What does the new smart meter framework mean for the rollout?
The Government recently created a new framework around the smart meter rollout. Will it be the start of a change in fortunes for the rollout? Let’s find out more.
By anyone’s definition, the UK’s smart meter rollout has been a bit of a disaster. There have been significant budget increases, technical problems, deadline extensions and a global pandemic. However, the Government is still persevering with the rollout – and it recently created a new framework to try and kickstart it back into life.
But what does it mean for consumers and the energy companies that are trying to navigate their way through? In this article, we’ll look deeper at the framework and try to find out.
What is the framework?
The new smart metering policy framework is the UK Government’s new plan to put a smart meter in every home and business in the UK by June 30th 2025. Initially, the deadline was the end of 2020, but this has been pushed back numerous times due to technical issues and, most recently, the Coronavirus.
The centrepiece of the framework is the proposal that each energy company involved in the rollout will be set individual targets on an annual basis. These targets will relate to the number of smart meter installations they carry out, on a trajectory towards 100% coverage.
The concept behind this initiative is if energy companies know what they have to achieve, they can allocate resources in the right way and invest if necessary. Of course, failure to meet these targets will result in sanctions.
The new framework is due to start on July 1st 2021 and last for four years, up to the deadline date in 2025.
Why smart meters?
In the framework document, the Government outlined why they regard the smart meter rollout as essential – and why they are making such an effort to get them into consumers’ homes.
Firstly, they regard smart meters as a vital part of the drive to net-zero carbon emissions. They believe that smart meters make consumers more conscious of their energy use, making them work harder to save energy.
The Government also believes that smart meters make life easier for consumers. Making energy easier to track means people know what they use and how much they will be charged. That way, they can budget accordingly.
During the Coronavirus pandemic, consumers with smart meters have fared better than those without, according to the framework documents. They can send meter readings without anyone having to come into their home and read it manually. Consumers on prepayment plans can top up their energy without leaving their home. Also, energy suppliers can communicate with customers who need emergency support. If there is another lockdown, or even a similar pandemic in the future, more smart meters in more homes would be a good idea.
One of the potential problems highlighted in the framework document relates to consumer attitudes to the rollout. It appears that people are not as open to having smart meters in their homes as the Government might like. This could cause further delays to the rollout project.
There are several reasons why this may be the case. Firstly, people don’t see the benefits associated with smart meters, and even if they do, they don’t regard having a smart meter installed as a priority. This is even more apparent during the pandemic, when getting a smart meter installed would require an installer to be in your home for several hours.
Many consumers will also have an unfavourable impression because of the technical problems at the start of the rollout. Many of the first meters installed (known as SMETS1) shipped with proprietary communications that meant they would stop working if the consumer switched their energy supplier. Many of these meters had to be replaced with a next-generation meter (SMETS2), which would have been a frustrating process.
The Government hopes that better communication with consumers, better SMETS2 meters, as well as an upturn in fortunes, will begin to win people over. As the rollout’s reputation improves, more people will sign up to join the smart meter revolution.
Are they right?
The thing is, the consumers are right to have this detached attitude. Smart meters are useful, but the benefits they bring are not significant enough to make installing one a priority.
The average cost savings for smart meter users are minimal, perhaps as low as £11 per year. You can usually save more money by simply switching energy suppliers.
The jury is out on the environmental benefits of smart meters too. Smart meters may drive consumers to save a (tiny) amount of energy, but what about the environmental cost of manufacturing, shipping, installing and recycling the old meters?
Also, getting a smart meter installed is a disruption to your day. An installer will need to spend several hours in your home to get it installed, which is even more of a problem during a pandemic. Plus, if it doesn’t work, prepare for hours on the phone, on hold to your energy supplier.
A better solution?
While it is good to see the Government attempting to make a success of the smart meter rollout, which was in danger of becoming a disaster, one question remains – why have a rollout at all? Why do energy companies and consumers need this disruption in their lives, to have a meter installed that brings minimal tangible benefits?
A better solution would be only to replace energy meters with smart meters when they actually stop working. When a traditional energy meter comes to the end of its life, that’s when it’s time to get a smart meter. This would be better for energy companies, who could concentrate on things that really matter to the environment and their customers. On the other hand, consumers who were never that concerned about smart meters anyway wouldn’t even notice.
That sounds like a better framework to me.