It is now ten years since the (then Labour) government confirmed it would roll-out smart meters to all UK homes. And with ten years behind us, and two until the 2020 deadline for roll-out, things aren’t fully going to plan.
Yes, customers with a smart meter installed are happy, but organisational and technical problems abound.
Suppliers are still installing SMETS1 meters, with the more advanced SMETS2 meters still not quite ready for a full rollout. Of the latter, there were a grand total of 250 installed at the last time of counting, mostly in the homes of energy suppliers’ staff. A good proportion of the SMETS1 meters revert back to being “dumb meters” if a consumer switches supplier. An over-the-air update has been promised to address this, but is yet to materialise. And there still remains no solution for residents in apartment blocks that have meters located far from their homes and, crucially, their Wi-Fi networks.
The body responsible for handling all communications flow, the Data Communications Company, has struggled with delays and budget overruns. Nerves are sufficiently high about its future that the government has had to legislate for a contingency plan in the event of its collapse.
No one really believes that the 2020 deadline can be reached, requiring as it would a truly heroic installation rate in the coming two years of – according to Which? – 24 meters every minute, 24 hours a day, 7 days a week. Even the government, while sticking to its 2020 target, has extended its powers over the smart meter roll-out until 2023, suggesting an acknowledgement within government that the 2020 target will be missed.
Meanwhile suppliers are expected to take ‘all reasonable steps’ to install smart meters in a consumer’s home, but have been given no guidance what that means in practice.
In the circumstances, it is almost remarkable that the roll-out maintains such strong support. Politically, the parties long ago grasped the foundational importance of a smart meter roll-out for enabling wider benefits such as EV and distributed renewables integration into a smart grid. Labour’s House of Lords spokesperson last week described the roll-out as being “in disarray,” but his party’s approach to the roll-out tends towards constructive criticism, rather than using it as a political punching bad. In industry, few people are in a position to openly criticise the largest energy infrastructure programme that directly benefits consumers.
So for now, there is an uneasy truce. No-one really wants to take direct aim at a programme that is about improving the consumer experience in energy. Will this truce last? What can we expect in the coming twelve months?
Firstly, scrutiny will strongly intensify as the National Audit Office (NAO) conducts and publishes its report into the roll-out late this year. Unlike industry, consumer groups, government and political parties, the NAO has no interest in sugaring the pill – it will deliver a cold-blooded assessment of the economic case for smart meters and delivery of the roll-out. We do not expect a particularly favourable report. If there is a point at which the Labour party might flip from being a critical friend, to an outright critic of the government on smart meters, NAO publication could well be it – although they would still have to tread carefully given that the smart meters were initially announced under a Labour government. Those in the industry frustrated at occasional, unfavourable, Daily Mail and Daily Telegraph headlines should expect their frequency to increase.
Secondly, we expect government to start to pivot towards communicating the system benefits of smart-metering. The government’s justification for the roll-out has largely relied on assumed cost-savings to households. That is starting to shift. BEIS has already said it will publish a paper this year on promoting the potential of smart-metering data for future innovative technologies and services. We can expect future communications from BEIS to draw more heavily on ‘smart-metering as an enabling platform’, rather than ‘smart-metering as a consumer cost saver.’
Finally, we expect government to move towards a solution for the unmanageable 2020 deadline. That could come as a time extension, issuing of loose guidance on what ‘all reasonable steps’ means in practice, or via another compromise.
What is clear is the political and reputational risk in the roll-out remains high. Market participants should ensure they have clear plans in place to deal with it.