b)
Appendix 10 Forecast Network Demand (Schedule 12c) Appendix 11 Forecast Interruptions and Duration (Schedule 12d) Appendix 12 Asset Management Maturity (Schedule 13)
Appendix 13 Mandatory Explanatory Notes on Forecast Information (Schedule 14a)
Appendix 14 Certificate for Year Beginning Disclosures
Electricity Asset Management Plan 2019-2029
6 Vector Limited://
LIST OF FIGURES
Figure 1-1 Global Risk Outlook for 2019 from the World Economic Forum
12 13
Figure 1-2 Key macro-economic external trends shaping Vector’s operating environment
Figure 1-3 Vector’s alignment with UN Sustainable Development Goals
20 22 24 26 30 30 32 34 37 52 55 58 60 64 64 67 69 70 85 86 88 89 90 92 93 94 96 96 99 101 103 106 106 107 107 109 110
Figure 1-4 Scenarios defined
Figure 1-5 Main drivers of scenarios
Figure 1-6 FY18 customer performance snapshot Figure 1-7 Customer Insights 1 – Home ownership Figure 1-8 Customer Insights 2 – Electric vehicle ownership
Figure 1-9 Example of customer persona ‘Gladys’
Figure 1-10 Residential and SME preferences for contacting Vector to report outages
Figure 2-1 Primary Stakeholders
Figure 3-1 Asset management governance structure
Figure 3-2 Document hierarchy
Figure 3-3 Asset management system Figure 3-4 Asset investment process Figure 3-5 Vector’s risk profiling structure
Figure 3-6 Vector’s enterprise risk management process Figure 3-7 Information Systems Lifecycle Management framework Figure 3-8 Data Management Associations body of knowledge Figure 4-1 Data and Analytics Strategy Figure 4-2 Logical Architecture Breakdown Figure 4-3 Networks Digital Reference Model Figure 4-4 Domain mapping for network streams Figure 4-5 Vector’s electricity supply region Figure 4-6 Age profile for 110 kV subtransmission cables Figure 4-7 Age profile for 33 kV and 22 kV subtransmission cables by voltage Figure 4-8 Age profile for 33 kV and 22 kV subtransmission cables by type Figure 4-11 Age profile for power transformers Figure 4-12 Age Profile for Primary Switchgear Figure 4-13 Age Profile for Capacitor Banks Figure 4-14 Age Profile for Conductors Figure 4-15 Distribution lines fault rates Figure 4-16 Asset Health at Year 0 - OH MV Conductor Figure 4-17 Asset Health at Year 10 - OH MV Conductor Figure 4-18 Age Profile for Poles (excludes 110 kV poles) Figure 4-19 Age Profile for 11 kV and 22 kV HV cables by Voltage Figure 4-20 Age Profile for 22 and 11 kV Distribution Cables by Type Figure 4-21 Fault rate for 11 kV Distribution Cables Figure 4-22 Age Profile for Solar Panel/Battery installations Figure 4-23 Age Profile for Battery Only Installations Figure 4-24 Age Profile for Distribution Ground Mounted Substations Figure 4-25 Age Profile for Distribution Ground Mounted Switchgear Auckland Figure 4-26 Age Profile for Distribution Ground Mounted Switchgear Northern Figure 4-27 Asset Health at Year 0 - Distribution Ground Mounted Switchgear Figure 3-9 Data and Information Management model Figure 4-9 Age profile for 33 and 22 kV overhead conductors Figure 4-10 Age profile for 33 and 22 kV overhead poles
111 111
114 114 116 117 118 118
Electricity Asset Management Plan 2019-2029
7
Vector Limited://
Figure 4-28 Asset Health at Year 10 - Distribution Ground Mounted Switchgear Figure 4-29 Age Profile for 11 kV Distribution Ground Mounted Transformers - Auckland Figure 4-30 Age Profile for 11 kV Distribution Ground Mounted Transformers - Northern Figure 4-31 Age Profile for 22 kV Distribution Ground Mounted Transformers - Auckland Figure 4-32 Asset Health at Year 0 - Distribution Ground Mounted Transformers Figure 4-33 Asset Health at Year 10 - Distribution Ground Mounted Transformers Figure 4-34 Age Profile for Distribution Pole Mount Transformers – Auckland Figure 4-35 Age Profile for Distribution Pole Mount Transformers – Northern Figure 4-36 Asset Health at Year 0 - Distribution Pole Mounted Transformers Figure 4-37 Asset Health at Year 10 - Distribution Pole Mounted Transformers
119
120
121 121
122 122 123 124 124 125 127 129 130 134 135 142 190 197 200 202 202 222 236 238 249 250
Figure 4-38 Age Profile for Protection Relays
Figure 4-39 Age Profile for PQM Figure 4-40 Age Profile for RTUs
Figure 4-41 Network asset information systems mapping
Figure 4-42 Levels of Sophistications in the Network Operations stream Figure 5-1 Geographic areas as basis of Needs statements Figure 5-2 Health index at year 10 with intervention Figure 5-3 11 kV underground cable population with poor asset health Figure 5-4 Asset health at year 10 for intervention programme Figure 5-5 Asset health at year 10 for intervention programme Figure 5-6 Asset health at year 10 for intervention programme
Figure 5-7 IEC61968 reference architecture – utilised as the basis for Vector reference architecture
