Cost-saving potential set out in government plan for national roll-out of energy-saving technology
Smart meters, which monitor energy use in real-time, will save households £7.3bn over the next two decades, the government said on Wednesday as it set out its strategy for the roll-out of the energy-saving technology.
The roll-out – the most comprehensive yet planned in any country – will require 53m smart meters to be installed in 30m homes and businesses, starting in 2014 and finishing in 2019. Households are likely to save £23 on their annual energy bills by 2020, the government has estimated, up from its previous estimate of £14 in savings.
But these figures were disputed by the consumer group Which? and by smart metering industry experts.
Jessica Driscoll, senior advocate at Which?, said: 'It's too difficult to say that people will save a certain amount of money. The savings depend on people making changes to the way they use energy, and that is very hard to do. Smart meters are just one way of helping people make those changes.'
She said Which? had not yet made an estimates of the cost or savings from the technology because there was not yet enough information to make a reliable estimate.
She said it was more important to reassure consumers that smart meters would bring a variety of benefits, than to try to persuade them of the potential cost savings based on estimates.
Some industry experts privately agreed that it was too soon to make such exact estimates of the cost savings that could be realised by the roll-out.
Smart meters benefit consumers by showing their energy use in real-time. This means people can respond quickly, for instance by turning off unnecessary lights or appliances, to save money.
The technology also benefits energy suppliers, as it eliminates the need for meter readers to visit properties and allow for more accurate billing, and better data on energy demand patterns.
Future generations of smart meters are likely to offer even greater advantages, for instance by allowing utilities better to manage demand within consumers' homes, by switching appliances such as washing machines on when demand is lower, or turning down fridges when demand peaks. This could save billions through more efficient management of the electricity grid, but these capabilities are unlikely to be introduced for several years at the earliest.
But these capabilities also bring potential problems, according to Driscoll, such as what happens to the valuable consumer data that the meters collect how utilities will ensure that people can retain control over their own energy use.
Some companies might try to use the opportunity of installing smart meters to sell souped-up versions with more features, or to sell additional services, such as internet or telephones. 'Once they're in your home, they might try to 'upsell', which is something we are worried about,' Driscoll warned.
She added: 'People do not trust energy companies. They need to work very hard to ensure that this rollout is going to be a big benefit to British people.'
Chris Huhne, the secretary of state for energy and climate change, stressed the potential benefits of the plan, which is one of the most visible aspects of the government's low-carbon strategy, as the meters will be in every home. He said: 'Smart meters are a key part of giving us all more control over how we use energy at home and at work, helping us to cut out waste and save money. In combination with our plans to reform the electricity market and introduce the green deal [project to insulate homes], the roll-out of smart meters will help us keep the lights on while reducing emissions and getting the best possible deal for the consumer.'
From now until 2014, the government plans to work with industry and consumer groups to lay the groundwork for the roll-out, including setting specifications for the kinds of smart meters to be used. Today's announcement is expected to kick off a frenzy of activity among smart meter technology companies, utilities and communications businesses as they jockey for position in pressing for the adoption of their competing ideas on how smart meters should work.
During this phase, companies are expected to build and test trial systems, get customer feedback and demonstrate how they can ensure energy savings. Consumers are likely to be invited to take place in trials. The government will also set up a Data and Communications Company, intended to provide data and communications services for the smart metering system nationwide.
In the following stage, from 2014 to 2019, the mass roll-out will take place.
Charles Hendry, energy minister, said: 'Smart meters will enable us to modernise the electricity system over the coming years and create the smart grids we will need to bring new low carbon energy sources online, and handle much higher demand for electricity as we progressively electrify transport and heating.'
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