DNOs can still seize the smart meter opportunity

The case for an area-by-area rollout of smart meters - made by the Centre for Sustainable Energy (CSE) in a report for Which? - is compelling (see page 5).

The government had already considered whether the cost of that approach would be lower, but in the end it decided that in a supplier-led rollout, pressure from the market would be a strong mechanism for keeping prices low – stronger than placing the rollout responsibility on regulated distribution network operators (DNOs).
The CSE does not propose to re-run that argument – although elsewhere in its report it says energy customers will think the government’s view naive. That’s because customers don’t see much evidence of competitive pressure in the market, and that view is reinforced by Ofgem’s Retail Market Review.
But the CSE says an area-by-area rollout would have addressed many other problems. A local rollout would mean people wouldn’t get smart meter information from their energy supplier (often regarded as “tainted”) but from government and consumer groups. It could actually increase competitive pressure, because customers where smart meters were being installed could receive price information from all the suppliers at once, enabling them to make an informed choice.
What is more, area rollouts would offer exciting opportunities for broader energy action. They could be targeted for energy efficiency measures, local energy projects and initiatives such as group buying. And voluntary groups could be used, as they have in the digital television switchover, to get the message across and provide help for the vulnerable.
Even the CSE doesn’t propose that the government should rethink the rollout. But do we have to lose all those potential benefits?
A forward-thinking DNO could take this on. While still allowing suppliers to lead, it could offer to co-­ordinate the rollout area by area within its patch, bringing suppliers and other organisations together for the purpose.
That would aid the smart meter rollout, and there is also benefit for the DNO. It could prioritise the installation of meters in areas where smart grid control was most needed. It would raise the DNO’s profile among customers, which they are increasinglyh going to need as we move to smart grid.
DNOs are regarded as slow-moving, but soon they will have to be leaders on smart grid. As an “honest broker” and local energy specialist, a DNO could still hold the key to a successful smart meter rollout.  Will they step up?

Janet Wood

This article first appeared in Utility Week’s print edition of 20 January 2012.
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