Smart meters: The dumb £11m investment that saves £11

A report produced by the British Infrastructure Group of Parliamentarians has criticised the roll out of smart meters; highlighting problems throughout the programme which will impact significantly on the benefits its meant to achieve.

It's been a campaign littered with bad press. From the ridiculous delays to installation to the SSE 3,000,000% price increase debacle, it's seemed like the smart meter roll out was destined to fail from the start. But despite continuing problems, the rollout continued to roll on, with devices installed in around a third of UK homes and businesses today.

According to the BIG report, however, the issues with smart metering are nowhere near over yet. Their evidence shows customers facing lower savings, repaying high programme costs and difficulty switching suppliers.

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How much do smart meters really save?

Originally predicted to save the UK's consumers around £26 per household on a dual fuel bill each year, this estimate has been revised down to just £11 per annum, rising to £47 by 2030. That's a pretty poor return, considering the cost of installation is estimated to be adding an estimated £370 to our energy bills.

The reason for this lower estimate by BIG is due to a number of issues with the assumptions which were made regarding potential savings, for example:

• Smart meters will reduce energy consumption by 2 - 3%: In trials, this was shown to be feasible, the evidence for sustained change is just not there. In fact, in a survey on behalf of Smart Energy GB, the campaign responsible for the rollout of the smart meters, 55% of respondents claimed their energy use had either not changed or had increased a year after their meter was installed.
• Time of Use tariffs (ToU) will shift 2% of peak consumption to off peak: There are two issues here. Firstly, this was based on 20% of customers being on ToU tariffs by 2020. At present just 10% of people are on Economy 7 or 10. Development of ToU tariffs in general has been delayed, meaning they won't be ready until at least 2020. The second issue is that there is no guarantee people will switch to these tariffs anyway. In Ontario, where they ran a similar scheme, 65% of customers did not switch, they just paid the higher price.
• The carbon savings will have a meaningful impact on consumers: The estimated 29.8 million tonnes of carbon which this programme hopes to save by 2030 has been valued at £1.29bn. However, this figure is unlikely to filter down into any real savings at consumer level, and yet has been calculated in the monetised benefits for this roll out. Taking it out makes the financial savings at consumer level appear far leaner.

Added to these ill-informed assumptions is the issue of the spiralling project costs for the roll out. Now estimated at a total of £11bn, this cost is being borne up front by the consumer, in increments on energy bills which are already being applied.

Too dumb to switch?

Included in the recent BIG report, it was also revealed more than half of smart meters become 'dumb' if the customer decides to switch. Worse still, even if you switch back to your previous supplier, the meter will still remain non-functional, making it impossible to send meter readings to your supplier or to see your usage in pounds and pence.

Second generation meters (SMETS 2) which were designed to be able to switch between suppliers should have been rolled out by November 2016. However, by January 2018, just 450 had been installed, and the majority of suppliers were still rolling out SMETS 1 meters, which do not allow a switch.

However, with the potential to save £200 or more by switching supplier, it's clear that a switch is still in the households best interest, even if they do lose out on their smart meter functionality.

Is it all bad news?

There is a small silver lining inside the smart meter cloud. The physical process of installation means that the entire UK is undergoing a bit of a safety check up.

According to the CEO of Smart Energy GB around 270,000 homes have had dangerous faults identified as a direct result of the installation. Gas leaks, trickles of carbon monoxide and faulty appliances have all been uncovered and rectified, which is probably the greatest achievement of the smart meter initiative so far.

If you haven't had your smart meter installed yet, you can find out more about these devices here.