The long-term effects of COVID-19 on the smart meter rollout

The long-term effects of COVID-19 on the smart meter rollout

The Coronavirus pandemic is drastically affecting every area of the UK economy. But what about the Government’s smart meter rollout? Let’s find out.

At the time of writing, England is in the middle of its so-called second lockdown, while the other UK nations are enforcing their own restrictions. Entire sectors of the economy are struggling and most businesses are having to adapt to survive. One of the matters that doesn’t get much attention is that the UK’s smart meter rollout is more or less on hold right now. Since it began in 2011, the rollout has suffered from technical problems, budget inflation, deadline extensions and more. Could COVID-19 be the final straw?

In this article, we’ll look more closely at how the pandemic has affected the rollout and how it will dictate what happens in the future. It’s hard to make predictions as the virus is unpredictable, and while a vaccine is on the horizon, there is nothing set in stone yet.

COVID put the smart meter rollout on hold

Coronavirus was not supposed to affect the smart meter rollout. When the first lockdown came into effect in March, OFGEM ruled that non-essential installations of smart meters could still take place. However, the rollout stopped immediately. The energy companies and their contractors announced that they would not take any risks with the health of their staff, and ruled that they would only install new smart meters in emergency situations. Many energy companies put their smart meter teams on furlough to avoid having to make them redundant.

From the start of the year until mid-March, around 11,500 smart meters were installed every day. By the end of March, that figure had dropped below 500. These would have been in emergencies, when the customer needed a new meter to restore their energy supply.

As the first lockdown lifted and non-emergency installations were encouraged, the numbers never reached their pre-lockdown heights. Customers are understandably wary of requesting smart meters and inviting installers into their homes for what is, at the end of the day, a non-essential operation. Even with safety measures in place, it is seen as an unnecessary risk.

Now, we are into the second lockdown – and as winter approaches, the virus shows little sign of abating. The future of the rollout is now in question.

Long term effects

Before the second lockdown, OFGEM estimated that the number of smart meter installations for 2020 would be 30% lower than 2017-2019. However, the second lockdown makes that extremely unlikely.

Currently, OFGEM projects that in 2021, the speed of the rollout will return to previous levels. However, that doesn’t make up the shortfall of 2020, putting the rollout further behind schedule.

OFGEM now estimates that by the end of 2023, 68% of homes in the UK will have smart meters. A year ago, OFGEM imagined that number would be 87% by the end of 2023.

Of course, the future is still uncertain. As I write this, it looks like a vaccine will be available in the next few months. However, we don’t know how long it will take to administer, or how it will affect what we can and can’t do. Making predictions at this time seems a bit pointless.

One thing is clear. If the rollout is ever going to work, action is needed on many fronts. The Government will have to extend the deadlines, which it has done many times before. Additionally, it will need to compel the energy companies to work faster in getting the meters installed, either with a carrot or stick approach. At the moment, energy companies believe fines for not hitting their targets will cause them to take unnecessary risks during the pandemic.

Something drastic needs to happen, unless the Government wants to abandon the target-driven rollout and take a different tack altogether?

Another obstacle on the road

In many ways, the Coronavirus is just another setback in a process that has endured many before. Unfortunately, the timing was terrible – the rollout was finally starting to progress as planned.

Firstly, there were technical problems. The first set of smart meters installed in the rollout, known as SMETS1, had a fault which meant they might stop working if the customer switched energy suppliers. Eventually, a new meter, SMETS2, was ready for rollout, but installers would need to replace the SMETS1 meters as well as fit new ones.

There were also issues with the budget. Originally estimated to cost around £11 billion, the cost is now 13.5 billion and rising.

These issues caused the Government to repeatedly extend the deadline to finish the rollout. It was initially planned to finish in 2019 – currently, it is set for the middle of 2025.

Are smart meters the answer?

With all these issues affecting the rollout, including a global pandemic, you may be wondering why the smart meter rollout is even happening.

The view from the top is that smart meters help consumers save money as they are better able to monitor the energy they use. When people use less energy, it is better for the environment. From the energy company’s point of view, the data produced by smart meters help them allocate their resources more efficiently.

However, many consumers have found that the savings smart meters have brought them are pretty minimal. Also, the environmental impact of the rollout (meter manufacture, transportation and recycling) diminishes the benefits of having a meter.

A better solution

At Meter Corp, we have been saying for a while that there is a better solution. Instead of having a target-driven smart meter rollout that puts pressure on the energy companies for minimal results, we should simply fit smart meters when customers’ current legacy meters have reached the end of their lives.

This idea is more relevant now than ever before. Scrapping the deadlines would allow the industry to get ahead of COVID and minimise risk. It would mean energy companies could divert their resources to more important matters, such as renewable energy. At the same time, consumers would not feel pressured to get a meter they don’t feel they need.

Perhaps in the aftermath of COVID, the Government will adopt this new approach. We’ll wait and see.