Figure 6-1 CAPEX AMP movement 2018 v 2019 by year Figure 6-2 OPEX AMP movement 2018 v 2019 by year Figure 7-1 Typical residential daily demand profile Figure 7-1 Typical commercial daily demand profile
Figure 7-1 Typical CBD daily demand profile
251
Electricity Asset Management Plan 2019-2029
8 Vector Limited://
LIST OF TABLES
Table 1-1 Customer interactions
31
Table 2-1 Examples of the broad range of stakeholder requirements
38 39 39 40
Table 2-2 Customer Effort Means Score Table 2-3 Speed of quotes for new connections
Table 2-4 Call Centre Grade of Service
Table 2-5 TRIFR
41 41
Table 2-6 Asset Safety Incidents
Table 2-7 SAIFI
42 43 44 45 46 47 55 56 67 73 92 95 95 97 98 51 91 91
Table 2-8 Customer interruptions performance
Table 2-9 Security of supply breaches forecast, should no investment be made
Table 2-10 SoSS Table 2-11 SAIDI
Table 2-12 Incident levels for cyber security Table 3-1 Asset category relationships Table 3-2 Major asset management policies
Table 3-3 Major asset standards
Table 3-4 Overview of primary information systems
Table 3-5 Overview of emergency response and contingency plans
Table 4-1 Key statistics for RY18
Table 4-2 Key statistics for 110 kV subtransmission network Table 4-3 Key statistics for 33 kV and 22 kV subtransmission network Table 4-4 Key statistics for 110 kV subtransmission network Table 4-5 Key statistics for 33 kV and 22 kV OH subtransmission network
Table 4-6 Key statistics for bulk and zone substations Table 4-7 Key statistics for power transformers Table 4-8 Key statistics for CBs for Primary Switchgear Table 4-9 Key statistics for Battery Energy Storage Systems
100 102 104 105 108 110 112 113 113 115 116 117 120 123 126 128 128 129 131 163 173 235 236 238 239
Table 4-10 Key statistics for Load Control plant Table 4-11 Key statistics for HV OH conductors
Table 4-12 Key statistics for Poles
Table 4-13 Key statistics for HV underground distribution cables Table 4-14 Key statistics for the LV OH Distribution Network Table 4-15 Key statistics for LV Underground Cable Network
Table 4-16 Key statistics for Solar/Battery installations and standalone Battery Installations
Table 4-17 Key statistics for EV chargers
Table 4-18 Key statistics for Distribution Ground Mounted Substations Table 4-19 Key statistics for Distribution Ground Mounted Switchgear Table 4-20 Key statistics for Distribution Ground Mounted Transformers Table 4-21 Key statistics for Distribution Pole Mounted Transformers
Table 4-22 Key statistics for Protection Relays
Table 4-23 Key statistics for Transformer Management Systems
Table 4-24 Key statistics for PQM Table 4-25 Key statistics for RTUs Table 4-26 Key statistics for DC Systems
Table 5-1 Key differences between the Symphony and Pop scenarios
Table 5-2 Routine and corrective maintenance and inspections expenditure allocation
Table 6-1 2019 forecast CAPEX
Table 6-2 2018/2019 CAPEX variance
Table 6-3 2019 forecast OPEX
Table 6-4 2018/2019 OPEX variance
Electricity Asset Management Plan 2019-2029
9
Vector Limited://
INTRODUCTION SECTION 01.
Electricity Asset Management Plan 2019-2029
10 Vector Limited://
While planning to meet the growing and changing expectations of our customers, we have a responsibility to enable Auckland growth and manage any associated constraints. To put this growth into context, in the past five years we have seen the number of subdivisions built in Auckland increase from 84 to 205. Last year, it was reported that 40,000 vehicles were added to Auckland roads over a 12 month period 1 . Further to this, we have a responsibility to align with central and local Government objectives regarding housing and transport. Other considerations include uptake of new technology and the electrification of transport. We also have a responsibility to prepare the network for the impacts of our changing climate. There are various reports, including one we ourselves commissioned from Ernst & Young, that signal greater volatility of weather is coming. We must consider this long-term impact – as an example, we have included a project in this AMP to relocate a low-lying sub-station to higher ground. In summary, preparing the network for the long-term interest of customers is an art not a science. The plan must balance all our responsibilities and challenges. We can choose to bury our head in the sand and ignore the opportunities that lie in front of us, or we can embrace them, take steps to innovate sensibly and with purpose, and invest efficiently so our customers can have confidence for the future and know we are meeting their expectations of today. Vector does not favour building a network that leverages high capital intensity based on historic paradigms. Instead we favour innovation that balances the long-term best interests of consumers whilst earning our shareholders a commercially appropriate return.
