Smart meter installation rate must double to hit target

The rate of smart meter installations must more than double to have any chance of completing the rollout by the 2025 deadline, Utility Week analysis of government figures has shown.

Based on the pace of installations over the past year, c.13.4 million homes and small businesses will still not have a smart or advanced meter at the end of 2025. To make up ground, suppliers would have to fit 700,000 devices per month, compared to the current level of just under 300,000. Even the government’s backstop minimum target of 80% coverage in domestic properties by that date is set to be missed under the current run rate.

Energy suppliers have individual annual targets on a trajectory to 100% coverage. However, as of the end of March 2023 – two years and nine months from the deadline – only 58% of homes and businesses had a smart meter connected (32.4 million).

Some estimates are that the smart meter rollout, which began in 2011, will ultimately cost c.£20 billion. It was originally due to complete at the end of 2020. However, when it became clear the goal would not be reached suppliers were given an extra four years. That time was extended again to account for disruption caused by Covid-19.

Responding to the figures Matthew Roderick, founder and chief executive of digital services company n3rgy, warned that even if suppliers manage to double their efforts, the 2025 deadline will still be missed.

He told Utility Week: “As an industry we have installed the easier meters in the first phases, in the early days of installations. Now what’s left are more medium to difficult installations which will take more time and therefore more people to maintain the installation rate.

“Installations may start to speed up as we ramp up the training of staff and engineers in the near term, but the reality is it’ll be slowed down as we come to the end of the rollout with more difficult properties such as tall blocks of flats and farmhouses.”

“Yes, we need to double installations now to get to 2025, but even if we double, that will still not get us to 100% by the deadline,” he added.

Meanwhile, Daisy Cross, head of future retail markets at Energy UK, said her organisation is concerned about suppliers being unable to achieve the rollout on their own.

Speaking to Utility Week, she said: “We want to see a stronger link being made between smart and net zero across everyone. We are trying our best but we can’t do it alone. There were some customers that just point blank refused a smart meter and gave no further information. Expecting an energy supplier alone through its own communication channels to convert that customer to an acceptor is, we think, not likely.

“I think it’s just a broader conversation about supporting that message, getting everyone on the same page and talking about what else needs to happen to get to market-wide coverage.”

She was further asked about whether the rollout’s official campaign, Smart Energy GB, had failed in its role of promoting the devices to consumers.

Cross said: “It is a difficult challenge and I think Smart Energy GB has done a good job at being flexible and converting from an awareness raising campaign to a targeted, trying to convert the most difficult to convert customers campaign.

“The nature of it is evolving, we are over 50% now. A lot of the easiest to convert customers have been converted and we are all recognising that and adapting our approaches accordingly and I think Smart Energy GB has done that.”

Meanwhile George Walters, chief home services officer at Utilita, a prepayment meter (PPM) specialist supplier which has achieved more than 90% smart meter coverage, said he believed that there are not enough incentives for non-prepay customers.

He said: “We have got to really just keep focusing on what outcomes we want to achieve and allow suppliers to deliver that without constraining them through these massive programmes, i.e. Market Wide Half Hourly Settlement.

“It’s something that is going to be hugely costly. Is that what was needed to actually deliver the value, rather than look at how we could have used the existing settlement platforms and started to realise the benefit much, much sooner?”

Walters clarified that he is not opposed to the concept of half hourly settlement and that it is essential to build the propositions and the price signals for customers to engage in the market.

However, he added: “The structure that it’s being delivered through, the programme for the delivery of it, is hugely costly for the consumer ultimately…if we’d looked at what outcomes we want and allowed the market to deliver these then I think we could have done it much quicker and at much lower cost and ultimately the consumer would be getting those benefits sooner and that would have driven the rollout quicker.

“We’re trying to get the meters installed before the customer can really understand what the benefit of it is. That’s exactly why Utilita has got to where we are because we went to the customers with a great product and guess what? They loved it. We’ve demonstrated that by having that proposition, it works.”

In response to Utility Week’s findings, a government spokesperson said: “We want households and small businesses to benefit from smart metering as soon as possible, with energy suppliers being set ambitious but realistic installation requirements to drive the highest levels of smart coverage by 2025.

“Already over 32 million customers have smart meters, helping them manage their energy use, enabling us to use more renewable energy, and reducing our reliance on imported fossil fuels. We continue to work with the industry to drive that up further.”