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Smart meters risk exacerbating problems of digital exclusion, says Ofgem

An Ofgem report has warned of the difficulties in getting consumers to engage with smart meters

Active use of advanced smart meter technology to manage domestic gas and electricity consumption is highest amongst wealthier socio-economic groups, and this indicator of digital exclusion shows little sign of changing, according to a report from energy regulator Ofgem.

With the switchover process from traditional gas and electricity meters to all-in-one connected smart meters now well underway, Ofgem’s latest Future Insights Report, the Futures of Domestic Energy Consumption, found that consumers in higher socio-economic grades were considerably more likely to be actively engaged with the process, while less well-off members of society were far less so.

Ofgem said this pattern had strengthened since 2016, meaning it may be hard to be sure that the benefits of innovation and decarbonisation could be shared at all levels of society. Additionally, it said, wealthier consumers may find it easier to invest upfront capital costs in connected appliances that could manage their energy use, or in micro-generation by installing solar panels on their roofs, for example.

Ofgem warned consumers labelled unengaged, or “unplugged” in the report’s parlance, may eventually choose to disengage by abrogating control of their energy supply or usage to third parties, while richer, “switched on” households might even start selling energy to their neighbours.

Furthermore, Ofgem said the transition to smarter, connected energy systems would give energy suppliers access to vast amounts of data on consumer behaviour and preferences, which should permit more diverse tariffs to, for example, incentivise use of smarter, efficient appliances, or reflect real-time wholesale costs.

Unfortunately, the flipside of this might be more complexity, and substantial divergence in prices, and because less engaged, poorer consumers tend to pay more on average and not switch suppliers, this could further fuel the problem.

While the changing relationship between consumers and energy suppliers that is now in progress would be a good thing for the country in terms of building a cleaner, more sustainable system for the future, there still remained a possibility that people would not adapt their behaviour, or lack the time or motivation to actively engage with the new system.

“We and government need to ensure that their interests are still protected, and that decarbonisation and other objectives can be achieved,” wrote the report’s authors.

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The UK’s smart meter roll-out has been dogged by controversy, ranging from concerns over the security of millions of connected internet of things devices to accusations that the government was misselling the benefits of the technology to users.

Most recently, the Department for Business, Energy and Industrial Strategy, which is overseeing the roll-out, was forced to concede that the net financial benefit of switching to smart meters would likely be hundreds of millions of pounds less than originally thought, thanks to a number of factors such as changing energy consumption patterns, low inflation, and changes to the network design and build.

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