EXECUTIVE SUMMARY
Vector’s 2019 – 2029 Asset Management Plan (AMP) sets out what we believe constitutes a leading asset management plan for the long-term interests of Auckland’s energy consumers. For the avoidance of doubt, Vector’s view is that the long-term interests of Auckland’s energy consumers cannot be served by a traditional view of what a network is and needs to deliver. • customer engagement; multiple channels including direct engagement and community groups • customer insights; garnered from analytics applied across various data sources, including socio- economic trends • extensive engagement with leading international energy technology providers; to inform how we can leverage new technologies to deliver for our customers and overcome the myriad challenges in our operating environment • electricity network quality guidelines from other jurisdictions; to better understand how other providers are defining and measuring quality standards according to their customers’ needs • observations from Customised Price Plan (CPP) verifier reports from New Zealand Above all, this engagement and research confirmed there is a rising expectation from our customers that energy should perform like any other modern-day service. It needs to be readily available, provide choice and seamlessly adapt to an individual’s personal needs and preferences. Importantly, for affordability, we must bring down the overall cost of energy solutions and avoid burdening future generations with costs for infrastructure that may no longer be required. To expand this view, we look through the lens of our customers and consider multiple inputs, these include:
1. https://www.newshub.co.nz/home/new-zealand/2018/02/why-auckland-s-traffic-just-keeps-getting-worse.html
Electricity Asset Management Plan 2019-2029
11
Vector Limited://
PURPOSE OF THE AMP The 2019-2029 Asset Management Plan updates our 2018 plan for the period 1 April 2019 to 31 March 2029. We note that at time of publishing our 2018-28 AMP, we clearly identified that it would not be the appropriate plan to inform the default price-quality path (DPP) reset in 2020. As noted in the 2018 AMP, we have expanded the scenario modelling that underpins our asset management and investment plans, and the load and expenditure forecast in this AMP is more robust because of that modelling. For that reason, we confirm that this 2019 AMP is better suited to providing the load and expenditure forecasts required by the Commerce Commission to use for the setting of Vector’s price path from 1 April 2020. • Section 2 Customers, Stakeholders and Service Levels • Section 3 Asset Management System • Section 4 Our Assets • Section 5 Managing our Assets Lifecycle • Section 6 Delivering our Plan As a requirement of the Deed Recording Essential Operating Requirements (DREOR) held with Entrust, we are required to provide a report from an independent expert to advise on the state of the network. 2 In addition, there have also been other external reviews of the network and its asset management practices relating to specific events, such as the April 2018 storm and the Commerce Commission investigation into quality breaches. All findings and recommendations from such reviews are carefully considered and adopted into the asset management policies and practices where it is deemed appropriate. The expenditure associated with these programmes and projects has been included in this AMP. This AMP document has the following structure beyond this Executive Summary:
“THE PACE OF CHANGE HAS NEVER BEEN THIS FAST, YET IT WILL NEVER BE THIS SLOW AGAIN.” JUSTIN TRUDEAU
Vector engaged the services of WSP to review the robustness and compliance of this document.
This AMP was certified by Directors on 21 March 2019.
2. https://www.entrustnz.co.nz/resource-library/network-security-reports/
Electricity Asset Management Plan 2019-2029
12 Vector Limited://
MEGA TRENDS: OUR OPERATING ENVIRONMENT IS CHANGING There are powerful forces shaping the energy sector, both here in New Zealand and around the globe. Enveloped in continuous change, planning long-term network investments is more challenging than ever before. Auckland is changing under the forces of urbanisation. More than a third of New Zealanders now call Auckland home. It produces 38% of the country’s gross domestic product 3 and also happens to be one of the fastest growing cities globally. We’re seeing an increase in customer density in the older parts of the network and new demand for electricity at the fringes. Once sparsely populated rural areas are becoming increasingly popular areas to live in as a lifestyle choice. There is an insatiable appetite for new housing, which will almost certainly continue over the next decade, as will associated growth in infrastructure building, such as the City Rail Link. Auckland’s growth is unprecedented and it is putting pressure on our network at almost every turn, so managing the dynamic demands of this will continue to be a key responsibility for Vector.
In the coming decade, the energy system as we know it will be impacted further as the energy and transport sectors converge, advances in network and digital technologies continue at pace, and as we seek to decarbonise our economy. Already our customers expect more personalisation, choice and participation when it comes to their energy needs, and they expect us to innovate and adapt quickly to meet their expectations. New technologies are having a monumental impact on customer preferences and our network, and it will continue to play a key role in delivering for our customers. There are also the undeniable impacts of climate change making network resilience and sustainability more of an imperative in everything we do. As we plan, we must mitigate and adapt to the physical impacts of climate change as well as the economic impacts associated with decarbonising the economy. These and other macro trends will continue to influence and disrupt our operating environment over the time- frame of this AMP. In this section, we consider the key trends in detail. We assess their implications for our network and outline our intention to respond with the best possible mix of strategies and plans.
Last year Vector added 11,135 new properties to its power-line network, a 22 per cent increase compared with the previous year, and the biggest leap in growth in Vector’s history.
