Vector aims for sustainable energy future

Vector’s financial results for the six months to December reflect its long-term investment in new energy future initiatives such as HRV Solar and the impact of Auckland growth on connections and capital expenditure.

Revenue was up to $676.2 million from $625.6m, due primarily to the acquisition of E-Co Products Group on March 31. However, group net profit was down to $79m from $107.m in the prior period. This is largely because of one-off items totalling $18.8m in the prior year, as well as a significant increase in depreciation and amortisation in this half, the company says.

Adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) were down to $250m from $257m in the prior period. Regulated business earnings were down $3m, largely due to an increase in maintenance expenditure. Gas trading earnings were down $5.3m, because of a $5.3m insurance settlement one-off in the prior year, with underlying earnings flat.

While earnings in the technology segment grew $4.2 m and helped to offset the earnings decline in regulated networks and gas trading, growth was lower than expected.

“The gains from acquisitions and the New Zealand smart meter roll-out were diluted by slow Australian meter deployment in advance of the Power of Choice reforms, by a lower than expected performance of E-Co Product Group’s heat-pump business, by the cost of establishing HRV Solar, and by changes to the way we account for internal communications services.”

Capital expenditure (capex) increased 5.7% to $182.7m from $172.9m in the prior period. This was driven by Auckland growth and by higher network replacement capital expenditure, partly offset by lower metering capital expenditure in line with the slow-down in New Zealand meter deployment rates.

“The six months to 31 December 31, 2017, saw continued progress towards Vector’s ambition of creating a new and more sustainable energy future,” Vector chairman Michael Stiassny says.

“According to the International Renewable Energy Agency (IRENA), by 2020, all the renewable power generation technologies that are now in commercial use will fall within the fossil fuel-fired cost range, with most at the lower end or even undercutting the cost of fossil fuels.

“Over the next decade, as the cost of solar and wind energy generation and battery storage inevitably falls and becomes competitive with traditional generation, we expect energy to be increasingly distributed, decentralised and democratised. Greater connectivity, artificial intelligence and data analytics will accelerate the adoption of the ‘internet of energy’, benefiting industries, communities, businesses, and individuals.”

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