Networks could supplement suppliers’ smart meter rollout

A network-led installation programme of smart meters could work in addition to, rather than instead of, the ongoing supplier-led rollout.

That is according to energy thinktank Regen, which calls for networks to be given a greater role in achieving the UK’s net zero ambitions.

Calls for networks to take over the smart meter rollout have been growing in light of the slow uptake across the country. Recent analysis by Utility Week found that the rate of smart meter installations must more than double to have any chance of completing the rollout by the 2025 deadline.

However, in its report Network Unlocked, Regen argues that it doesn’t need to be a case of suppliers or networks leading the rollout.

“There is a case for networks to take control of smart meter delivery to accelerate installation,” the report states.

“For distribution networks to have a role in the delivery of smart meters, a change in position from Ofgem would be needed.

“Whilst the regulator would understandably be unwilling to halt the supplier-led roll-out, a network-led approach could be in addition, rather than instead of, the supplier-led installation programme.”

The report adds that the “use of smart meters will be crucial for enabling consumers to be smart and efficient with their energy use”, citing Smart Energy GB figures which show 86% of consumers change their behaviour after having smart meters installed.

As well as changes to the smart meter rollout, Regen argues for connection reform, network charging reform, network planning, scaling up the use of flexibility and steps to accelerate strategic investment.

It also calls for regulatory reform and warns that the current periodic price control budget allocations creates a “stop-start” investment cycle which fails to support long-term investment planning, efficient delivery and capacity building.

“As a result [of periodic budget allocations] most networks have invested less at the start of each price control period, ramping up investment towards the end to deliver the budget,” the report adds. “The result can be underinvestment, or at least inefficient and more expensive delivery.”

Regen backs Ofgem proposals to reform the model to be more flexible, allowing budget approval and investment decisions to be made more quickly and potentially change within price control periods.

In terms of regulatory reforms, Regen also calls for devolution of regulatory powers to coincide with the formation of regional system planners.

It adds: “The increased devolution of energy matters, and the strong view that energy is a public good that underpins social and economic goals requires a new, enhanced relationship and governance model between networks and their regional partners. […]

“As engagement and expectations increase, it makes sense to reform the governance model with a shift of emphasis away from centralised regulation towards more decentralised governance arrangements.”

Johnny Gowdy, director at Regen and co-author of the report, added: “Whilst a lot has been said about the failure of privatisation in the water and rail sectors, the electricity networks are in a different position.

“An objective appraisal would find that over the past decades the regulated power networks have reduced costs and provided improved services, but that the current model now faces an extreme challenge (and opportunity) to massively increase the rate of innovation and investment to support the transition to net zero and meet far higher customer expectations, such as the power required for millions of new electric vehicles.”

Stephanie Anderson, head of regulation and policy at SP Energy Networks, commented: “We know that networks can deliver more, and therefore we welcome Regen’s review of ways to harness the full value that networks deliver for our customers and communities as a valuable contribution to future policy development.

“In addition to the policy ideas covered in this paper, we believe more radical and constructive change is required in our planning and consenting regimes and in the supply chains that service the UK electricity industry. Electricity networks stand ready to support this economic growth and to embrace cohesive, coordinated and efficient changes to make this happen.”

The role of utilities in rolling out a net-zero society will be discussed at Utility Week Forum on October 4-5 in London. Find out more here.