THE GLOBAL RISK OUTLOOK FOR 2019
Types of Risks:
Environmental
Geopolitical
Societal
Technological
Economic
TOP 5 GLOBAL RISKS IN TERMS OF IMPACT
TOP 5 GLOBAL RISKS IN TERMS OF LIKELIHOOD
1
1
Weapons of mass destruction
Extreme weather events
2 Failure of climate-change mitigation and adaption 3 Extreme weather events 4 Water crises 5 Natural disasters
2 Failure of climate-change mitigation and adaption 3 Natural disasters 4 Data fraud or theft 5 Cyber-attacks
Figure 1-1 Global Risk Outlook for 2019 from the World Economic Forum. Interestingly, this risk outlook aligns with the key trends creating the most impact for us, our network and our customers
3. https://www.aucklandnz.com/business-and-investment/economy-and-sectors
Electricity Asset Management Plan 2019-2029
13 Vector Limited://
EXTERNAL TRENDS
VECTOR’S OPERATING ENVIRONMENT
1 Shifting customer base, preferences and expectations 2 Climate change adaptation 3 Changing geopolitical and regulatory landscape
Auckland Growth
ENVIRONMENTAL (market/customer)
Energy Consumption
Safety Always, Because Lives Matter
4 Rising income and wealth disparity 5 Auckland affordability 6 Increasing skilled labour shortage
Cost of Operating in the Auckland Region
SOCIETAL
New and Emerging Technologies
7 Rapidly evolving technology and digitalisation 8 Dynamic cyber threat landscape 9 Rise of Artificial Intelligence 10 Hyper-transparency and speed of social media
Changing Customer Needs
TECHNOLOGICAL
Sustainability
Labour Market Dynamics
Regulatory Compliance – Price/Quality
Figure 1-2 Key macro-economic external trends shaping Vector’s operating environment
AUCKLAND GROWTH Auckland’s population is expected to grow by the size of Tauranga city every three years 4 . Auckland Council estimates the city will have two million residents by 2028, which is a five-year average annual growth rate of more than 20 per cent. Because the city is set to swell, investments in civil infrastructure projects will need to grow too, by more than 30 per cent just over the next five years. Vector’s core focus is to balance our complex regulatory, operating and customer expectations in a time of unprecedented growth and other challenges such as affordability. As Auckland continues to grow, it is essential that we continue to evolve our network infrastructure, operations and investment strategies to reduce the impact of network outages for customers. INFRASTRUCTURE DEVELOPMENTS Whether a development project is as significant as the Light Rail Project, or as small as a suburban sub- division, Vector must understand its impact on the network and ensure customers remain connected to a reliable, affordable and resilient supply of electricity. Right now, new ICP (installation control point) connections, as well as projects to relocate existing network assets to accommodate growth, are at an all-time high. This presents a mix of challenges and opportunities for New Zealand’s fastest growing city. Vector is embracing a broader range of network extension and augmentation technologies that will enable us to grow the network to meet the needs of customers. Beyond traditional
solutions, like poles, wires and substations, new network options like microgrids and battery systems can, in some cases, deliver a more resilient electricity service for customers without the need to invest in traditional assets, that typically have longer lives and could burden future generations if they are no longer needed. While traditional physical assets will form the backbone of our network for decades to come, we will continue to look at how alternative options can – and should – be used to build a network that is in the long-term interests of Aucklanders. CONSUMPTION TRENDS Energy consumption rates across Auckland’s 1.4 million residents is trending down on average, while overall network peak is increasing, as the number of connections continues to grow. Since 2005, the average level of energy used per residential connection has declined by about one per cent every year however since 2012 network peak has grown by seven per cent. Vector must invest in its network to ensure a reliable supply during the peaks in demand. We are incentivised to manage or ‘cap’ them as best we can. It is unclear where Auckland’s consumption trends will head next but it is expected that this trend will flatten or reverse as EVs become more commonplace. Whatever happens, in today’s world there is no excuse for not making data driven decisions in response to such trends. Therefore, Vector is boosting its ability to better
4. http://archive.stats.govt.nz/browse_for_stats/population/census_ counts/2013CensusUsuallyResidentPopulationCounts_HOTP2013Census.aspx And, Auckland Plan 2050, updated June 2018.
Electricity Asset Management Plan 2019-2029
14 Vector Limited://
understand customer behaviour and track demand trends with greater precision. Our investment in data collection and analytics technology is central to developing this understanding. Real evidence about our customers will help inform our decision making – reducing the risk of over-investing or under-investing in different areas of Auckland.
