What’s next for the smart meter rollout?

By the end of March 62% of all homes in Great Britain had a smart or advanced meter, with a target to reach almost 75% by the end of 2025. That goal is set by the Government through the “smart meter framework”, with mandatory targets for individual suppliers to meet.

However, most suppliers are off track to meet their targets, and the whole rollout is significantly delayed, having originally been due to finish several years ago.

Our new Government will soon have to choose how to handle the smart meter rollout after 2025, when the current targets end. These decisions will have a major impact on the fairness of the energy market for consumers in the years ahead.

Despite the benefits, not everyone is sold on smart meters

The benefits of smart meters include an end to estimated bills and allowing people to see how much energy they’re using through their In Home Display (IHD). The benefits are often greatest for people who prepay, as smart meters enable new ways to top-up and make it much easier for suppliers to provide support like additional credit.

They also support our net zero goals through new services which increasing numbers of consumers are using. These include new “time of use” tariffs that allow people to use energy when it’s cheapest and make efficient use of things like solar panels, electric vehicle charging and batteries. The data from smart meters can also be used to check whether a home needs insulation or, for example, would be a good candidate to install a heat pump.

While our research shows that the majority of people with a smart meter are happy with them, there have been many reputational bumps in the road. Early on there were issues with meters losing smart functionality when people switched supplier and more recently we saw high-profile cases of suppliers using smart meters to remotely switch people to prepayment without checking that it was safe to do so. Unsurprisingly this caused a big increase in people contacting Citizens Advice who were worried about getting a smart meter.

Too many smart meters aren’t operating properly

We have also seen frequent media headlines on the number of meters not “operating in smart mode”, but these figures are just the tip of the iceberg when it comes to issues with smart metering equipment. While the proportion of meters not operating in smart mode sits at around 11%, our recent research found that 20% of people with smart meters are regularly being asked to give manual meter readings and 31% of people are having problems with their IHD meaning they are unable to monitor their energy usage.

Problems like these can be due to issues with smart metering equipment, the wireless communications network, or supplier systems. Working out which of these is at fault in an individual case remains difficult for consumers and suppliers, leading to headaches and unresolved problems. The reputation of smart meters and consumer appetite for them will only improve when these issues start to be resolved promptly and consistently.

Ofgem have recently said that they will be looking at energy suppliers compliance with existing rules on meters operating in “smart mode” — but we don’t think this will go far enough to resolve the issues consumers are facing. That’s why in our Get Smarter report we have called for:

• New ‘Guaranteed Standards’ that require suppliers to install and operate smart metering equipment properly, address problems in a timely way, and provide compensation when this doesn’t happen.
• Protections that better reflect the promised benefits of smart meters, like a reduction in how much usage suppliers are allowed to send catch up bills for, from a year to 6 months.

The previous Government recently announced its intention to introduce a smart “code of practice”. Continuing this work is a significant opportunity to introduce these protections to ensure that the needs of consumers are kept at the heart of the smart meter rollout.

Some groups are falling behind

There’s concerning talk from some suppliers that targets for smart meter installation should be softened — or even dropped entirely — because they’re struggling to find consumers who’ll accept smart meters. However, our research found that of consumers without a smart meter 27% haven’t been offered one yet, and 33% are keen to have one or have agreed to one but are still waiting.

There’s also been an uneven distribution of smart meters so far. Urban and isolated rural areas are less likely to have a smart meter and the private rented sector is particularly behind on installation rates. The places you’re most likely to find smart meters are in suburban owner-occupier homes. This is despite our research showing that enthusiasm to get a smart meter is actually higher among younger, more urban consumers and those in the private rented sector.

Some of this is explained by technical barriers which have delayed smart meters in some areas and types of properties. But this data also suggests that the rollout has often focused on installing smart meters where it is easiest, rather than following consumer demand.

This risks leading to unfair outcomes. Some consumers are already better placed to take advantage of new Time of Use tariffs and smart energy services — but households without smart meters are locked out of these benefits altogether. This risks a growing divide between those who can take advantage of new energy systems and technology, with higher energy costs for those who are left behind.

Smart meters must enable a fair, low carbon energy system

Decisions on the smart meter rollout need to tackle the risk of a two-track energy market. All consumers who want them must be able to get smart meters installed, and have confidence that they’ll see clear benefits when they do. The new smart delivery framework and code of practice should:

• Require suppliers to install smart meters where there is consumer demand, promote them to communities and areas where take up is low, and prioritise consumers who prepay for energy
• Ensure that smart metering equipment works as expected and is fixed promptly when problems arise
• Eliminate the “accountability gap” that makes it hard to determine whether suppliers or the smart meter network are responsible for problems
• Pass through more of the financial savings from smart metering to consumers who have them, and tackle the barriers that some people face, like giving those who rent their homes clearer rights to having one installed

Together the new delivery framework and smart code of practice right need to deliver smart meters to all households that want them, putting in place the foundations for a fair transition to net zero.