Kiwi households are steadily using less power each year, which poses a challenge for the electricity sector, says lines company Vector’s boss.
Vector has reported revenue of $1.1 billion for the most recent financial year and profit of $274.4 million.
Vector offers electricity and gas distribution services through Auckland.
Chief executive Simon Mackenzie said it was a rapidly changing market. He said consumers were expecting more from all of the services they used, whether that was energy, telecommunications or banking.
He said the industry was responding with more options for consumers, and the ability to access information about their energy use, whenever they wanted it. Some wanted to be able to engage 24/7, he said, while others wanted “set and forget” options.
“The future is unpredictable,” he said. “New business models are evolving in response to new customers demands and these technologies. We have taken the strategic decision to embrace these changes rather than resist them.”
Vector is identifying potential new markets, including Tesla batteries to save the power generated by home solar systems and business applications, charging stations for electric vehicles across Auckland and taking its metering expertise to the Australian market. Vector was among the first customers outside the US to take delivery of Tesla batteries.
“In Glen Innes, east Auckland, we have installed a Tesla utility-scale Powerpack battery. It will allow Vector to continue to provide a secure power supply and defer the significant investment required for a new substation while we assess the effects of trends in the area such as declining household power consumption, renovation and infill housing, and the uptake of new energy solutions,” Mackenzie said.
Consumers could expect the technology for things such as home solar power systems to continue to become more affordable, Mackenzie said.
But he said all electricity companies had to adapt to the fact that households were using less power. Over the past eight years, consumption had dropped 12 per cent, where previously it had historically grown by 1 per cent to 2 per cent a year.
“The volume hasn’t occurred as had been forecast,” Mackenzie said. “That’s a challenge.”
It would continue to decline, he said. “We haven’t seen a huge uptake of LED lights, when that becomes mainstream in customer homes, it will be a big downward trend.”
The difference in power consumption between the most efficient and least efficient households of similar income was about 17 per cent, he said. “Whether it’s through new technology or more control of costs, the trend is down,” Mackenzie said.
But he said the growth in customer numbers meant overall consumption volumes were increasing and Vector was having to build a network the size of Hamilton’s every five years.
It will pay shareholders a dividend of 15.75c per share.