Smart meter rollout: consider the alternatives

Smart metering has the potential to deliver huge benefits to many parties, but current proposals come at a high price to the consumer - an estimated £12 billion. More companies than ever are voicing serious concerns about both the timescales, costs and promised financial benefits.

We feel that the programme is overly complex, expensive and has unachievable elements. Many of the basic features required of smart metering are available with existing technology, meaning that rollout can begin much sooner. Furthermore, alternative solutions offering greater rewards with less financial risk are already being implemented. We feel that alternative solutions are worthy of a serious consideration that they have not been given to date.

The current estimate of cost is considered to be significantly understated – the costs of equipment and installation have not been amended since the initial impact assessment in 2009. Suppliers are already suggesting that a target price of £15 for an in-home display is unrealistic, and the market has yet to produce a meter that is close to the proposed price for the full rollout. More significantly, the cost of installations is rising rather than falling. A comprehensive review of the costs and benefits of this programme is crucial, so accurate comparisons can be made with alternative solutions.

The main deliverable of a smart meter rollout should be accurate monthly bills for consumers and half-hourly readings that are made available to the consumer and parties authorised to receive them. Current proposals have lost sight of these aims because they have been driven by suppliers who have seen the installation of smart metering as an opportunity to deal with their own operational issues rather than addressing the primary objectives of the government.

Current proposals are complex because the industry has pushed for technical interoperability, meaning that a significant amount of time and effort will be spent on developing and testing more complex meters, and the Data Communications Company – which is in our view unnecessary. The most interoperable thing we have is the Data Transfer Network (DTN) – any supplier can receive meter readings from any data collector via the DTN – whether that meter reading is provided in a “smart” way or by a meter reader. To that end, we call on the Department of Energy and Climate Change (Decc) to consider continuing the current business process arrangement. This will reduce costs and increase the speed of the rollout.

Another way to deliver the benefits at a fraction of the cost would be to consider using a back office approach to data and bill management, as currently used to great effect in the mobile phone industry. Data privacy concerns have been fuelled by the media, and yet most consumers don’t really know what the information could be used for. It certainly will not be used to find out when consumers are on holiday and sold to burglars. Mobile phone companies know when we’re abroad, but that doesn’t seem to concern anyone. We must educate consumers, build their trust in what the data will be used for and highlight the benefits to them.

The rollout of the programme is already behind schedule. There has been very little activity in the 12-month “foundation phase” and there is little information on the results of these pilots in terms of customer satisfaction, data quality, energy savings and costs. This is a massive oversight on the part of Decc. If the overall experience is not good, and the benefits not forthcoming, then surely a review of the whole programme is required?

Buried in the small print of Decc’s recent consultations is the revised rollout start date – the end of the third quarter of 2014 – however, there is a significant risk that the 2019 deadline will not be met if the rollout does not begin before 2014. Utilising a simpler solution that can be rolled out now gives us a greater chance of delivering something effective within that timescale.

We believe that these simpler, cheaper solutions – which are available now – can meet 80 per cent of the government’s objectives at 50 per cent of the cost. We look to Decc to review the current proposals for the benefit of consumers and the industry.

Lynne Sharp, corporate strategy manager, Orsis UK

This article first appeared in Utility Week’s print edition of 11 May 2012.

Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here: http://bit.ly/zzxQxx