The IT cost of the UK’s smart meter roll-out is set to skyrocket as suppliers buy in IT consultants and recruit and train installers, a National Audit Office report has warned.
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The programme is due to complete in 2020, but costs are expected to rise during the programme's final year.
Residential gas and electricity meters will need to communicate over a radio network with a home hub, which will gather data and send the meter readings to a data facility operated by the Data and Communications Company (DCC), which will act as a data hub for smart meter data.
The Department of Energy and Climate Change warned that the current home area network radio system is not suitable for up to 30% of premises, so suppliers have had to develop alternative home networking based on different frequencies. Most homes will operate on a 2.4GHz home radio network.
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For incompatible households, energy suppliers are evaluating meters that communicate on the 868MHz frequency. But even with the 868MHz meters, the NAO said 5% of households will still not be on the network.
The NAO report said that the DCC, which manages the networking for smart meters, is looking to delay the mass roll-out by eight to 10 weeks to allow enough time to build and test the smart metering communications systems. This will increase the cost of the roll-out by £23m, according to the NAO.
So far, only two of the big six energy suppliers have installed a significant number of smart meters, the NAO report said.
The NAO also said the net economic benefits from rolling out smart meters across the UK is now estimated at £6.2bn – £2.1bn less than the government's original forecast in 2011.
The NAO noted that the main reason for the lower-than-expected net benefits is the one-year delay in the completion of the mass roll-out. "The Department expects the [smart meter] programme to deliver additional benefits, which it has not quantified, from increased competition through easier switching between suppliers and from the opportunities offered by developing a smart grid," the report stated.