We need to change to the V2 board when the power blocks are used. MakeCode team supplied this answer on how to implement:
We switch to v2 sim based off the v2 exclusive parts; e.g. this parts attribute on a microphone block: https://github.com/microsoft/pxt-microbit/blob/master/libs/microphone/microphone.cpp#L78
Here’s where they are defined:
https://github.com/microsoft/pxt-microbit/blob/master/sim/dalboard.ts#L138
so //% parts=”v2” should be fine