Critical need for alignment

Simon Mackenzie of Vector. Photo / Supplied

Vector chief says the energy sector needs a portfolio of its own.

Vector chief executive Simon Mackenzie has called on the Government to establish an over-arching Ministry of Energy.

Mackenzie believes energy provision in today's world is just too complex for it to be managed from within the Ministry of Business, Innovation and Employment (MBIE) with outside liaison with other disparate agencies.

He points to major issues relating to energy: the resilience of the New Zealand economy; objectives around climate change and decarbonisation; energy security and cyber-security — to name just a few.

"Globally now, energy and electricity markets are deemed to be the most critical infrastructure because everything just sort of hangs off it," says Mackenzie. "Whether it's telcos, transport just rapidly increasing up the curve and so on. This is not a criticism of the people in MBIE, but it's just saying it doesn't have a laser-like focus.

"It doesn't have to have a big ministry, but we just think that it's really critical."

Mackenzie contends that while some of the biggest areas of cyber-vulnerability relate to energy systems, in New Zealand there are multiple agencies all playing in the space.

"They all have to try and get together and co-ordinate. How do you get that beautiful policy alignment?

You know, Ministry of Energy linking with Ministry of Transport, actually starts meaning it's a easy conversation. But at the moment you've got MBIE, the Commerce Commission, Ministry of Transport — it's just hard to see how that can align up that well."

Vector's insights were sharpened by last year's gas supply challenges in Taranaki which helped push electricity spot prices through the roof.

"We've got a country heavily dependent on hydro resources and hydro storage doesn't have long times in New Zealand," Mackenzie explains. "We're not trying to scaremonger or anything. "But with climate change it is not now inconceivable that you could have long periods of dry sequences. So, what does happen if you have long, extended dry periods — hydro's at a real stress level and you've got a large part of your transport fleet sitting on electricity? For us, we look very much in that 10/15/20 year horizon with those types of assets and those trends and then lay that over with climate change."

He points out Auckland has had winds of 210km/h in the the past two years. "We were lucky when that tornado went through because literally about 100 yards away is our major Quay St substation.

There's a lot of stuff in the port there, containers and everything."

While Vector has built resilience into its downtown systems, Mackenzie says he doesn't think people have been considering tornadoes in Auckland as possible risks.

Substations are also being built at higher levels and at Vector there is considerable modelling taking place around wind impacts, sea level rises and floods.

"We built in Kawakawa bay — we're finishing just at the moment — what's called a microgrid which basically arose because it had so much erosion down there that we just couldn't get a new line path through," he says. "So we've done quite a bit of work with the community and put in solar and battery and standby diesel generation. So they've almost got their own grid to manage that area down there."

He says Vector is putting in a micro-grid in Wellsford where a large-scale agriculture farm is being developed which requires more reliability and resilience.

"So all these sort of new solutions are much more cost-effective. But they also give the benefit of resilience because they have got their own generation." But, says Mackenzie, it really needs a Ministry of Energy across the whole area.