The Energy and Climate Change Committee has said the government’s plans to install energy-saving smart meters in every single UK home and business by 2020 are veering off-track and could end up being an expensive failure.
The committee, which is chaired by MP Tim Yeo – a former environment minister under John Major – said the Smart Meter project was not being driven forward effectively, and highlighted a number of concerns around technical, logistical and public communications issues.
Yeo accused the government of failing to move quickly enough following previous warnings, and said time was now running out.
“Without a significant and immediate change to the present approach, the programme runs the risk of falling far short of expectations,” he said.
“The government is at a crossroads on its policy. It can continue with its current approach and risk embarrassment through public disengagement on a flagship energy policy, or it can grip the reins and steer the energy industry along a more successful path.”
It is estimated that about 53 million smart meter devices will need to be installed by energy suppliers in 30 million homes and business, costing around £10.9bn, although the Department for Energy and Climate Change (DECC) claims this will be offset by energy efficiency savings of £17.1bn.
The meter units use mobile phone networks and wireless technology to provide suppliers with electricity and gas readings remotely. If successful, they may emerge as a benchmark for internet of things deployments.
The benefits of smart meters are already established, with British Gas saying that customer satisfaction among its existing foundation stage smart meter customers was on average 53% higher than among those still using standard meters, and complaints were down by 21%, with dual fuel customers saving around £26 per annum.
However, following a review, the committee has declared itself disappointed by the government’s failure to resolve problems around technical communications in multiple occupancy and tall buildings; compatibility problems between different suppliers and types of meter; a slow start to informing and educating the general public on smart meters; and network roll-out delays at the government-appointed communications infrastructure company Smart DCC.
It also noted the continuing failure by DECC to publish the Major Projects Authority’s review of the scheme on grounds of “commercial sensitivity”.
Interoperability critical, say suppliers
Energy suppliers, meanwhile, have been calling for the government to take the lead in making sure all industry parties supply an industry-standard, interoperable system.
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British Gas said it believed this would be substantially cheaper than having each supplier go into a multiple-occupancy building to install its own technology which did not necessarily play nicely with others, a view echoed by Scottish and Southern Energy (SSE).
Responding to the committee’s inquiry, a spokesperson for smart meter maintenance firm Skanska said a lack of interoperability would add more risk because there was no mechanism for the meter-rental agreement to be transferred between suppliers should a customer switch.
In effect, if a customer switched from British Gas to SSE, SSE would bear the burden of installing new equipment, and the costs would be passed to the consumer, said Skanska.
Concerns were also raised around the estate of existing smart metering equipment technical specification (Smets) 1 smart meters, which would need to be removed and replaced with the Smets 2 meters required for the roll-out phase.
SSE said that the longer Smart DCC delayed its infrastructure the more likely that suppliers would continue to install foundation stage SMETS 1 meters, deepening the interoperability problem.
In response the committee agreed that Smart DCC must now urgently find ways of incorporating foundation-stage meters into its infrastructure.
A further challenge will arise around a shortage of installation engineers, according to Ovo Energy in-home technology managing director Melissa Gander, who said that historically electricity-trained installers and gas-trained installers were already having to be retrained on dual fuel meters, and then had to layer smart meter training on top.
“There is a lot of cost and it is a risk in employing installers because the market is so small that you pay to train them and there is a retention risk there,” she said.
British Gas smart metering managing director Jorge Pikunic estimated he would need more than 10,000 engineers to complete on schedule. In 2014, he hired 450 British Gas-trained fitters. But, he said, “to make sure the peak does not go too high it is important we start the mass roll-out as soon as possible to smooth that peak.”
A lack of effective communication between the energy industry and the general public was also highlighted in the report, with British Gas among those calling for a broad, consistent and positive message as it had found that although 40% of customers were aware of smart meters, it was unclear that they knew quite what they are.
Vulnerable customers in particular would also need support, noted chief executive of anti-fuel poverty charity National Energy Action, Jenny Saunders, who said she had no confidence everything was in place to ensure all customers would have access to smart meters.
Gander at Ovo Energy added that smart meters often fell out of use and were even switched off, possibly because people didn’t understand how to use them properly.
Smart Energy GB, the body responsible for consumer engagement, called for broadcasters with public service obligations, such as the BBC, to communicate the smart meter roll-out as part of their remit.