The smart meter roll-out is set to miss targets, new research from Frontier Economics on behalf of Energy UK has found.
The date for the rollout is being pushed back to 2024, with the Department for Business, Energy and Industrial Strategy (BEIS) consulting on the regulatory framework for this new period.
As part of its consultation response, Energy UK commissioned research from Frontier Economics, which found that installation levels “will fall far short” of the government’s goal of 85% by the end of 2024.
Moreover, only 54%-68% of relevant premises are likely to have a smart meter in that timeframe unless changes are introduced to require consumers to accept installations.
Energy UK said it believes the new framework must not include hard targets, which it says risks increases costs and inefficient delivery as well as negatively impacting customer experience.
Seven other recommendations for the new framework were outlined, including acknowledging there will always be a group of consumers who will not accept a smart meter under a voluntary approach and making sure it applies to all suppliers on an equal basis, whilst taking account the fact that suppliers will be at different stages of their roll outs by the end of 2020.
The new framework must also be supported by proactive, positive and public communication from government, its agencies, quasi-government organisations, charities in receipt of government grants and consumer groups. This would ease concerns and drive a positive sentiment.
Energy UK did, however, laud the “considerable achievement” of the installation of over 16.5 million smart meters so far considering the complexity of the challenge.
Current± understands a letter was sent to BEIS by Energy UK on the matter, although Energy UK declined to share its contents.
A spokesperson said: “As outlined in our consultation response, based on independent research, we believe the current targets are not achievable without further changes. It is our shared ambition to ensure that as many households as possible can benefit from smart meters.
“That’s why we have suggested a number of proactive polices the government should implement quickly to drive greater consumer uptake of smart meters, which will be vital to ensuring the successful delivery of the programme over the next few years.”
Concerns the smart meter roll out won’t meet targets have been raised in the past. Cornwall Insight predicted before the shift in goalpost that over 50,000 smart meters would need to be installed per day to meet the 2020 target and that meeting a 2023 date would still require an increase of close to 6,000 meters a day.
Suppliers have also been taken to task over the rate at which the meters are being installed, notably SSE, which paid £700,000 to the Consumer Redress Fund after it missed its 2018 gas smart meter target.
Ofgem confirmed it is “ready to take tough action” if suppliers fail to meet targets during a recent BEIS select committee hearing.
Caroline Bragg, head of policy at the Association for Decentralised Energy, said: “The ADE support further scrutiny and a review of the best approach to achieve this - recognising that the smart meter roll-out has been met with significant delays and that technology, including of the smart metering options available, has moved on considerably since this programme was begun.
“To unlock the benefits of flexibility at domestic level, it is crucial that instead of specific technology solutions, we focus on getting the framework right - interoperability, security and clear advantages to consumers from better energy data,” Bragg said, adding it is “clear that better data will be needed” for decarbonisation, no matter the path.
Analysis: Alice Grundy, junior reporter, Current±
This isn’t the first piece of research to take the government to task on the pace of the smart meter roll out. However, for it to come before BEIS has even published its finalised regulatory framework is especially damning.
The history of smart meters is fraught with tension over delivery dates and the extension to 2024 was a sign that industry concerns – and mounting evidence that 2020 was simply unfeasible – were being taken seriously.
This new research could be a sting in the tail for BEIS, potentially driving it to rethink its approach and take into consideration the requests to make smart meters a requirement by law, forcing those stubborn consumers into popping one on their kitchen counter.
Of course, everything could change in several weeks’ time depending on who takes charge in Westminster and wrangles BEIS to their political agenda, although no policies on smart meters have yet been put forward by any party.
Energy UK also suggested the government should consider the need to create incentives around tariffs, and that the new obligation should apply to all suppliers, regardless of size or date of entry into the market.
Industry led campaigns for consumer awareness of the benefits of smart technology should also continue and BEIS should work with Ofgem to clarify the use of smart contingent discounts and tariffs to ensure smart benefits are passed on to consumers. It said it believes pricing signals could ensure suppliers continue benefitting.
A spokesperson for Smart Energy GB said it is “vital” the energy industry and government work together.
“We agree that the rollout is an essential upgrade to our outdated energy infrastructure and without it, reaching the Government’s net zero target will be nigh on impossible.
“The Department for Business, Energy and Industrial Strategy has set out its proposals and is considering the views submitted and any changes needed to complete the rollout.”
Energy UK also suggested BEIS could continue working with industry to remove technical barriers to full scale launch of future looking policies such as marker wide half-hourly settlement, the Smart Export Guarantee, flexibility initiatives.
Another set of recommendations included the possibility of adding new requirements into building regulations to require smart meters to be installed in all new homes and mandating a requirement for smart meters to be installed with all new EV chargers.
Citizens Advice have also published their consultation response, acknowledging the consultation is "a step in the right direction" to BEIS recognising not all consumers will have smart meters by 2020.
It stressed the need for greater consumer engagement and awareness and recommended the government provide protections to ensure consumers are not disadvantaged if they cannot have a smart meter, clarity on what the period until 2024 will mean for consumers, an option for consumers who do not want a smart meter and clear minimum standards for common ‘difficult’ installation issues, among other recommendations.