By Garry Felgate
More than three years have elapsed since we started work on our smart metering programme at the Energy Retail Association (ERA). In the past year, our activity has focused on the government’s plans for their preferred rollout model for smart meters. Our own research conducted last year showed that 32% of the public was aware of this planned rollout.
While there is clearly still some way to go to raise public awareness about smart meters and the benefits they bring, the public’s increasing knowledge base on issues such as climate change, the shift to a low carbon economy and the need to reduce energy consumption means that the issue of smart metering is now more timely than ever before.
ERA members welcomed the much-anticipated announcement by the Department of Energy and Climate Change (DECC) on 2 December 2009, that gas and electricity smart meters would be rolled out by energy suppliers to every home by the end of 2020.
This announcement kick-started the preparations for smart meters in earnest with a central smart metering programme established by the DECC and Ofgem, the energy regulator. Each of the major energy suppliers have their own programmes in place to deliver smart metering and much of this development is dependent on the work undertaken over the next few months by this joint programme.
So what are our next steps, and what needs to happen to ensure the project is a success for everyone?
BENEFITS OF SMART METERING MUST BE ACHIEVED
The priority for the project has to be to recognise the core principle that the £6 billion positive cost benefit case for smart metering must deliver benefits to British consumers. In order to make sure this remains at the heart of the project, energy suppliers need to continue to be involved in key discussions with the DECC and Ofgem. Energy suppliers will be providing the bulk of the investment and will be responsible for the delivery of smart metering, so it is essential for them to be included in the process over the coming months.
It is also important to recognise that industry benefits are consumer benefits.
Clearly, consumers will be able to benefit from smart meters because of the insight the technology will provide in terms of how to save on energy bills.
There is also the question of the new two-way relationship between customer and supplier, which will include the end of estimated bills, more innovative tariffs and the possibility of selling energy back to the grid from microgeneration systems in the home such as wind turbines and solar panels. There is also a significant benefit to society, not only through the development of an energy industry that is truly efficient, but through the important role smart metering will play in the transition to a low carbon economy.
The government’s consultation response in December rightly identified better, more accurate billing and meter reading as an essential way of achieving these benefits for consumers. This simplification will drastically improve the switching process, making it quicker and easier to change supplier. Without simplification, this unique opportunity to deliver benefits to the consumer will be lost. In addition, the government’s and regulator’s programme needs to work with the industry to look for opportunities to make Britain’s already highly competitive market serve the consumer better.
Competition is a consumer benefit that cannot be underestimated. Any supplier who does not pass on savings and other benefits to their customers risks losing them to a supplier that has done so.
Although this seems reassuring to consumers, it remains true that the smart metering market design needs to adequately define interoperability. Metering interoperability is crucially important to the benefits case and the effort required to achieve it must not be underestimated.
While suppliers also welcome the government’s preferred choice of the centralised communications market model, there is still much development work to do to define the model and its scope.
What is needed above all during these next stages is ambition to deliver the best for Britain and a vision for what needs to be delivered. This vision will guide and inform the programme at every stage.
MOMENTUM MUST NOT BE LOST
So having defined what is needed for the next stages, suppliers find themselves once again urging the government and the regulator to maintain the momentum for smart meters.
While progress has undoubtedly been made since the initial project work back in 2006, suppliers are still up against a deadline of 2020 in order to deliver the ambitious rollout of smart meters to every household in Britain.
The ERA and its members have always been committed to this deadline and to delivering the programme within Britain’s uniquely competitive market place. This is the challenge that makes the smart metering programme so exciting, but there is no room for complacency along the way. The benefits of smart metering are clear – the industry needs this same clarity now on the programme itself.