Smart Meter Blog
The Smart Gas Meter roll-out across England, Wales and Scotland, described as “the biggest national infrastructure project in our lifetimes”, is probably the single largest opportunity for domestic energy consumers to reduce carbon emissions and reduce costs. It is surely true that what gets measured gets managed.
I can envisage a time where we can compare our consumption to our neighbours’ consumption and start questioning whether our boiler is efficient enough, are our pipes lagged, is our home sufficiently insulted and can we cut our carbon footprint? According to Oxford Economics, the average savings will be £65 per year per dwelling – that’s around a 5% saving. Stop the press, Which? Has recently reported estimated savings as low as £11 per household, that cannot be right can it? As an engineer with over 25 years’ experience, I’m going to stick my neck out and discount the £11 (although I suspect the truth lies between the two figures).
So what’s not to like about a mandated roll-out, indeed, over 90% of Italian households have had smart meters installed for over a decade? No more meter readings, no more inaccurate estimated bills and no more confusion about energy prices.
I decided to ignore the news about the woes of the smart meter project for a moment and dusted off my trusty Casio calculator that I’ve had since the 1980s. Apologies, but most of the statistics available are based upon combined gas and electricity. The average savings are £65 per dwelling in an estimated 30 million homes. That’s a combined annual saving of £2 billion per year. With an estimated project cost of £11 billion that’s a five to six year payback on equipment that likely has a seven year lifespan. Also, given an average installation and commissioning cost of £367 per site it feels like there is significant scope for over-spend.
Now with calculator in hand, let’s look at the logistics. The time is 2016, the place, Ramsbottom in Lancashire, UK. Target completion date 2020 (of course), let’s say by 31st December 2020. If we started now, and we are not starting now because there are security questions that we will come onto later, we need to install single or dual meters in 30 million dwellings over 52 months. So, by my reckoning, that’s over half a million installs per month. Let’s say that one person can undertake four installations per day, that means that we need a work force of 6,600 on the task – and now remember. Now things start to look rosier. We have over 120,000 Gas Safe engineers registered so seemingly resource will not be an issue so long as they can install for £367 per dwelling including equipment.
Now that we are happy on the resource front, let’s explore security. Earlier this year GCHQ, the UK’s electronic security agency had to intervene in the roll-out of smart meters after observing that the security measures were not up to scratch and could pose a national security risk. This was something that they first highlighted back in 2012. In lay terms, the encryption of data and access to such was not strong enough to keep modern-day hackers at bay. On a singular basis this is not such a big issue, however, if you can imagine a cyber terrorist gaining control of every single meter and switching off supplies to thousands of residents it would cause absolute mayhem.
According to GCHQ’s Dr Ian Levy, one of the significant security issues to overcome on gas meters was the battery life (they cannot be mains powered for safety reasons) and balancing this with the communications overheads. In other words, could the batteries be exhausted by a continuous and malicious reading request? This issue was overcome by building in a “gas proxy” into the communications hub that is powered by the electricity meter.
Despite the hoo-ha caused by GCHQ’s intervention, we should be reassured that the involvement of our National Cyber Security Centre works.
The idea of the smart roll-out includes a single DCC (Data and Communications Company) that polls, collects and stores data from the 53 million meters. It was recently announced that the DCC, which is already more than a year late, will be delayed further. The target completion date has been postponed on numerous occasions, firstly moved from April 2015, to April 2016, to August 2016 and is now September 2016 at the earliest. Given the various security issues highlighted by GCHQ, September 2016 seems like an ambitious projection, and many think-tanks agree, arguing that the scheme needs to be halted until all concerns have been properly ironed out.
On the face of it, the intentions of a mass smart meter roll-out are honourable. Below I have proposed some benefits:
- A live view of energy consumption in pounds and pence should empower consumers to change their behaviour and see the fruits of their diligence. It simplifies people’s understanding of energy usage.
- Energy bills will always be accurate and there will be no requirement to provide regular readings to suppliers.
- The infrastructure would provide a shift towards multiple tariffs that help to balance demand. This would give people opportunity to use energy for less during certain off-peak periods, albeit this would be a limited opportunity in influencing gas consumption (when it’s cold, it’s cold).
- It could encourage new suppliers to enter the energy market and stimulate competition, providing households with more choice.
As Newton stated “To every action there is always opposed an equal reaction”. Whilst this smart meter programme has been running for quite some time, for instance the Stop Smart Meters movement which started in January 2012, perhaps it is worth reflecting on some possible unforeseen consequences:
- The cost is actually a foreseen consequence; however, who picks up the bill is less clear. There has been wishy-washy talk of the energy suppliers picking up the tab but in reality, this is never going to happen. It is the consumer that will pay, and if this proves to be the case, it could be increased energy prices that cover the cost.
- After years of simplification there is a high probability that charging tariffs could become very complex making an informed switch of supplier impossible.
- Compatibility of smart meters across energy suppliers is an issue in that different suppliers use different hardware. A consumer’s right to switch will remain, however, there may be practical issues that result in a loss of functionality when you switch suppliers.
The Abolition of DECC
With the abolition of the DECC and the creation of the BEIS (Department for Business, Energy & Industrial Strategy), one would assume this is a good time to take stock of the smart meter programme? Oh yes, there’s also the matter of Brexit, after all, this programme was born out of the European Commission’s goal of 80% smart meter coverage by 2020! Interestingly, the European goal was “where it is cost effective”, and many have always argued that the UK aspiration is not.
I would hope that BEIS will take stock at this juncture, not because I don’t believe in smart meters, but because it all feels rushed, late, a bit messy and expensive. Done properly, smart meters could be the most significant component part of getting people engaged in the energy debate and able to manage their consumption. Taking stock does not necessarily mean stopping the programme, just improving it.
Anthony has been in industry for 26 years and in the energy market for over 10 years. He loves to help customers to reduce their costs by getting them a better deal elsewhere.
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