NEWS

According to critics, the UK’s smart meter rollout is floundering again and a new approach is needed. What can be done? Let’s find out more.

The UK’s smart meter rollout has had a troubled history, to say the least. Since it was first devised in 2008, it’s faced massive technical issues, several budgetary problems and a global pandemic that all but put a halt to the whole thing. The rollout was supposed to be completed by 2019, but it’s now pencilled in for 2025, albeit at a reduced threshold for completion. Today, there are further problems threatening to derail the rollout.

In this article, we’ll look at the challenges the rollout currently faces and explore possible solutions. Let’s get started.

The news

The catalyst for the possible reorganisation of the rollout is the Public Accounts Committee (PAC). The PAC is a House of Commons select committee in charge of evaluating the effectiveness and value for money of government programmes, including the smart meter rollout.

The PAC was highly critical of the rollout and the bodies involved, including Ofgem, whose ‘traditional regulatory’ mindset of penalising suppliers who miss targets could delay the smart meter rollout further (in its view). Indeed on 9 November, Ofgem agreed voluntary payment contributions with 6 energy suppliers for failing to hit their 2022 installation targets. The payments came to a combined £10.8m.

As of March 2023, only 57% of the UK’s energy meters were running in smart mode. There are significant variations in installation rates across different areas and demographics. For example, installation rates are lower in London and rural areas, and while men and older people are more likely to have smart meters, women, younger people and the less wealthy are less likely to have had the installation.

Currently, Ofgem has the power to penalise suppliers who miss their targets via fines, enforcement action or voluntary payments. However, the PAC believes this is the wrong approach to accelerating the rollout. Instead, the PAC would like to see Ofgem targeting suppliers for their investment and innovation in the sector, as well as how they engage with customers.

Challenges to the rollout

The rollout has faced several challenges throughout the process. However, there are four obstacles currently in the way of achieving its goals:

• Technical issues – Around 3 million smart meters are not functioning correctly. Estimates show that 7 million meters could become obsolete when the 2G and 3G mobile networks are shut down (by 2033)
• Installation difficulties – Suppliers are finding it hard to complete installations in  blocks of flats, but also in remote areas without strong network connectivity
• Dwindling consumer appetite – There is the view that everyone who wants a smart meter has got one by now, but also that the industry hasn’t been proactive enough in communicating the benefits of smart meters to holdouts
• Low energy savings – Many consumers are not seeing the monetary savings that they were expecting when they installed smart meters, while suppliers have withdrawn exclusive smart-meter-only time-of-use tariffs during the recent energy crisis

All of these issues need to be solved if the industry is going to get the rollout moving in the right direction again.

Proposed solutions

The Public Accounts Committee proposed several solutions to reinvigorate the rollout:

• More consumer engagement from suppliers to encourage behaviour changes
• Support for smart meter installation in remote areas
• Better understanding of the data by the Department for Energy Security and Net Zero (DESNZ), including an update of their data sets
• A replacement schedule for non-functional meters
• A coordinated campaign to sell the benefits of smart meters to consumers
• Annual reporting to Parliament by DESNZ on the state of the rollout

Looking to the future

It’s important to note that there was no place for ‘raising fines for energy suppliers who miss targets’ in the PAC’s list of proposed solutions. Ofgem believes that the stick is more effective than the carrot, but the PAC disagrees. Why double down on something that wasn’t working in the first place?

Smart meters have the potential to deliver significant benefits to consumers, which is so important in the middle of a cost of living crisis. However, the government and the energy industry need to pull in the same direction to help achieve it.

Will it work? Only time will tell.