By David Stroud, General Manager, EDMI Europe
The recent delay in Britain’s smart meter rollout has been regarded as an intelligent move by the government. Pushing the start date back to 2015 will ensure that the functionality will be in place to meet consumer demands. It has been widely acknowledged that consumer engagement and public acceptance is crucial to the success of the rollout, highlighted by what we have seen from the experience of the U.S. and our European counterparts.
According to DECC’s public awareness report, currently about half of British consumers have heard of smart meters, and enthusiasm for receiving one is mixed. If a large number of consumers do not want meters installed the cost of the rollout could increase as more investment is required to try and persuade them otherwise. G.B. needs to make sure that the consumer is educated and engaged in the process, and this delay should give us more time to make it happen.
Key learnings from the U.S.
The approach in the U.S. to the smart meter rollout has given Britain and other EU countries plenty to learn from when it comes to planning their own rollout programs. In the U.S. the Federal Energy Regulatory Commission reports that there has been more than $4 billion in stimulus money and 30 million meters deployed in the two years since its program started. Yet the Commission also found that smart meter penetration levels in the U.S. have only reached 23%. There are a couple of causal factors that may be to blame for this. Firstly, the political and geographical make-up of the U.S. means that some states have had significantly more success than others.
Yet at the same time, it is vital to highlight that keeping the rollout customer centric in approach is again incredibly important. Consumer wariness in the U.S. has proven a considerable challenge. For example, a recent select committee report described a conversation with a number of utility companies about the effect that consumer concerns about smart meters had had on the rollout, particularly in relation to health and privacy. There had been pockets of resistance across California, and in some areas opposition had been so strong that local politicians had considered banning further smart meter installations. Even though these particular fears are voiced less in Britain, education will still be vital to prevent a similar backlash.
A snapshot of Europe
According to a senior energy official at the European Commission, Europe’s ambitious plan for 80% market penetration of smart meters by 2020 is failing to live up to expectations. The official claims that market penetration is still very low, particularly in the new member states, and that there is a big shortfall in investment. The Commission reports that €6 billion has been invested in 300 smart meter projects across Europe, however it believes that more investment is needed, €50 billion for 250 million smart meters by 2020 and €480 billion to upgrade the rest of the grid system by 2030.
Looking at individual countries within Europe, IMS Research reports that the Nordics and Italy are currently leading in the smart meter rollout with over 94% and 70% of meters installed respectively. This is due in large part to early investment ($3 billion by 2006) in smart meter technology in Italy and the first policy of regulation-driven rollout of smart meters in Sweden. Germany, in comparison is lagging behind their European counterparts. With very optimistic expectations in the beginning, energy companies now believe that only 12% of German homes will have smart meters within the next four years. This is down from the 51% originally estimated in 2010. Predictions made early last year for 2015 show France (49%), Spain & Portugal (73%) and the U.K. & Ireland (65%) catching up. However there is uncertainty on whether the U.K. will reach its potential this fast, taking into consideration the delay in the rollout, this may be a substantial overestimate.
Europe is very much aware that smart metering rollouts are not only about technology; they are also very much about the level of engagement achieved with consumers. For example, Denmark’s rollout paid careful attention to the consumer, training installers in how to talk to customers in their homes resulting in minimal complaints to utility companies. Customers in Denmark are now saving an average of 16% on their power bills. Ultimately in the U.K. and other EU countries that are planning or running rollouts, success is dependent on how countries plan to monitor and gauge consumer expectations as well as how rigorously the program is implemented.
In order to promote consumer engagement there are a number of underlying factors that need to be addressed. It is imperative to secure the right skill set for the installers, as highlighted in the Danish rollout. Secondly, the consumer needs to be persuaded to engage in long term behavioral change. Soft skills from installers will ensure that miscommunication is kept to a minimum and that customer expectations are valid and realistic in conjunction with the smart meters capabilities. It is important to manage these expectations; and therefore underline that a smart meter only offers the potential to achieve significant savings to their customers if behavioral change is applied. On its own a smart meter is not an energy saving tool, it is an enabler for change.
The program already in place in Britain has noticeably taken into consideration the experiences of other countries, whether positive or negative. The delay in the rollout will hopefully provide the opportunity to iron out any kinks and ensure that consumers have a seamless quality experience. If all goes well, the British rollout could become the beacon of best practice for future programs.