It's fair to say that in the list of things we simply cannot live without, electricity ranks right up there with food, water, shelter, and sewerage — closely followed of course by Wi-Fi and Netflix, writes Simon Mackenzie.
Today, with our increasingly digitised, electrified lives we need electricity to heat our homes, pump our water, run our businesses, power all our various technologies and, increasingly, drive our vehicles. And with the predicted surge in electric vehicles (EV's) and electrified public transport yet to occur, this electricity dependence is only going to go in one direction.
Infrastructure resilience has always been a challenge in New Zealand. We live in a long, thin, sparsely populated and earthquake-prone country with difficult terrain, which makes redundancy economics difficult for infrastructure providers. That said, the reliability of Auckland's electricity network currently sits at 99.7 per cent, which compares well on a global basis and has met consumer expectations throughout many decades of Auckland growth.
But the challenge is to ensure we keep making the right investment choices for consumers to meet future expectations.
To do that it needs an informed public discussion of all the resilience options available, so consumers better understand the necessary trade-offs between costs and quality. And it needs a shared view of resilience that involves council, consumers, and government as well as the end-to-end electricity system.
Compounding the rising criticality of electricity is the impact of climate change being felt in New Zealand. As part of its future planning, Vector has had a close look at what climate change might mean for Auckland. This work was undertaken by EY and outlined in The Physical Risks of Climate Change report, completed in November 2017. The EY model projects the number of hours with wind in the 70-80km/h range or upwards will increase significantly. This will likely mean a big increase in the duration of outages, customer minutes lost, and numbers of customers affected.
Climate change also means we must factor an increase in the number of "1 in 100 years" extreme weather events and an increase in the risk of drought, with the consequent impact on New Zealand's lake levels, so critical to our energy supply. We expect to see increased erosion, with slips impacting infrastructure. That's why a system wide view of resilience and operating more sustainably is a critical need for New Zealand, and why Vector has committed to being net carbon zero by 2030.
This combination of climate change and the rising consumer expectations means more complexity for infrastructure companies, such as Vector. The big question is: how do we ensure a more resilient electricity network, which is built on assets with a life span of many decades (that in most cases predate the digital era), that can respond dynamically to these new challenges?
Today, Vector already spends the maximum amount it has been allocated by the Commerce Commission for network maintenance and resilience. To spend more, we would need a new level of expenditure approved by the regulators, as investments in the network are recoverable through regulated lines charges that make up a small component of your electricity bills. But if we spend too much, there is a risk of "gold-plating" the network. This is what happened in Queensland where resilience concerns were met by over-investment and subsequent over-billing, which was called out in the recent ACCC report on Australia's electricity market.
That said, there are a range of choices for delivering resilience solutions, including overlaying physical assets with digital technologies and network "smarts", replacing traditional power poles with aerial bundled conductors, improving tree management processes, facilitating faster take-up of distributed energy such as solar and battery, using real time network performance data from smart meters, delivering micro-grid solutions or household or community generators, using demand response measures, or continuing to underground the network where it makes sense.
Undergrounding is not however a "one-size fits all" option. Vector's network is already 55 per cent underground and most new parts of Auckland are undergrounded as they are built. This compares well with the New Zealand average of 27 per cent, or with other cities such as Sydney (35 per cent) and Melbourne (40 per cent). But undergrounding the remainder is costly — we estimate near $5 billion — and, ultimately, that cost would need to be borne by consumers.
Cost aside, undergrounding is not always the optimal solution. Repair times are substantially longer, and undergrounding cannot ensure resilience against flooding, earthquakes, volcanic eruption or even trees falling in strong winds and uprooting buried services. It raises the question, would those costs be better employed on new technologies and distributed energy solutions, such as solar, battery, and vehicle-to-home technology that uses EV's as mobile energy sources.
More immediately, improving tree management is critical. The ferocious storm which hit Auckland in April 2018 brought down thousands of trees. Under the Electricity (Hazards from Trees) Regulations 2003, only a limited area around lines can be trimmed, and after the first trim, it is the responsibility of the tree owner.
Newer tree regulation can help but so can consumers. Tree-owners, including households and councils, should be aware of their obligations. We love trees, but trees that interrupt the security of your electricity supply are a problem, and we don't think it's fair for all consumers to bear the cost of tree damage if tree owners aren't doing their bit.
In the end, electricity resilience is all about a future that avoids "gold-plating" the network, leverages new energy technologies, delivers more targeted customer-focused solutions and reduces cross-subsidisation. It's about getting the balance right on all the trade-offs and delivering the best resilience solution in the right place at the best cost to consumers.
Resilience solutions around the world
Across New Zealand, varying factors such as climate change, population density and geography mean there is no one size fits all solution for resilience. Targeted solutions are required, but raise serious cross-subsidisation issues, as some areas will require more costly solutions. These examples illustrate the options.
Auckland — a tale of two lines
In Henderson, a network solution has been implemented with back-up lines that can be switched to provide power when there is a fault, offering 100 per cent redundancy. In Piha, 25km from Henderson and supplied by a single overhead line through the Waitakere Ranges, the low population density does not support the cost of a secondary line or undergrounding. Alternative solutions must be considered including local generation — renewable (solar, wind) or diesel, but able to run independently from the network, or local storage via a battery, which acts as backup supply and could be supplemented with generation.
Japan — new tech solutions
Vehicle to Home is an innovative solution that allows customers to supply their home with energy stored in a compatible electric vehicle enabling a cost effective, non-network alternative to increase resilience (see below). With a 28kWh Nissan Leaf EV, a household could supply a 3kW load for more than nine hours and a 6kW load for more than four hours. Customers can integrate V2H units with their solar and battery installation to obtain greater resilience, especially during network outages. Japan has more than 6000 solar integrated-V2H units in operation. Vector is the only utility in Australasia trialling 3kW and 6kW V2H units; and with access to Nissan's upcoming solar integrated-V2H technology for the Australasian market.
New York — microgrids
In 2012 Hurricane Sandy plunged much of the city into darkness as flooding cut power across the network. But there was one notable exception. During the darkness, NYU remained brightly lit thanks to its microgrid, which continued to produce its own electricity. This was captured in a striking photo, and has proven to be a point of inflection for the city, with microgrids increasingly seen as a useful resilience tool. Vector is exploring their suitability for Tapora and Kawakawa Bay in Auckland.
• Simon Mackenzie is chief executive of Vector
• Disclaimer: The results of EY's work, including the assumptions and qualifications made in preparing the report, are set out in The Physical Risks from Climate Change Report of Findings for Vector Limited dated November 2017. The report has been prepared for Vector. EY disclaims all liability in relation to any other party who seeks to rely upon the report or any of its contents.