SMEs need to be embraced in smart rollout

The smart meter rollout will see the technology installed in small businesses as well as domestic properties. But more can be done to get them to see the benefits, says Andrew Hallett.

Reliable and reasonably-priced energy is a necessity for microbusinesses. By the end of 2020, around 3 million smart meters will be fitted in businesses up and down the country. It is therefore important that microbusinesses fully understand the smart meter rollout and what that means for them as energy customers. Citizens Advice undertook research to see better what microbusinesses know, want and expect from smart meters and to evaluate to what extent these needs are being met by the current market.

Our research revealed that concerns such as stock and staff generally take priority over thinking about energy use. Many businesses (especially the very smallest) have engaged in energy saving measures but this is where it has been relatively easy for them to do so. Business owners will often have heard about smart meters in a domestic context but may not think about them in the context of their business. This means they sometimes fail to spontaneously think of ways in which a smart meter would benefit their business, suggesting that ‘they don’t know what they don’t know’. When probed, businesses rate the pounds and pence real time information and visibility of data as the chief prospective benefits, but they are unsure what they gain from this. They are also worried about the initial cost and hassle of installation and the danger of cost savings not materialising, with only 17 per cent willing to pay to have one installed.

This evidence leads us to believe that small businesses who do not yet know that they are going to be offered a smart meter need a comprehensive information campaign. This could be as simple as providing “you can get a smart meter for your business too” style messaging. A more detailed information campaign will need to be undertaken simultaneously that builds on the work that Smart Energy GB is already undertaking with bodies like the Federation of Small Businesses (FSB). This would take identified passive interest in smart metering to an active interest, using sector-specific case studies and discussion pieces that explain how real businesses have employed smart in ways that have cut their energy bills.

We also ascertained that microbusinesses who have had a smart meter installed need more information about making efficiencies to feel the benefit. They struggle to turn awareness into savings as they often fail to check their data at a useful frequency – almost half never do so, and some are charged for this privilege. These businesses tend to rate the benefits of accurate billing and avoided meter readings above the real-time information that would translate into savings for them. One concern we therefore have is that the benefits of smart metering will flow overwhelmingly to suppliers in the form of avoided meter readings and accurate billing, and not consumers through behaviour change and demand reduction. Consideration therefore needs to be taken to a rebalancing of the messaging around the relative benefits of accurate billing compared to demand reduction. We would expect government and official bodies to be especially clear on this given that the official cost-benefit analysis is dependent on significant energy demand reduction from businesses.

In line with rules around smart in the domestic market, smart meters and basic data access should be free upfront. But businesses need advice and tips that go beyond raw data. Primarily this should be much-needed energy efficiency advice from a trusted source. Future information and additional services should focus on converting monitoring into savings, some more tech-savvy businesses already assume that smart meters will be compatible with emergent ‘Internet of Things’ technology. Almost half (49 per cent) said they would expect “immediate” cost savings without “a lot” of effort on their part and more generally want their in-home display or app to do the “heavy lifting”. This will require suppliers and others using new technology and approaches to turn usage data into pro-active guidance on energy efficiency. Businesses would also benefit from advice about the best tariffs and available (e.g. whether they would benefit from a tariff offering cheap off-peak electricity) and how this would work for their type of business and consumption profile.

An ideal smart meter rollout for microbusinesses would also include installations that signpost to energy efficiency advice. The installation process (including aftercare) should not be limited to the time spent physically installing – suppliers should therefore be incentivised to monitor for benefits, including demand reductions, after installation.

If microbusinesses face charges for their data, unambitious installation processes and no targeted awareness programmes they are far less likely to reduce demand sufficiently to justify the cost they all face in the rollout. But, if these challenges are tackled head-on, there is enough latent interest in reducing demand from microbusinesses that they can take control and benefit from smart meters.