Simon Mackenzie, chief executive of Auckland lines company Vector, says there has been early interest from both buyers and sellers in the peer-to-peer energy trading platform that it's trialling in New Zealand from December with Perth start-up Power Ledger.
Vector has signed a deal with Power Ledger to use its platform to enable people and businesses to buy or sell surplus electricity to each other. The trial of 500 solar households, schools and community groups in Auckland will be the first commercial deployment of the platform, which uses the same blockchain technology that underpins virtual currencies like bitcoin.
Mr Mackenzie said solar households with excess energy were getting only around 5c per kilowatt hour when selling it back to electricity retailers and this will give them other options.
Those interested in buying the excess energy include those who want to achieve objectives relating to their carbon footprint and brand, he said. Even people without solar can buy from their neighbours and Vector will act as a buyer of last resort to ensure no seller lacks a buyer.
If the trial goes well, Vector could partner with Power Ledger in taking the platform to "other markets," he said, but wouldn't be drawn on where.
Vector is leading change in the energy sector with technological advances such as smart meters, solar panels, batteries, electric vehicle charging, and drones, in order to get "well ahead of the disruption new technologies are starting to cause to traditional business models in the sector," chairman Michael Stiassny told shareholders at the company's annual meeting in Auckland today.
One shareholder questioned the value to shareholders in being at the forefront, which Mr Stiassny admitted was always a risk.
"It would be exceedingly arrogant and stupid to say we will get everything right, especially when you are at the forefront of change," he said. "It's incumbent on you to move forward and incumbent on you if you do get it wrong, to fail fast."
The company's strategy was endorsed by Karen Sherry, who was re-elected today as a director on behalf of Entrust, Vector's majority shareholder, which manages the stake on behalf of the company's consumer beneficiaries. "It will ensure Vector retains and controls its own destiny and is not left behind," she said.
Vector has expanded its smart metering fleet to 1.13 million meters, up nearly 18% from the previous year, and expects to deploy up to another 160,000 to complete the New Zealand roll-out. The main growth is now expected from Australia, where it has already rolled out around 4000 meters in New South Wales in the past two months, although Mackenzie admitted to some teething problems similar to those experienced at the outset in New Zealand.
The company has deployed New Zealand's first-ever Tesla Powerpack network battery in the Auckland suburb of Glen Innes and more than 100 Tesla Powerwall home energy systems across its network. The Powerwall batteries are selling for about $21,000 with a household solar system, which is comparable with others on the market, Mr Mackenzie said. Vector is looking to add lease options to buyers in the near future.
It's sold some batteries to another lines company and is working with Tesla on selling Powerpack in Australia to utilities and large companies.
It is also trialling drones equipped with light detection and ranging (LIDAR) scanning technology to produce 3D models for its network, which could potentially better target preventative maintenance and drive efficiencies in network spending, Mr Mackenzie said.
Vector, whose returns on its monopoly network operations are regulated, is going to spend an estimated $2 billion upgrading its network infrastructure over the next decade along with maintenance to cope with population growth in Auckland. It has added 11,849 connections in the past year, up 11% on the previous year.
With that level of capital investment, the right regulatory and policy settings were vital to "evolve with technological change and promote the rapid innovation taking place in the sector," Mr Mackenzie said.
After booking a $164 million gain on the sale of Vector Gas during the financial year, the company plans to spend some of those proceeds on reducing debt and the rest on investing in new technologies.
It had to ensure that it wasn't pouring money into investments that have a 40-year life and where the regulator loads higher returns towards the end of that life cycle and risk not being able to get a return because of disruption to the sector over the next five to 10 years, Mr Mackenzie said.
The Glen Innes substation was a good example, where it could put in a battery that delivered the same network service and reliability at half the cost of a traditional substation, he said.
Vector is on the board of the Hawaii-based Energy Excelerator, which has US government and venture capital funding to help start-ups solve the world's energy challenges.
Mackenzie said it was like the "Silicon Valley" of energy tech and allowed Vector to see what new technology was on the horizon and potentially invest in some of the more promising start-ups.
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