Smart meters have bigger consumption impact than anticipated

Smart meters have a bigger impact on energy consumption than the government previously anticipated, a new study has shown.

Research by the Behavioural Insights Team (BIT) on behalf of the Department for Energy Security and Net Zero sought to understand the energy savings attributable to the rollout of the devices.

The project involved reviewing analyses from energy suppliers. Each analysis estimated the effect of installing a smart meter on domestic customers’ energy consumption in the first year after installation, expressed in percentage change in consumption before and after installation.

Previously the government anticipated that smart meters would result in 3% less electricity consumption and 2.2% less gas consumption.

Yet in an evidence synthesis of seven studies from four suppliers, the BIT found that the there was a collective 3.43% reduction in electricity usage and a 2.97% decline in gas consumption.

The research found that there is a dramatic variation in the estimated effects from smart meters depending on which supplier installed the device.

Studies from a retailer known as Supplier A show that from installations between Q2 2017 and Q1 2018 electricity consumption reduced by as much as 4.4%. This compares to reductions between 1.12% to 1.86% for Suppliers B, C and D.

There is a similar pattern with gas consumption. The studies from Supplier A show reductions of 3% to 3.8%. The impact studies for suppliers B, C and D found reductions between 0.94% to 1.55%.

While the report said it was not possible to draw strong conclusions about the reasons for the variation in estimated impacts, the BIT speculated on a number of reasons why.

It said that it could be due to differences in smart-meter rollout and installation strategies between suppliers such as the comparative maturity of their rollout at the time of their installations, the proportion of customers receiving an in-home-display, the quality of displays provided and/or the energy efficiency advice customers received during the installation.

“However, it is also possible that the differences in estimated effects reflect differences in the suppliers’ sample for the analysis, analysis strategies, and/or customer base,” it added.

The report also found in the case of one retailer, known as Supplier E, that electricity consumption actually significantly increased after smart meters were installed.

The sample size for this supplier ranged between 500,000 and 1 million smart and traditional meter customers.

Electricity consumption among its smart meter customers was 17% higher than Ofgem’s medium Typical Domestic Consumption Values (TDCV). Conversely, gas consumption among Supplier E’s smart customers was 17% lower than Ofgem’s medium TDCV.

The smart meter rollout has been ongoing since 2011 and is currently scheduled to end in 2025.

Yet recent analysis of government figures by Utility Week found that the rate of installations must more than double to have any chance of completing the rollout by the deadline.

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.