Vector among first in world to get new Tesla storage batteries

Thursday 22nd October 2015

Vector, the Auckland gas and electricity distribution monopoly, said it will be among the first customers in the world to take delivery of Tesla’s home and business batteries that store home-generated solar and wind power.

The utility company formed a partnership in May with Tesla, best known for its electric cars, but is also active in alternative energy generation and storage.

Vector told shareholders at its annual general meeting in Auckland today that Tesla is leading the introduction of new technological advances that will help consumers manage their energy costs, such as new batteries, electric vehicles, solar panels, and energy monitoring technologies.

Chief executive Simon Mackenzie said Tesla Energy batteries, which can offer energy storage at a significantly lower price than other systems, represented a “game changer for the global energy industry”. It opens new markets for Vector, including the provision of back-up power supply, peak energy supply, and new network services, he said.

“Demand for the new batteries exceeds supply, but Vector is among the first customers in the world to take delivery,” he said.

Prices for the lithium-ion batteries are likely to start at US$3500.

The company plans to bring two Tesla battery solutions to New Zealand, including one for homes and small businesses and a commercial and utility solution. Vector is developing the engineering that adapts the batteries to local conditions, including the control systems and interface with local networks.

“By playing a key role in the commercialisation of solar panels and batteries in New Zealand, we are better positioned to manage the challenges the technologies pose to our core electricity networks, including reduced demand for electricity network services,” Mackenzie said.

Vector had already fielded inquiries from businesses across New Zealand and “we see plenty of other opportunities further afield”, he said.

The company has more than 400 solar installations across Auckland and expects its Tesla relationship will accelerate uptake of these technologies in the coming financial year.

It’s also deploying electric vehicle charging infrastructure around Auckland after earlier this year setting up charging stations at its Newmarket head office. A station that can recharge an EV in less than half an hour is also being set up at its Hobson Street substation and Vector plans to roll out more of these city-wide in the next year. It’s working with EV distributors such as Auckland City BMW and Auckland Transport on developing charging stations best suited to local conditions, Mackenzie said.

Last year’s acquisition of smart metering company Arc Innovations added almost 140,000 smart meters, lifting Vector’s installed base to more than 900,000. It’s contracted to install a further 1.2 million nationwide.

The company has been eyeing a move into Australia’s mass smart meter roll-out for some time and Mackenzie told shareholders the potential is significant.

“We are looking initially at Queensland, New South Wales, and Tasmania. The regions offer an opportunity of well over 6 million meters,” he said.

Vector has forecast about $1.8 billion of capital investment will be required in its Auckland energy networks in the coming decade, however Mackenzie said the company needed confidence the regulatory environment would enable it to recover capital costs, earn a fair return, and that the rules won’t change across the investment period.

The Commerce Commission is reviewing key inputs that determine the prices Vector can charge for network use. Mackenzie said infrastructure providers should be able to reach binding, long-term “special undertakings” similar to those used in other countries to support the economic growth Auckland needs.

Following unsolicited interest in its gas transmission and gas distribution assets outside of Auckland, the company started a strategic review covering more than 6,000 kilometres of pipes across the North Island which contribute around 70 percent of gas transportation.

Vector’s wholesale gas business continues to face headwinds due to increased competition through reduced demand for gas used in electricity generation and uncertainty over the quantity of gas reserves in the Kapuni field.

However the company remains “comfortable” with its guidance provided in August for adjusted ebitda ranging from $605 million to $620 million in the 2016 financial year. Excluding capital contributions, adjusted earnings before interest, tax, depreciation and amortisation is expected to range from $550 million to $565 million.

The shares slipped 0.9 percent to $3.32, and have dropped 20 percent this year.

BusinessDesk.co.nz

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