London, U.K. — (METERING.COM) — July 1, 2011 – Britain’s smart meter rollout faces major risks that the Department of Energy and Climate Change (DECC) must address to achieve value for money from the program, according to a report from the National Audit Office.
The 40 page report, Preparations for the rollout of smart meters, states that while the plan was based on the strength of cost-benefit estimates, there is uncertainty over how much, and for how long, consumers will change their energy use, and therefore whether the benefits will be fully realized. Further, the smart metering trials that were carried out, while generating useful findings, do not relate to a nationally representative sample of households and so provide limited further support for the Department’s forecasts.
The current estimate of the program cost is £11.3 billion, while the benefits are estimated at £18.6 billion by 2030.
The report, which is aimed to provide an early assessment of the DECC’s progress in preparing for the mass rollout of smart meters and the risks to securing value for money for taxpayers and consumers, says the Department has developed its overall approach to installing smart meters, but now faces the considerably more challenging tasks of preparing detailed plans and delivering them.
In this phase full value for money was not demonstrated, because the early planning and budgeting were insufficient to support clear monitoring and accountability. However, the Department is now strengthening the program management team.
Other risks highlighted are that there is very little contingency time to address the risk that design approvals, procurement and testing take longer than planned, that the system will need sufficient flexibility to minimize the risk of future obsolescence, and the security risks on which the wider public has not yet been seriously engaged.
Further the DECC has yet to develop its benefits realization plans and consumer engagement strategy, and further work is needed to assess the impact of the program on vulnerable consumers.
“The benefits of proceeding with this major technological and logistical undertaking are still uncertain,” commented National Audit Office head Amyas Morse. “Large scale projects of this kind can take on a momentum of their own and so, along the way, there should be clear decision points at which the Department will need to review costs to consumers, benefits and risks and judge whether to carry on as originally planned or significantly change direction.”