CASE STUDY URBAN FOREST INITIATIVE The Vector Urban Forest is an initiative from Vector to plant two native trees for every one tree we remove to protect Auckland’s power lines. The new planting takes place in areas where local ecological restoration schemes are already underway. Aucklanders love their trees but unfortunately there is a real lack of awareness of the issues they can cause to network resiliency if they are not maintained or planted with consideration to power line proximity. Managing tree risk is especially important given the extensive network damage that occurs during storms and other high wind events. Our climate modelling projects a significant increase in the number of hours with sustained wind speed in excess of 70km/h – the point where damage to the power network is historically high. A further complicating factor for Vector and the other EDBs is the existing tree management regulations which limit our ability to trim or remove problem trees. As we continue to work with government to revise tree management regulations, the Urban Forest Initiative is an example of the action we are taking now to raise awareness of the issue. Each year the Urban Forest Initiative aims to plant at least 20,000 new seedlings to make up for the approximately 10,000 trees we remove from near the electricity network. The trees we remove are first identified as a risk by an expert and removed with permission from the landowner. The Urban Forest also plays a key role in educating the public about the importance of proper tree management and what their responsibilities are as a tree owner. We’ve also published a planting guide on our website that shows what trees and plants are safe to plant near power lines.
CAUSE OF ENERGY USE DECLINE IN AUCKLAND • Socio-economic factors, such as affordability and environmental concerns
• A region-wide shift towards medium and high-density living
• Technology – improved building practices and standards, greater building energy efficiencies, a higher penetration of dwelling insulation and better equipment efficiencies • The increasing prevalence of ‘energy efficient’ appliances in homes (such as heat pumps and LED (Light-Emitting Diode) lights • New and emerging technologies such as solar panels and storage batteries
VEGETATION MANAGEMENT Vegetation encroaching and falling on power lines is one of the main causes of power outages in Auckland. A recent survey of Electricity Network Association (ENA) members found that 60 to 70 percent of outages during storms were caused by trees. The challenge for network companies is that under the Electricity (Hazards from Trees) Regulations 2003, vegetation can only be trimmed in a limited zone, essentially where it is almost directly against power lines – the ‘growth limit zone’. This hinders network companies’ ability to adequately protect the electricity network during adverse weather events, where trees damage power lines from outside of the growth limit zone. Even after a tree is trimmed, the problem persists. While a newly-pruned tree might be physically separated by up to 1.5m from a line, the tree might tower many metres directly above a line, meaning branches can fall across lines, shorting them out or bringing them down.
Electricity Asset Management Plan 2019-2029
15 Vector Limited://
RIGHT-OF-WAY POLES The ownership structure, maintenance responsibilities and regulation governing right-of-way pole management is a growing concern for Vector. Like service lines, the lines and poles that connect properties located down right-of- ways are technically the responsibility of customers. There is low awareness of this however, and as a result many of the cables, lines and poles have reached end of life or are not being properly maintained. This leads to a poor service experience for some and is also a health and safety risk if the assets are not maintained. It is also driving cost into Vector’s business as customers rely on us to deploy field services crews to diagnose problems with their electricity supply. Vector is of the view that the regulations governing right-of-way assets need review to provide better planning certainty for our customers, field crews and Vector in the long term. As this is a nationwide issue affecting every electricity lines company, we will continue to work with the ENA to call for a review of the regulation governing right-of-way poles. To date, the ENA has raised these concerns directly with the MBIE, and is awaiting guidance on how appropriate amendments to the current regulations can be made. THE WAY FORWARD FOR AUCKLAND Auckland City is expansive. People’s homes and businesses are spread far and wide. We have a high- density CBD, along with harbours, islands, mountain ranges, and isolated peninsulas, and we live and work in all these places. There are significant costs associated with continuing to build a traditional network to keep up with demand. Putting the interests of our customers first, we are turning to new, affordable and cost-deferring technology options to grow our network as efficiently as we can. If we do not innovate in how we design, plan and adjust for Auckland’s growth, especially when we consider the rapid pace of disruption, then we run a real risk of increasing the stranded asset risk. This could also potentially result in a large traditional asset base paid for by future generations, that may not be required.
Some trees are also very fast growing and may require two trims in a season, which is both costly and inefficient. Fast-growing trees also tend to be less resilient to high winds and therefore pose a greater risk. Unfortunately, risk is not considered under the tree regulations, only distance. The first ‘trim’ of vegetation inside the growth limit zone is funded by Electricity Distribution Businesses (EDBs), and then all further tree trimming should be paid for by the tree owner. Often, tree owners do not complete the tree trimming they are legally required to do due to cost. Under current regulations we are limited in our ability to reduce the negative impact vegetation can have on our network. We rely on tree-owners, including private landowners and Council, to ensure that they are aware of their obligations under the tree regulations, and are aware of at-risk vegetation near power lines. Vector is investing in education and awareness efforts to encourage tree-owners to remove at-risk vegetation (such as fast-growing trees) and replacing them with more suitable vegetation. The advantage to the tree owner is that they will avoid the risk of having to pay for subsequent trims in future years, or any damage to the network caused by the tree. As effective tree management is a nationwide issue affecting every electricity lines company, we will continue to work with the ENA to call for a review of the regulations governing vegetation management. To date, the ENA has raised these concerns directly with the Ministry of Business Innovation and Employment (MBIE), and is awaiting guidance on how appropriate amendments to the current regulations can be made to improve outcomes for consumers. AUCKLAND TRAFFIC Auckland’s growth is impacting how long it takes for Vector’s field crews to reach power outages across the city, which adds to the length of time that customers can be without power. Commonly-used arterial roads and routes in Auckland are now increasingly affected by traffic congestion, and this is affecting outage response times. Vector is investigating alternative measures to overcome traffic congestion, including increasing the number of equipment depots across the city and basing crews at these locations during peak traffic periods. In the future, it may be possible for scoping work to be carried out using drones.
