U.K. government urged to decide policy on smart meters


London, U.K. — (METERING.COM) — July 6, 2007 – Government intervention is required if its Energy White Paper vision of smart meters for all in the U.K. within 10 years is to be met, according to a new report from the think tank, Sustainability First.

To achieve smart meters for all in the ten-year timescale will require major investment in new meters and associated communications and at least a doubling of the current meter replacement rate, says the report. The lack of clear supplier incentives for mass smart meter installation means that at least some government and/or regulatory intervention will be required if the vision is to become a reality.

The report, which was sponsored by major U.K. energy suppliers National Grid, the Energy Saving Trust, Ofgem, Ampy Metering and Accenture, says that government and Ofgem need to clarify what type of meter will meet the definition of a “smart” meter and should, from 2008, require all new and replacement meters to meet this definition.

The report also considers the role of visual displays for consumers, noting that a visual display linked to the smart meter could provide immediate feedback. However, displays without a smart meter will not facilitate a link to price signals through innovative tariffs. Moreover low-cost stand alone visual displays are not available for conventional gas meters, despite U.K. households using around four times more gas than electricity.

If the Energy White Paper proposal results in displays being delivered without smart meters, it runs the risk of limited benefit for potentially significant cost and diverting supplier effort from the greater prize of full smart meters, says the report. In-home displays should be delivered along with smart meters and not as a separate initiative.

It is also suggested that for electricity all smart meters should support prepayment as this adds little to costs and will result in savings in replacing meters when customers change payment method. For gas, given the higher extra cost of prepayment functionality, a fuller appraisal of the costs and benefits would be required.

The report continues that two particular social issues that need consideration are whether low income/vulnerable households would be able to benefit from new tariff options and whether more information would cause such households to cut back on essential use. These social factors need to be borne in mind by suppliers, the government and Ofgem in the deployment of smart meters. Furthermore, smart meters need to form part of a broader strategy to improve energy efficiency for low income households.

The report reviews three possible delivery options:

  • Evolution of supplier-led approach within a mandated timescale and framework, in which the government would place an obligation on suppliers to ensure that all their customers have a smart meter within 10 years of a specified start date.
  • Systematic roll-out of meter and communications network, which would be likely to be regional and based on some form of meter company franchise.
  • Systematic roll-out of communications network only – in effect a hybrid of options 1 and 2, with the meter communications network via a franchise, leaving smart meter installation to suppliers within a mandated timescale and framework.

Any of these options will require a number of legislative and regulatory changes and a very major implementation effort, says the report, adding that an important next step will be to carry out a fully-costed analysis, with sensitivities, of the likely present and future costs of a limited number of delivery options. This is clearly a task where the government and Ofgem need to provide leadership, working in collaboration with the industry.

Uncertainty about what, if anything, the government may or may not mandate, is presently inhibiting even modest smart meter investment, says the report, calling on government “to act quickly to set out how its smart meter vision will become a reality.”