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Smart meters for both gas and electricity will be coming to every UK home by 2020 aspart of a £11bn Government programme designed to cut carbon emissions nationally by 34% and modernise the energy industry. Some energy companies havealreadystarted to install these in customer’s homes and The Energy Saving Trust estimates there are already 1.5 million installed across the UK. The main roll out of approximately 50 million smart meters will begin in autumn 2015.
Smart meters will replace existing electricity and gas meters and will be connected, via a wireless network to the energy companies. This means no more estimated billing or meter reading. Each smart meter will have some form of in house display that will present consumers with details about their energy use and costs.
What are the benefits of smart meters?
The obvious benefits of smart meters to consumers is the automated meter reading. This should help to ensure bills are accurate, customers aren’t paying too much via direct debit and building up large credits, and there will be no need to let anyone into your property to read the meter.
Other benefits include:
Inevitably, with any new technology, there will be some features of smart meters that are considered to be disadvantages and may give more power to the energy companies. The most commonly cited disadvantages include:
By far the biggest concern is likely to be security. Given smart meters will communicate over a combination of mobile or wireless mesh depending on coverage, in theory it will be possible for that data to be intercepted and read. This leads to concerns about data protection and privacy on the part of consumers. Whilst this will be the main security concern of the consumer, other security concerns are being voiced by the Information Security community including:
The Government has emphasised the importance of data protection in this project and the BBC reported that Baroness Verma, Energy and Climate Change minister has stated the Government is working with the National Technical Authority on security issues. However, Ross Anderson, Professor of Security Engineering at Cambridge University stated in his paper “Who controls the off switch?” that: “an ideal attack on a target country is to interrupt its citizens’ electricity supply. This is the cyber equivalent of a nuclear strike; when electricity stops, then pretty soon everything else does too.” He also highlights in his paper that mass disruption may not only be caused by cyber-attack but also by software errors and concludes that whilst energy regulators are beginning to wake up to the problem, it is important the issues are discussed and features to mitigate the effects of errors or attacks are put into place before a mass roll out of smart meters.
How much will consumers save?
Most consumers will be sold on the idea of smart meter by the potential to save on their energy bills. In an initial roll out of smart meters by British Gas, it was found that 54 percent saved money on their energy bills with some saving up to £75 per year. It was highlighted by British Gas that by making consumers more aware of their energy usage, they naturally make small changes to save energy.
This is positive news but, as of yet, there is no long term usage data to support the view that energy savings will continue once the novelty has worn off and consumers have made all the easy and low cost changes to reduce their energy consumption. This is why energy companies are looking at other ways to incentivise consumers to use less energy by bringing in an element of competition. The Guardian reported that energy efficiency company Opower is looking at software that will allow consumers to compare their energy usage with their neighbours. There are already tools available on the market in the UK such as Compare My Energy that do exactly this.
The UK isn’t the only country to adopt smart meters. As well as the intention to reduce energy consumption and upgrade the energy infrastructure in the UK, Europe has passed a law requiring all Member countries to roll out smart meters and have 80% adoption by 2020.
The majority of smart meter installations in Europe are driven by large rollouts in the UK, Spain and France and the majority of European Union countries have advanced plans in place to roll out the new technology. Germany has delayed their rollout following opposition over data security and a report that suggested smart meters won’t bring economic benefit.
Further afield, the US has also been rolling out smart meters however, according to Renewable Energy World, their programme has only seen 30 million meters deployed in two years with a penetration level of just 23 percent. A lack of consumer confidence has been largely to blame for this poor performance.
The smart meter programme is well under way in the UK and, whilst there are obvious security concerns that may still need to be addressed, it is likely within the next five years that you will be converted to a new smart meter.
To help raise awareness of the new scheme the Government and energy companies are going to have to embark in a high profile marketing campaign if they are going to be successful in addressing the concerns that may arise, particularly in relation to security. The recent debacle over the sharing of GP surgery data is a classic example of how the Government should not conduct such an awareness raising scheme and let’s hope they adopt a different, more informed and open approach.
One question that will inevitably be raised about the whole programme is who is paying for the £11billion investment? The answer that is being given is that, as with the maintenance and support of existing meters, the costs will come out of the energy bills and hence it will be no different than it has been in the past. However, does the new smart meter infrastructure cost more to run than the existing one? That is difficult to answer as, whilst the new meters will eliminate the cost of reading meters, there will have to be a considerable team of people across a number of organisations supporting the network and communication of such meters. This infrastructure is complex and hence it may be that running costs are far higher.
It has to be questioned whether the cost of the project could have been reduced slightly by not adopting in home displays. With the rise in popularity of smart phones and tablets, it could be argued that customers could use these or the internet to check their energy consumption. This may actually be more popular for users of these devices than a static display that can only be seen from one room in the house. However, if the goal of reducing energy consumption is to be achieved, those that do not have smart phones or tablets would have to be given the standard in home display otherwise it is unlikely they will monitor usage and attempt to reduce consumption.
Despite the recognised potential energy saving benefits of introducing smart meters across the UK, a saving per household of less than £75 in the first year isn’t in itself particularly large. Whilst every little helps both in terms of households bills and the reduction in carbon emissions, there is a thought that the £11 billion could have been spent on improving insulation, upgrading boilers and generally improving older housing stock that could have brought bigger savings. According to The Energy Saving Trust, just replacing an old, inefficient boiler could save a typical household in the region of £300 per year. If you upgrade insulation, particularly if you implement cavity wall insulation, that figure could be even higher.
Consumer advice about Smart Meters – Consumer Focus: http://www.consumerfocus.org.uk/get-advice/energy/smart-meters-what-are-they-and-how-can-i-find-out-more/benefits-and-disadvantages-of-smart-meters
Who Controls the Off Switch? – Professor Ross Anderson, Cambridge University: http://www.cl.cam.ac.uk/~rja14/Papers/meters-offswitch.pdf
Helping Householders to Cut Their Energy Bills – HM Government: https://www.gov.uk/government/policies/helping-households-to-cut-their-energy-bills/supporting-pages/smart-meters
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