Electricity Asset Management Plan 2019-2029
16 Vector Limited://
LISTENING TO OUR CUSTOMERS Vector has responded to these demand imperatives by developing a deeper understanding of customers’ changing needs, preferences and expectations. We have carried out market research, and employed smart analytics methods, across a wide range of data sources (for example, the census, council and transport data). This gives us greater customer insights. GREATER ACCESS TO SMART METER DATA We are also seeking greater access to our customers’ smart-meter data, so we can better integrate the low-voltage network into our overall view of the service our customers are experiencing. Right now, a significant challenge is that many distribution companies do not have ready access to smart meter data. This impedes the ability of networks to adequately respond to outages as they cannot ‘see’ faults at the household level. As a collective industry, it is clear there needs to be better sharing of secure information to deliver improved customer service and enable efficient investment. THE CASE FOR SHARED RESILIENCE Over the past year Vector has promoted more informed discussion on the different ways to deliver network resilience. Shared resilience solutions offer more control, security and choice for consumers – but are not necessarily grounded in traditional or centralised network investments. Vector will continue to do its part to ensure a reliable supply of energy for our customers by maintaining and reinforcing our assets where this is needed. But we also need to play a role in enabling customers to take more control by using the energy options becoming available to them. These options include solar and battery systems, and other forms of grid-edge distributed energy resources (DERs). These consumer-centric solutions give households and businesses greater control. They take less time to realise a financial return too, which can avoid burdening future generations with the costs of investing in traditional network assets that could become stranded. They also guarantee that consumers benefit directly from their ‘resilience’ investments, and provide extra benefits such as off-setting energy costs. Customers are increasingly willing to take control of their energy and this will change the way the energy market operates. We will continue to grow our understanding of how we prepare our network to actively facilitate this control.
PUTTING CUSTOMERS AT THE CENTRE
The way customers use energy is changing. Our homes and businesses are becoming more energy efficient, but at the same time, our lives are becoming more electricity dependent. This, coupled with Auckland growth, is increasing demand for electricity and the criticality of electricity will further increase with the electrification of transport. We can no longer assume the preferences of our customers fall along traditional demographic lines, such as urban and rural, residential and business, or a household of one versus a family of ten. Instead, it is becoming increasingly important to define specific customer archetypes and back this up with evidence. This level of detail is essential for planning and preparing our total customer experience. In recent years, digital service providers have launched services like streaming and ride-sharing that have taken the world by storm. Unshackled from the constraints of physical infrastructure, these companies have raised the service-level bar by providing intuitive, relevant and mostly friction-free experiences to their customers. Their services almost always come at a competitive price too. This shift has conditioned customers to expect a similar exemplary level of service at every turn, and will happen in electricity as well 5 . With the technology that is now available, Vector wants to go as far as it can in meeting its customer expectations.
Read more about our approach to customer service in ‘Delivering for our customers with urgency’, page 24.
5. Shell’s intent to become the world’s largest power company also serves to highlight the disruption in service provision and customer satisfaction coming to the electricity industry. ‘Shell aims to become world’s largest electricity company’; ft.com
Electricity Asset Management Plan 2019-2029
17 Vector Limited://
spent and towards an increasing number of lower voltage networks that will support customer technology adoption and enablement through integration with the network. We are also monitoring the use of hydrogen and fuel cells as potential new technology options our customers may adopt. There is a broad range of possible applications as it could be utilised for commercial vehicles or even for peak load management using our gas network. ENERGY STORAGE Advances in energy storage, in particular how much energy batteries can store, will mean that mass energy storage could soon become cheaper to purchase, build and manage. Like solar panels, lithium-ion storage batteries are becoming more common in homes and businesses. As the cost of solar and lithium-ion battery technology trends down, there will be a tipping point for mass market adoption. However, we don’t know when this will occur. This creates uncertainty when planning for investment in the network. At the industrial level, electrification linked with thermal storage, metal-air and battery alternatives like supercapacitors are emerging. This proliferation of energy storage options could also change the way power flows through electricity networks. If managed and integrated with the network, these storage options could lead to less demand for electricity from homes and businesses, which would result in less strain on the network, along with other economic and operational benefits. Such storage options would provide people with the capability to store excess energy generated from solar panels. ENERGY UTILISATION AND MANAGEMENT Energy utilisation and management technologies are also advancing. There is a growing array of electrical devices and equipment that are much more energy-efficient. LED lighting, heat pumps, refrigeration and energy efficient air-handling systems are reducing the energy needs of our factories, offices and homes. Internet and cloud-based software, which control and manage how energy is used and co-ordinated across different sites, is also helping create ‘smart’ buildings and infrastructure. As these smart technologies evolve, even smarter developments like machine learning and artificial intelligence, which are now at the early leading-edge stage, will allow these energy technologies to dynamically adapt and optimise. For Vector’s network, the potential of these technologies is huge. We are continuing to invest in them to understand how they can help us manage, control and utilise our network to meet Auckland’s growing demand for energy.
