Over 50,000 smart meters will need to be installed every day to meet 2020 targets, says Cornwall Insight, as Ofgem discusses the challenges facing suppliers.
Forecasts from Cornwall Insight show that installations would need to quadruple from the current rate to meet the 2020 target of all UK households to have a smart meter, equivalent to installing 51,000 a day. The report also recorded a drop in the number of smart meter installs for the last three quarters.
As of March 2019, the deadline for when SMETS1 meters would stop counting towards the government’s target, 500,000 SMETS2 meters had been installed.
Meanwhile, Ofgem has released an open letter to suppliers, stating that the 2020 deadline will now be missed, with meters continuing to be installed beyond that date. This is partly due to some suppliers continuing to install SMET1 meters, which no longer count towards the target.
After evaluation by Ofgem, SSE paid £700,000 to the Consumer Redress Fund, administered by the Energy Savings Trust, after it missed its 2018 gas smart meter target. The supplier reached the target in February 2019, two months after the deadline.
Reasons provided by suppliers for missing 2018 milestones were challenges with customer engagement, third-party contracts, remote upgrades of non-compliant SMETS1 meters and the transition from SMETS1 to SMETS2.
Availability was cited as a large factor in why suppliers are currently unable to offer smart metering to all customers. The full range of smart meters are not yet available from manufacturers, HAN coverage is not available in all premises, a SMETS2 pre-payment solution is not available to be deployed at scale and certain suppliers don’t have SMETS2 meters that meet the required Radio Frequency limits in all regions.
However the letter also said that individual suppliers’ commercial decisions were in part at fault for why suppliers can’t offer all customers smart meters.
In addition, consumer engagement is also a continued barrier but installer capacity is not. The letter also says that the default tariff cap “must not be used as justification” for reducing plans to install smart meters.
The department for Business, Energy and Industrial Strategy is considering the post-2020 policy regulatory landscape as it becomes clear the target will not be met.
Oliver Archer, analyst at Cornwall Insight, said the drop-off in installations is unsurprising, especially given ongoing issues with transitioning to SMETS2, including issues connecting meters to the communication network in the north of England.
“Meeting the current deadline now looks incredibly challenging. Even an extended target of 2023 presents difficulties - install rates would still need to increase by close to 6,000 meters a day to reach this.
“Installations have consistently lagged on what one might expect to meet the target by the end of the decade. However, the drop off in installations shows a deceleration rather than acceleration, despite the proximity of 2020.”