KEY POINTS:
Vector is betting its investment in New Zealand Windfarms and that company's Te Rere Hau project in Manawatu will prove the worth of distributed renewable electricity generation.
Distributed, or embedded, generation refers to small power stations, such as those owned by Vector and other lines companies, close to consumers. They are usually connected to a local network rather than the national grid.
Vector is to take a 19.9 per cent stake in NZ Windfarms by subscribing for $17.2 million worth of the $75 million in shares to be issued in an offer that opened this week.
Vector chief executive Mark Franklin said the move was part of Vector's environmental strategy.
"There's been a lot of discussion and debate particularly in the last three to six months on a sort of a national commitment to climate change. The debate has moved on from whether there's a climate change issue to how everybody's going to respond."
Franklin said NZ Windfarm's Te Rere Hau project, a distributed generation plant, was an example of a "demand side" response.
If such a plant is connected to Vector's network it could cut the transmission charges Vector incurs from Transpower because of reduced peak demand on the national grid.
"We're not a generator," said Franklin, "but we are interested in seeing a lot of this stuff happening, particularly the smaller stuff ... rather than big wind farms."
There had been some teething problems with the New Zealand-made Windflow turbines which were being installed at Te Rere Hau, but Franklin said due diligence and a review of early problems by independent international wind energy experts had given the two-blade turbines the thumbs up. "We're pretty comfortable with the technology."
Vector yesterday posted a nine-month profit that was well ahead of last year's.
The company had benefited from a return to normal winter weather conditions during its first quarter after a warm winter the year before.
Revenue was up 24.5 per cent to $1.01 billion and net profit was up 18.4 per cent to $39.55 million.
Franklin said increased wholesale gas sales were largely behind the increased numbers for the company, which makes most of its money in the first and fourth quarters.
Natural gas sales volumes were up almost 55 per cent on a year earlier.
The company had also enjoyed "a fair bit of organic growth" in customers, particularly on its Auckland networks.
Its overall electricity connections were up by more than 11,000 to 671,678.
The company also gave further guidance on its full-year net profit, saying it was likely to be between $58 million and $63 million.
Previously the company had said it expected to achieve full-year net earnings at the upper end of market estimates of $42 million to $65 million.
Vector shares rose 2c to $2.86 yesterday.
