It looks like the long-awaited roll-out of smart meters in the UK has been put back yet again. An announcement from the Department of Environment and Climate Change (DECC) had been expected last year, and then again at the start of this year. Now energy industry and government sources are saying that an announcement could come in April.
The UK’s difficulties are a lesson to other countries seeking to press ahead with smart meter and smart grid technologies.
The British government has already signalled that it is in favour of smart meters, which promise to give households the information they need to use less energy, as well as to allow for more accurate billing by energy suppliers. But it has yet to decide how the project will be rolled out.
One option would be to leave it to the market and allow energy companies to supply smart meters to their customers whenever they like. The other extreme would be to shake up the current liberalised system and divide the country up into regional franchises, awarding contracts to companies to supply meters to these areas in bulk. Most people agree that the free market model would lead to a very slow roll-out, whereas the regional franchise model would be quicker and more efficient but would compromise the concept of the UK’s liberalised energy market.
It looks likely, therefore, that a compromise solution will be chosen. The government is expected to award a multi-billion pound contract to create a centralised communications system for the gathering of data
from smart meters, probably to a mobile telecoms provider. Energy suppliers will then be able to choose their own meter technology, as long as it is compatible with the communications system, and roll out
smart meters to their customers at their own pace. The government is likely to say that all UK households should have a smart meter by 2020.
The UK’s ‘big six’ energy suppliers say they are behind the roll out of smart meters, though there is some dissent about how this should be achieved. Scottish & Southern boss Ian Marchant said recently that he
favours the regional franchise model, while British Gas is known to favour the so-called ‘central comms’ proposal.
Either way, installing smart meters is vital for making progress in areas like micro-generation. If households are to generate their own power through technology like solar panels and mini wind turbines, they need to be able to measure how much power they sell back to the national grid. Smart meters, with their two-way communication technology, can do this but old-style ‘dumb’ meters can’t.
But the real prize in the roll-out of smart meters could be less peak demand for energy and therefore a reduced need for new power stations. Energy companies, though they don’t like to talk about it, would like to introduce different tariffs for different times of the day, and plan to charge customers more to use electricity during peak hours, such as the early evening. They would also make it cheaper to use power during off-peak times, such as late at night. This should smooth out power consumption and reduce the total amount of power generation capacity that needs to be available.
As energy companies increasingly come under pressure to ensure that the lights won’t go out as older power stations shut down, the gains from smart metering look more attractive than ever.
