UK Energy
Image credit: Stock

Smart Energy International spoke with key industry leaders and stakeholders to understand the state of the GB smart meter rollout, the reality of the savings for consumers and what needs to change.

This article was originally published in Smart Energy International 5-2018.  You have access to our digital magazine here.

Below, the Right Honourable Grant Shapps MP, chairman of the British Infrastructure Group (BIG), a cross-party group of parliamentarians, shares his thoughts on the programme in light of the recent BIG report, ‘Not So Smart.’

Can you provide us with a brief description of the project goals and the key role players in reaching those goals?

The UK Government first began to make preparation for the rollout of 53 million energy smart meters to 30 million homes and small businesses across Great Britain in 2008. At the time the programme was advertised as having no downsides. Smart meters would reduce overall and peak-time consumer energy use, supplier overheads, network operator costs, and facilitate the transition to a more renewably powered smart grid. Customer bills would therefore fall, without impacting upon supplier profits, and the associated reduction in carbon emissions would help the government meet its climate change targets.

The rollout was originally set to start in 2011 and end in 2019. After initial delays though, in May 2013 the Coalition Government laid out a revised timetable for it to be completed by the end of 2020. After much lobbying by big energy companies, the UK became the only government in Europe to entrust the rollout to energy suppliers, as opposed to network operators.

In the same year Smart Energy GB was established to promote the rollout to the public, and Smart DCC Ltd was given a licence to establish and manage the communications network for 2nd Generation (SMETS 2) meters.

What is the current status of the smart meter rollout in Great Britain (meters installed,technology upgraded etc) and where should the project be tracking?

The main rollout stage was set to begin in October 2016, by which point customers were to be exclusively provided with new 2nd Generation (SMETS 2) meters. These meters should have overcome many of the technological shortcomings of 1st Generation (SMETS 1) meters, which were only meant to be installed in the previous ‘foundation’ or testing stage. Such limitations include SMETS 1 meters going ‘dumb’ in areas with poor mobile signals,not working in 30% of properties (with thick walls, high rise flats etc.), and going ‘dumb’for over half of the 1 million smart meter customers who switch suppliers every year.

Despite these issues however, suppliers presently continue to install these outdated meters. In fact, this very month, BEIS yet again held a consultation on extending the deadline by which suppliers can no longer install these obsolete meters, into early 2019.

In terms of where the project should be tracking, by March 2018 suppliers were a third of the way through the rollout but had only installed 21% of meters by then.

In order to hit their target by the deadline,suppliers therefore presently need to be installing almost 1.3 million meters a month. By April 2018 though, they were only installing around 420,000 meters a month.

Energy suppliers are therefore almost certain to miss the ‘end of 2020’ deadline,even though they have been allowed to continue to install outdated SMETS 1, as opposed to new SMETS 2 meters.

What are the main challenges experienced in terms of meeting project deadlines?

Regarding the overall programme timetable,the two biggest challenges going forward are both the physical lack of SMETS 2 meters to install (due to ongoing technological issues with their development), and the shortage of suitably trained engineers to install meters.

Additionally, and despite the fact it went ‘live’in 2016, there also remain challenges withthe functioning of the data communications network for SMETS 2 meters, and the plan to upgrade existing SMETS 1 meters.

On each of these issues, energy suppliers have had 3 years from announcement in 2013 to implementation in 2016, to make suitable preparations. That they have evidently failed to do so, has been allowed to occur due to the hands-off approach taken by BEIS. An overarching challenge which BIG has tried to raise through its Not So Smart report, is therefore actually getting BEIS and Ofgem to suitably hold energy suppliers, Smart DCC Ltd and Smart Energy GB to account for their rollout shortcomings.

Do you believe that there is any scenario in which customers may benefit from the rollout?

If government acknowledges the rollout isn’t going to plan, intervenes accordingly, and implements measures such as those outlined in BIG’s Not So Smart report, then the short answer is yes. Even with the ongoing issues,the programme still has the potential to both provide customer savings in the short term and deliver the long-term benefits that come with a smart grid.

