QIC completes deal for 50pc of smart meter company Vector

Queensland Investment Corporation has sealed a deal to acquire 50 per cent of the smart metering business of New Zealand-listed company Vector, in a deal valuation of $NZ2.51 billion ($2.34 billion).

The deal takes QIC's investments in energy transition to $5 billion, which Ross Israel, head of infrastructure at the fund, said demonstrated its commitment to backing a business leading the movement away from fossil fuels.

Close to 90 per cent of New Zealanders have a smart meter in their home, while less than 30 per cent of Australian households have the same device.

"With this investment, QIC Infrastructure's global investments supporting the transition to a low-carbon economy have grown to $5 billion. Our energy platform assets also aim to invest more than $15 billion in the energy transition over the next five years," Mr Israel said.

The NZX-listed Vector picked QIC as a preferred bidder last year and granted it exclusivity. Singapore's Keppel and Hong Kong's CKI were the other two bidders in the auction.

The deal still requires regulatory approvals under New Zealand's Overseas Investment Act and Australia's Foreign Acquisitions & Takeovers Act.

The deal positions QIC to capitalise on an expected rapid rise in demand for smart meters as households seek to manage consumption amid a surge in electricity prices.

"Smart meters have a critical role to play in the decarbonisation of electricity supply in both Australia and New Zealand," Mr Israel said. "Their role is rapidly evolving from data processing for timely billing purposes.

"They are an enabler for electricity networks to manage an ever-increasing volume and volatility of electricity supply due to the broader energy transition and increasing penetration of renewable generation."

Once seen as just a billing tool for electricity providers, smart meters are increasingly used by consumers to use energy more efficiently and reduce their bills, and by utility providers to better manage a surge in intermittent renewable energy that can make the grid more susceptible to demand-supply squeezes and blackouts.

The threat of blackouts is widely seen as increasing as Australia struggles to build enough renewable energy generation and storage to compensate for a wave of fossil-fuel power stations retiring.

Vector Metering owns or manages more than 2.3 million meters across the electricity and gas markets in Australia and New Zealand, but Mr Israel said there was a huge disparity between the uptake in both countries.

Close to 90 per cent of New Zealanders have a smart meter in their home, but less than 30 per cent of Australian households have the same device.

A spate of companies has moved quickly to meet that expected rise in demand, but Mr Israel said Vector was well-placed to lead Australia's transition.

The Australian Energy Markets Commission has proposed that all Australian households have a smart meter installed by 2030, which Mr Israel said offered QIC significant expansion potential.

A rapid increase in smart meters could also spur the development of virtual power plants, or VPPs, which are a key part of the expansion plans of some retailers.

A VPP pools thousands of households with rooftop solar and batteries. Households use their batteries to store excess energy generated through rooftop solar.

VPP technology is in its infancy because policy support and affordable home batteries are lacking. But higher bills are encouraging more and more households to look at storage, and companies are competing aggressively for new customers, with offers of zero per cent interest loans to spur greater uptake.

If there is sufficient energy in their battery, a household could approve the discharge of some stored energy into the wholesale market when prices are high, offering a financial return and helping to ease the squeeze on the grid.

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