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"Smart meters are the fundamental first step to people being able to access the benefits of innovations"
Despite today’s National Audit Office (NAO) report criticising the rollout of smart meters, they are still an essential step toward modernising this country’s energy infrastructure.
The energy market is changing. There are major innovations and changes to the way we use energy coming down the road, including the increased uptake of electric vehicles, smart appliances, and products and services in our homes. Smart meters are the fundamental first step to people being able to access the benefits of these innovations.
Smart meters are also essential for more prosaic developments – giving people accurate bills without having to submit meter readings, and transforming the experience of prepay energy customers, with new ways to top up without having to physically go to the shops.
The 2020 deadline by which every home is supposed to be offered a smart meter is fast approaching. With a further 39m meters still to be installed, suppliers would need to rapidly scale up the speed at which meters are being installed to hit that deadline.
The NAO has made clear today that the government’s 2020 target will not be met, and that the cost of the rollout “will likely escalate”. As the official consumer and small business advocate for energy, Citizens Advice finds this deeply concerning.
Earlier this year we called on the government to push this deadline back to 2023, and to be more transparent about the costs of the programme for people. We did this because we have serious concerns that poor consumer experience and escalating costs risk undermining public trust in what is an important technology.
As the NAO points out, there will be 7.1m more first generation smart meters (SMETS1) on walls than originally planned. An outcome that was a direct result of the 2020 deadline and the pressure put on suppliers to install meters quickly.
A continued commitment to this unrealistic deadline risks driving up costs further and leaving little time for major technical problems to be fixed. Chief among these problems is the data communications company (DCC) – the communications network that will allow smart meters to communicate with suppliers and other services – which has been severely delayed. Yet, the rollout deadline has not been extended to reflect this.
Frustratingly, there was and there continues to be little need for the 2020 deadline to remain. As the NAO makes clear, the benefits of smart meters will largely be realised in the long-term so there was no need for such an urgent rollout. Forthcoming research shows the public would far rather see value for money and a positive consumer experience than any deadline met.
Ultimately it’s energy customers up and down the country who will foot the bill the cost of smart meters. The rollout was estimated to cost bill payers a combined £11 billion, that works out at £374 per dual-fuel household. Today’s report suggests it will cost at least a further £0.5 billion (£17 per household).
In theory, the costs incurred by energy customers will be offset by savings made in the longer term. However, part of these savings will only materialise if people know how to use their smart meters.
The rollout offers a unique chance for energy suppliers to ensure this happens, by engaging with their customers and providing one-to-one energy efficiency advice. According to the NAO there is an estimated 2.1m households who have missed out on this and a third of smart meter users want more information on how to save energy.
We have now reached a point where we don’t have a clear picture of the overall costs of the programme, or a clear picture of whether the supposed benefits will materialise. Add to this the ongoing technical problems which mean the system for second generation (SMETS2) may be years away from being fully functional, and it’s clear that government needs to take action.
The government must now extend the rollout to 2023, publish an up to date cost benefit analysis as soon as possible and outline how it plans to address ongoing technical problems
Ultimately we believe that smart meters are in the best interests of consumers, but the challenges and delays the programme has faced and the 2020 deadline are not.
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