Vector Electricity Asset Management Plan— 2020 Update
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Supporting Auckland’s growth Auckland’s relentless growth continues, with a population that has now grown since 2013 by the size of Tauranga and Whangarei combined. In that time, we have spent nearly $1.3 billion to strengthen network integrity and support Auckland’s growth, and have added 59,222 new customers to the network. This growth is not stopping. In the next 10 years Auckland will see around 300,000 more people in the region for a total population of 2 million; up to 250,000 more vehicles on our roads (assuming current ownership rates continue); and 117,000 new energy network connections required to support this growth. Development projects in new areas, or greenfield developments, have started slowing down but the Auckland Unitary Plan triggered a significant amount of small infill subdivisions over the past several years, where property owners of single lots were redeveloping these to high density developments. Re-development projects, or brown field developments, are more complex and more expensive for Vector, because existing assets often need to be removed, relocated, or upgraded. There is also typically less space to work in as a result of the existing buildings, and as work is done in existing roads, traffic management and access are more complex. Enabling this growth through the provision of necessary electricity connections and upgrades requires appropriate investment, whether that be constructing new assets, adding intelligence to our network and systems, or developing digital solutions that put customers’ needs at the centre. Significant investment is required across all infrastructure in Auckland to cater for growth and electricity network reinforcement is no exception – ensuring this growth results in the greatest economic benefit for Auckland requires a partnership approach to capital and infrastructure needs by local and central Government. We support the Government’s focus on infrastructure investment and agree that now is the time to be investing for future growth. Traditional network assets will continue to form the backbone of our network. However, our Symphony strategy will integrate new technologies and digital solutions into the broader system in order to maximise customer outcomes within allowable spend, and to better manage energy flows as demand grows and changes. An important factor in how we support Auckland growth is the availability of suitable resource to undertake project works. We will not compromise on safety, quality of materials or technician expertise when considering investments to deliver a resilient, reliable electricity network that meets the current and future needs of Auckland families and businesses. Resource constraints are a factor in our capability to support Auckland’s growth in a timely fashion. FUNDING APPROPRIATE INVESTMENT The growth in Auckland’s population over the past five years has caused a significant volume of growth-related investment for new connections and for reinforcement works to meet the increased demand on the network. At the same time, we have increased capital spend year-on-year since RY16 to address the integrity needs of our assets with a focus on addressing the long-term requirements in an economically prudent manner. With no sign of Auckland growth conditions easing, we will need to continue to invest significant capital expenditure in our network to support infrastructure growth for Auckland. This continued investment ensures that the electricity network can play its part building Auckland’s future which includes affordability and choice, making it a great city to live in for those who call Auckland home today. The investment to support new housing connections is significant and we anticipate greater investment will be needed to support residential intensification objectives – consents for dwellings in Auckland are forecast to hit 17,200 in 2023. Affordability of electricity is an important issue – particularly as EV uptake will increase demand for electricity. Pushing value for money and continuing to deliver quality services in the long run requires new efficiencies and technology. Our work to put in place new technology options that will flatten peak demand has the direct outcome of being able to defer infrastructure investment that would otherwise be needed, thereby keeping costs for consumers down. Vector’s investment in innovation is also important to find new efficiencies and resilience in the future. Some of the future investment required flows directly from other infrastructure decisions made either by central or local government. The proposal to build a light rail line (Auckland Light Rail or ALR) from the city to the airport is a good example – depending on the route finally chosen, we anticipate a capital cost in the vicinity of $85m to move the electricity assets. ENABLING ELECTRIFICATION OF TRANSPORT We support the work of the former ICCC, which recommended in their report, Accelerated Electrification 2 , that the electrification of transport be prioritised to reduce emissions. This reflects New Zealand’s unique energy emissions profile – whereby emissions from transport are around four times greater than the emissions from electricity generation (with transport accounting for around 20 percent of New Zealand’s total emissions). The scenario favoured by the ICCC to reduce emissions included replacing around two million vehicles with EVs in New Zealand over the next 15 years. Already more than 40% of EVs are on Auckland roads, and international trends suggest that EV uptake tends to be concentrated in larger urban centres. This ‘clustering’ would further concentrate load on the network. EVs require charging and a 22kW fast charger can add the equivalent average demand of 9 houses to the existing network. Clearly, growth in EV uptake puts pressure on network infrastructure. Even with the uptake of 7kW ‘slow’ chargers, our modelling has found that existing network capacity would be exceeded at just 20 percent EV penetration. New solutions, such as vehicle-to-home technology and smart EV chargers (coordinated through a smart digital platform, like a DERMs), supported by the right pricing signals, can help shift load, manage network peak and keep electricity affordable in the long term.
2 https://www.iccc.mfe.govt.nz/assets/PDF_Library/daed426432/FINAL-ICCC-Electricity-report.pdf
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