HARNESSING THE POWER OF EMERGING TECHNOLOGIES
Vector’s core focus is on ensuring our distribution network provides an affordable and high-quality service for Aucklanders, and is an enabler not a hindrance to the new energy future. While traditional network assets will form the backbone of the network for many decades to come, new network technologies are fast becoming an essential part of the mix. DISTRIBUTED RENEWABLE ENERGY GENERATION Foremost in this energy revolution is the emergence of technologies that can renew or generate their own electricity, such as solar panels. These technologies are trickling down from an industrial level (solar energy farms) to become directly available to people and businesses (solar panels installed in the home, for example). As technology innovation continues and prices drop, solar is becoming more available and affordable. Solar panels will have an increasing influence on our electrical system. Until now, the energy generation/retail model has been based on customers getting their power from a central location and then paying for this in a standardised way. Solar panels are changing this. They will let households and businesses become energy ‘prosumers’ (producer / consumers), and, through channels such as peer-to-peer trading, allow solar energy to be shared within ‘energy communities’ on their own terms. These solar households will be able to generate their own clean electricity on-site and convert any surplus into revenue by trading locally. These changing power flows undermine the unidirectional flow that our current networks were designed for. As a result, we anticipate investment in electricity distribution networks will shift away from where it has traditionally been
Electricity Asset Management Plan 2019-2029
18 Vector Limited://
THE ELECTRIFICATION OF TRANSPORT Electric vehicles (EVs) are growing in popularity, not just globally but also in Auckland. They will continue to do so as the purchase cost of an electric car declines over the next decade. Vector has trialled a number of 50 kilowatt (kW) rapid EV chargers across the city to cater to the region’s growing fleet of EVs and to build understanding of how charging technology interacts and impacts on the electricity network. This has highlighted a wider, future challenge - as EV use increases, it will only be a matter of time before charging these cars puts pressure on Auckland’s electricity network to supply the demand. A greater penetration of EVs charging at peak times using residential feeders could lead to a need for more infrastructure to meet this peak demand. A standard dwelling tends to operate at an after diversity maximum demand of 2.5kW. If a 50kW rapid charger was installed into an average home, it is comparable to adding another 20 dwellings to the feeder circuit. A proliferation of chargers (even a typical home AC charger which is closer to 7 kW) could lead to challenges around peak demand if not managed. Vector’s investment in software management systems will help reduce the impact residential EV chargers have on peak demand. If we have access to data to enhance visibility and understanding of each customer’s behaviour, it provides the opportunity to incentivise behaviour to better manage demand peaks. For example, we can offer a financial incentive to customers who opt to charge their EV in the middle of the night by choosing that option themselves or giving us permission to do it on their behalf. Vector has also explored the potential of Vehicle to Grid (V2G) and Vehicle to Home (V2H) chargers. EVs take power from the grid to charge the car’s battery. A V2G system can reverse the process by putting power back into the grid from the battery. This has the potential to transform EVs into mobile power sources for homes and businesses (for example, an EV with a 30kWh battery capacity could supply the average household load for 12 hours before fully discharging.) This new rechargeable energy source could be used to supplement imported electricity to buildings, and be a cheaper power source during times of peak consumption. It could also be a way to supply homes during power outages – and to release energy back to the grid to support the network during times of high energy demand. Vector is committed to understanding more about these emerging technologies, and facilitate their uptake to benefit our customers by putting more control into their hands.
