Ofgem’s Smart Meter Rollout – What’s Happening?
The UK’s energy regulator has documented the past, present and future of the smart meter rollout. But what does it mean to you?
In an open letter, Ofgem, as the regulatory body in charge of the UK’s energy industry, has set out the current status of the country’s smart meter rollout. It documents everything that has happened this year to progress the rollout and identifies what needs to be done moving forward to meet the government’s ambitious smart meter targets.
In this article, we’ll pick out ten highlights from the (13-page) open letter and explain what it means for the industry. Let’s get started.
1 – The rollout passes the halfway point
At the end of 2022, 55% of the energy meters in use in the UK were smart meters. This means more than half the homes and businesses in the UK were reaping the benefits of smart meters, including:
- Real-time information on energy use
- Automatic readings sent to energy suppliers
- Nudges to reduce energy use and save money
Passing this milestone also benefits the energy industry as smart meters make the market more flexible and help suppliers better allocate their resources.
2 – The framework continues
The current smart meter rollout framework started in January 2022 and will last until the end of 2025. The framework provides the basis for the industry as it aims to install more smart meters in homes and businesses. For example, during this period, suppliers must hit annual installation targets.
3 – Most suppliers are missing their targets
Out of 49 energy suppliers that work to Ofgem’s smart meter rollout framework, 31 have failed to achieve their electricity meter installation targets and 23 missed their gas installation goals.
Missing targets represents a breach of a supplier’s license, which Ofgem takes extremely seriously. Each failing supplier will be contacted and enforcement action may be taken. Penalties for missing targets may become more severe in forthcoming years.
4 – Suppliers need more installers
One of the reasons suppliers may not be hitting targets is a lack of qualified installers. From Q1 2021 to Q4 2022, the number of smart meter installers employed by large energy suppliers fell from 6,800 to 6,000.
Ofgem believes that suppliers aren’t doing enough to retain their installers – and that they must do more. Ofgem would like to see suppliers be more active in recruiting qualified installers and training new ones, including through apprenticeship schemes.
5 – The prepayment smart meter rollout continues
Prepayment tariffs have been a hot topic in the industry during the recent energy crisis. Some suppliers have received bad publicity for making late-paying customers prepay for their energy.
Ofgem stresses that suppliers must look to fit smart meters wherever possible, even if they are for customers on prepayment tariffs. Prepayment customers can still benefit from having a smart meter, including being able to top up their accounts from their phones rather than going to the shop. In addition, the same smart meters work on standard tariffs as well as prepayment plans, so if the customer moves to a credit account, they don’t need a new meter.
6 – The end of RTS meters
Radio Teleswitch (RTS) meters are legacy energy meters that are controlled by signals from radio masts. These radio signals are traditionally used to allow meters to switch from on-peak to off-peak rates on the customer’s tariff.
The technology behind RTS is due to switch off in March 2023. However, Ofgem believes suppliers haven’t done enough to identify customers with RTS meters and move them to smart meters. It wants to see much more action from suppliers on this.
7 – Are enough smart meters smart?
Ofgem is concerned that too many smart meters – while installed in homes and businesses – are not operating in smart mode. This means there are smart meters that are installed but not communicating with their energy suppliers. It means customers are missing out on the many benefits of smart meter ownership.
According to its research, 89% of smart meters are running in smart mode, which means 11% are not. That’s around 3.2 million meters. Ofgem wants suppliers to proactively identify customers whose meters aren’t running smart and work to remedy the situation.
8 – Maintenance of in-home displays
The in-home display (IHD) is the little screen that shows customers their energy use in real time.
Ofgem wants to ensure suppliers are fitting IHDs properly when installing smart meters in customers’ homes. They also want to ensure that if an IHD is faulty, it is swiftly replaced. Currently, Ofgem is happy with a 12-month window for suppliers to replace faulty IHDs, but it wants to look at extending this period.
9 – Replacing SMETS1 smart meters
SMETS1 smart meters were the first smart meters installed in homes when the rollout began. Unfortunately, it turned out that if a customer with a SMETS1 meter switched energy suppliers, their meter would not be able to communicate with the new supplier, effectively rendering the meter useless. A new meter, SMETS2, which would continue communicating even if the customer moved suppliers, was quickly introduced.
Ofgem wants suppliers to be more proactive in fixing any SMETS1 smart meters their customers have in their homes. Alternatively, they can replace them with SMETS2 meters.
10 – Raising standards
Ofgem has introduced the Smart Metering Installation Schedule (SMIS) to ensure customers receive good service during the smart meter installation process. It will monitor suppliers’ compliance with the schedule through customer surveys. Suppliers that fail to meet standards will face penalties.
So there you have it: the ten things you need to know about Ofgem’s open letter to the energy industry on smart meters. It’s great to see the regulator taking a hands-on approach with suppliers participating in the smart meter rollout. We hope it means more customers will experience the many benefits of having a smart meter in their homes.