However, should the programme be allowed to continue on its current trajectory, then it’s unlikely that customers will see a meaningful return on their investment.

Two years ago, BEIS had to revise down the predicted saving an average dual fuel customer in 2020 would see on their bills,from £26 to just £11. With the further delays and cost increases we have already seen since then, the questionable methodology used to calculate programme net benefits to begin with, and the fact that BEIS is assuming energy suppliers will pass on all their savings to customers, the true figure will now undoubtedly be well below £11.

Not only will customers therefore not see anywhere near the savings originally stated,but without any meaningful intervention it is not unforeseeable that the UK could end up like the State of Victoria in Australia,where the rollout actually ended with a net cost to customers.

What comments would you like to share with the public?

The first thing members of the public should be aware of is that they are under no legal or contractual obligation to accept a smart meter. Big energy suppliers have been using coercive tactics to pressure customers to accept a meter, but if you do not want one,then you don’t need to get one.

The public should also be aware that the meters being provided to them are not‘free’. Every customer has paid for the rollout through higher premiums on their energy bills and will continue to do so fora number of years. While energy companies are guaranteed to make savings, regardless of how the rollout progresses, each delay and cost increase is effectively passed onto customers.

Ultimately, and despite the numerous issues with handling the rollout, smart meters are vital for the transition to as mart grid. Given this important fact,and as customers have already paid for the programme, it is still in most of their interests to have a meter installed. The public should however wait until energy companies are offering 2nd Generation smart meters, which facilitate rather than hinder switching, to ensure they can get the most benefit out of the meters.

Commentary From The Department Of Business, Energy And Industrial Strategy

The Department of Business, Energy and Industrial Strategy (BEIS) explains the benefits of the smart meter rollout.

To dispel some of the negative press being disseminated concerning the rollout of smart meters across Great Britain, Smart Energy International went to the source for some much needed reassurance as to the benefits for consumers, as well as an accurate status update on meter deployment.

The Department for Business, Energy and Industrial Strategy (BEIS) press office, as well as Robert Cheesewright, Director of Policy and Communications for Smart

Energy GB, provided commentary and referred us to a number of statistics relating to the project.

According to BEIS: “More than 400,000 smart meters are being installed every month helping people to take control of their energy use and save money on their bills. Everyone who wants a smart meter will get one by the end of 2020.

“We already have 12 million smart meters operating across Great Britain, and as well as helping save money and cut CO2 emissions,they are the building blocks of a cleaner,smarter and more efficient energy system fit for the 21st century, with the potential to save up to £40 billion on energy costs between now and 2050.”

The good news:

  • More than 80% of people with smart meters say they have taken steps to reduce their energy use and as a result, cut their bills • It is estimated smart meters will take £300 million off consumer’s bills in 2020, rising to more than £1.2 billion per year by 2030 – an average annual saving of £47 per household
  • Smart meters will be the cornerstone of a cleaner, flexible and efficient energy system, forecast to save the country tens of billions of pounds.
  • 82% of people with smart meters say they have a better idea of their energy costs and 8 out 10 people with smart meters say they would recommend them to friends or family.
  • 90% of people with a smart meter say they are satisfied with the installation process.

OVO Energy, based in Bristol and London, is one of just a few companies already using smart meters to offer innovative products,such as rewarding customers for charging their electric vehicles at off-peak times.

These offers, made possible thanks to as mart meter, help customers use energy at times when there is less demand on the grid,in turn saving money on their bills.

Smart meters also support OVO’s intelligent platform V Charge, which is enabling residential appliances such as electric vehicles, electric heaters and in-home batteries to help balance the grid and reduce energy costs.

Stephen Fitzpatrick, CEO and founder, OVO said:The smart meter rollout is a huge and complicated programme. However, there’s no question it needs to be done as we can’t build the energy system of the future unless we know accurately how much energy people are using and when.

OVO is using technology like electric vehicles,smart electric heat and batteries to help lower energy bills for consumers and enable us to use more renewable energy. None of this technology will work without smart metering.