PROGRESSING THE JOURNEY TOWARDS CUSTOMER CENTRICITY THROUGH DATA ANALYTICS We are continuing our journey to meet our customers’ needs in a safe, reliable and affordable way. A key aspect of this journey is enabling the network to facilitate and integrate the new energy management technologies our customers are adopting in such a way that the overall cost of managing the network is reduced. At the same time, this approach can improve overall resilience, the customer experience and the way we communicate and update our customers. We are transforming our systems to deal with new data from multiple sources, allow faster processing of data and minimise manual intervention, while improving our ability to collaborate with external parties such as Civil Defence. These systems consider activity across network operations, network integration, data and customer experience. Given the impact of severe weather events on the network and the community, we have asked our customers to tell us what is important to them when it comes to their service experience during outages. This feedback has enabled us to redesign our customer facing tools and systems to ensure they are fit for purpose. Our customers tell us that accurate and up to date communications during power outages is very important. They expect us to provide network information that is relevant to them – and they want the message delivered through their preferred communications channel. Vector is delivering on this by investing in a totally new web based outage application, which provides customers information and updates of outages affecting them irrespective of where they live in Auckland. Through the new online portal, customers can set up their own notification preferences. This gives Vector the necessary permissions to provide customers with notifications to keep them up to date with planned and unplanned outages. This new online outage app replaces Vector’s previous outage app - which could not cope with the unprecedented surge in customers trying to contact us after the extreme storm of April 2018. The outage app has been built to a standard that enables Vector to seamlessly scale our customer communications in the event of a major storm. CASE STUDY COMMUNICATING WITH CUSTOMERS DURING OUTAGES
Electricity Asset Management Plan 2019-2029
19 Vector Limited://
CASE STUDY MANAGED INTEGRATION Technological disruption in the electricity sector is advancing every year. Customer-owned distributed energy resources (DERs) are changing the way energy is transferred across the network. In response to this, there is a pressing need to manage the impact of these changes to enable Vector to continue to provide a service that is affordable and fair to all customers. Traditionally, energy has always moved in one direction: from large power stations through to the transmission network, then to the distribution network, before terminating at an end-point in appliances and devices. When you add solar panels and battery storage into the mix, energy can also flow back the other way. It is important that Vector has visibility of the customer owned DERs on the network, and that we understand the impact they have on bi-directional power flows. Without this visibility, there is a risk DERs could lead to significant network investment, cause unplanned interruptions for customers as well as creating a safety risk for line mechanics due to the bi-directional power flows. The benefits of this visibility go far beyond network resilience and reliability. As well as enabling customer choice, managing dynamic power flows can reduce the load on physical assets during peak times. This enables Vector to defer capital investment. Vector has invested in a system known as the ‘Vector DERMS Platform’. The acronym DERMS stands for distributed energy resource management system . There will be increased use of non-traditional technologies and designs which will enable greater visibility, control, resiliency and access to the distribution network. The network of the future will no longer consist of proprietary components and legacy protocols and will become far more accessible, open and have a less definitive boundary. All of these factors increase the attack surface and significantly increase the risk of unauthorised access and disruptive cyber-attacks. We expect the transition to this new type of network to continue at pace. To adequately manage the increasing cyber risk from targeted attacks on critical infrastructure, Vector needs to continually assess the threat landscape to ensure the network is appropriately protected and CYBER SECURITY Increased customer demand and expectation in relation to the capabilities of the network coupled with the need to adequately address the macro trends impacting the Auckland region, require a different approach to network design.
Co-developed with software firm mPrest, the Vector DERMS Platform allows us to securely connect DERs and manage them in conjunction with our customers by ensuring alignment with network requirements while also providing direct benefits to customers. This system that we are co-developing will challenge the traditional mindset that has seen EDBs grow their networks to accommodate greater peaks. It helps Vector defer network reinforcements costs and reduces the risk of stranded assets at a time when industry disruption is almost certain by utilising DERs to their full extent. In the long term, this kind of system has the potential to actively facilitate customer choice. For example, if a customer has a full storage battery at their home or business and doesn’t need to use its energy, the Vector DERMS Platform could allow the person to share this excess energy with a neighbour, or even sell it back to the grid. Customers could also choose to let Vector integrate their DER into the network. This has the potential to enhance network resiliency and reliability – meeting the needs of the customer’s wider community – while also providing commercial benefits to the customer and Vector. It’s the same principle as room-sharing models, but, instead of booking accommodation in someone’s home, customers can put their home’s generated energy into an open marketplace. Vector could choose to run the network as a closed system, but we have chosen a bold strategic path of evolving a traditionally closed system to one that is open, intelligent and connected, in a way that provides satisfactory commercial aspects to customers and all others. invest in appropriate preventative and detective technologies, tools and resources. Maintaining trust and confidence in the network and ensuring security of supply is critical to our future. The investments we have made to date have improved our ability to detect and respond to cyber threats but are only the start of our journey. The controls we have in place today are likely to require upgrade, replacement or enhancement to remain relevant and effective. At times, we will need to be leading edge (such as our deployment of an Intrusion Detection System (IDS) specifically for our electricity control systems, which, as we understand, was the first in our sector in New Zealand) and at other times a more conservative approach may be required. The cyber threat can never be fully eliminated and therefore to manage any exposures will require a constant level of assessment and investment. The evolving cyber threat cannot be ignored and will remain a key strategic risk for Vector and our industry moving forward.
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122 Page 123 Page 124 Page 125 Page 126 Page 127 Page 128 Page 129 Page 130 Page 131 Page 132 Page 133 Page 134 Page 135 Page 136 Page 137 Page 138 Page 139 Page 140 Page 141 Page 142 Page 143 Page 144 Page 145 Page 146 Page 147 Page 148 Page 149 Page 150 Page 151 Page 152 Page 153 Page 154 Page 155 Page 156 Page 157 Page 158 Page 159 Page 160 Page 161 Page 162 Page 163 Page 164 Page 165 Page 166 Page 167 Page 168 Page 169 Page 170 Page 171 Page 172 Page 173 Page 174 Page 175 Page 176 Page 177 Page 178 Page 179 Page 180 Page 181 Page 182 Page 183 Page 184 Page 185 Page 186 Page 187 Page 188 Page 189 Page 190 Page 191 Page 192 Page 193 Page 194 Page 195 Page 196 Page 197 Page 198 Page 199 Page 200Made with FlippingBook - professional solution for displaying marketing and sales documents online