We welcome the government’s recent efforts to improve the delivery of smart meters but there is still more work to do.

At OVO’s offices, Minister Claire Perry met with their smart meter installation engineers, who undergo thorough training ahead of installations. When having as mart meter installed all homes and small businesses benefit from a free visual safety check of their gas appliances and electricity supply; in the past 18 months alone, installers have raised 430,000 safety notices for issues not related to smart meters during installation visits as part of the safety check provided.

More than 400,000 meters are being installed by energy suppliers across Great Britain each month. Consumers can call their supplier and book an appointment to have one installed.

More than 500,000 households in the South West [Smart Energy GB, August 2018] have already had a smart meter installed and hose still without one could save a collective£50 million if they had a smart meter. If every household in Great Britain had a smart meter, we could save enough energy to power every household in Exeter, Plymouth and Swindon for two years.

Myths

According to BEIS, it’s vital to distinguish between fact and fiction when it comes to gaining consumer buy in. Many base their views of the rollout on false information and the government needs to ensure accurate information is circulated through strategic awareness campaigns.

Myth 1: Smart meters stop people from switching and lock them into one supplier Fact: That is simply untrue. All consumers can switch whenever they want. In fact households with smart meters are more likely to switch than those who don’t have one, with 23% of people with smart meters switching in the last year, versus 17% without a smart meter.

Myth 2: Smart meters don’t really help you save money

Fact: Not true. More than 80% of people with smart meters have taken steps to reduce their energy use and as a result, cut their bills. It is estimated smart meters will take £300 million off consumer’s bills in 2020, rising to more than £1.2 billion per year by 2030 – an average annual saving of £47 per household. 8 in 10 consumers with a smart meter would recommend one to family and friends.

Myth 3: People are being forced to have smart meters installed

Fact: Not true. Those customers who want to benefit from having a smart meter can have one installed at no extra cost, but installing a smart meter is always the customer’s choice and people have the right to say no.

Myth 4: Suppliers are bullying consumers into having a smart meter installed Fact: Ofgem has made it clear suppliers must treat customers fairly and their communications must be complete, accurate and not misleading. Ofgem will take up complaints with energy suppliers for customers who feel they are being bullied or coerced into getting a smart meter.

Myth 5: Smart meters can be hacked and are a safety hazard in the home Fact: Smart meters are secure, with a security system developed by leading experts in industry and government including GCHQ’s National Cyber Security Centre.

Smart meter installations are also making British homes safer. In the past 18 months, over 430,000 safety issues were identified by smart meter installers, unrelated to the smart meter installation, as a result of free visual safety checks, helping to protect households across Great Britain.

Myth 6: Suppliers are installing ‘dumb’ meters that fail when you switch supplier Fact: All smart meters offer the same smart functions to customers. Some first generation smart meters may lose some smart functionality if consumers switch but 93% of those installed remain unaffected. This issue is only temporary however and all smart meters will retain their full capabilities when they are enrolled into the national wireless smart meter network. This upgrade will begin by the end of 2018 and will happen automatically without the consumer needing to do anything.

Myth 7: Consumers with poor mobile signal can’t get a smart meter Fact: By the end of the year more than 95% of households will have signal, rising to 99.25% by the end of 2020 – meaning that almost every household who wants one will be able to have a smart meter.

Myth 8: Suppliers aren’t making enough progress on the rollout of smart meters Fact: Over 400,000 smart meters are being installed every month and 12 million are already operating across Great Britain. Ofgem holds suppliers to account to ensure they are meeting their obligations to roll out smart meters and can fine energy companies for missing targets.

Myth 9: Smart meters can turn off your fridge without you knowing

Fact: No they can’t. It will always be up to consumers to decide when to use their appliances. In the future smart meters will allow consumers to be rewarded when they use appliances at times when energy is cheaper.

Myth 10: Smart meters mean suppliers can charge higher prices without you knowing Fact: Energy suppliers can only charge prices customers have agreed to – and that won’t change. Customers with smart meters can access tariffs that allow them to get cheaper prices at times when demand is low – but it will always be the customer’s choice.