PC Probe: Sparks fly as smart meter scheme falters
The smart-meter rollout that promised to save billions is turning into another government tech disaster, Stewart Mitchell discovers
By 2020, we’re all meant to have smart meters – but the rollout is plagued with problems.
The government-led project to install 53 million smart meters in the UK by 2020 was supposed to make switching supplier simpler for consumers and reduce energy bills. In reality, compatibility problems have made switching more difficult and could mean that millions of installed meters will soon have to be scrapped.
Spurred into action by a European directive, the projected £11 billion scheme started life under a Labour government, but has been pushed ahead – in spite of problems that many believe should have seen it postponed – under the Conservatives.
At the heart of the problem is the ad hoc development of the system that has seen outdated meters installed in seven million homes to date.
The first batch of meters installed under the scheme use a standard known as Smart Metering Equipment Technical Specifications (SMETS1), but it soon ran into problems.
“Initially there was only ever going to be one version, SMETS1,” said Nick Hunn, CTO of consultancy firm WiFore and a smart-meter pioneer. “That hit an issue because, at the tail end of it being written, GCHQ was asked to come in and give a security audit for the system and they had an absolute fit. They basically said: ‘This cannot be the enduring rollout... you need to come up with SMETS2’, which is much more secure. It’s still not the way you’d do it if starting from scratch.”
These security changes to SMETS1 meters meant further delay in getting them to talk to the national database that was supposed to mesh the smart-metering system together. That Data Communications Company (DCC) network – run by Capita – finally went live in November 2016, but the initial SMETS1 meters are still unable to be “enrolled” onto the system.
That means the meters can only talk to the energy supplier that installed them, rather than the national network that could help balance consumption across the national grid. On top of that, they can turn into dumb meters if consumers switch providers because different meters from different energy suppliers are incompatible. “When switching, some consumers, not all, find that they temporarily lose some of their smart services,” admitted a spokesperson for Smart Energy UK, the cheerleading public face of the rollout. “This is just a temporary situation that only affects the first generation of [seven million] smart meters. “The national communications network for smart meters became operational in late 2016 and once these existing meters are bought into this network, they will be able to deliver the full benefits. Government and industry are deciding on the precise timetable for bringing existing meters into this network.”
Replacements needed?
The meters can only talk to the energy supplier that installed them, rather than the national network
However, there’s speculation within the industry that the SMETS1 meters will never work with the DCC system, which could see all seven million meters – and any more installed in the interim – replaced. “There’s a growing feeling that it looks too difficult, that they’ll need to be replaced, so you have a rump of stranded assets that’s going to be a cost, and those meters do nothing other than send you back a figure that’s used for a quarterly bill,” said Hudd. The DCC and industry body Energy UK (not to be confused with Smart Energy UK) say they’ll make the system work – Energy UK told PC Pro it’s a question of “how and when, not if” SMETS1 meters are branched into the central system. According to Smart Energy UK, we’re only at the stage where “DCC and government are consulting with the industry on the approach to take to ensure that this is done”, while the DCC reports that “we currently expect that migration of SMETS1 meters to the new service will be underway in 2018”. There’s currently no public solution on how to bring the meters into line with the DCC system, but energy regulator Ofgem optimistically says: “It’s expected that these upgrades will be delivered remotely (‘over the air’) and will not involve a site visit.” Even if the meters can be integrated with the central system, they’ll still lack some of the functions – such as reporting power cuts to the provider – available in later models.
Halt the rollout
Given the raft of problems, would it not make sense to delay the rollout of smart meters until the SMETS2 devices are ready? During conversations with the industry, it’s clear some privately believe pushing ahead with the rollout in order to meet the arbitrary 2020 deadline could be a waste of money – there could be 20 million SMETS1 meters installed before SMETS2 is properly up and running.
“The view was that it would be sorted in a year or so, and there wouldn’t be many SMETS1 meters going out and those that did would be replaced,” said Hunn. “That’s not what’s happened, and they’re still being installed.”
What’s more, some smart meters don’t fully meet the SMETS1 criteria. In a letter to suppliers in June, Ofgem threatened that “suppliers must ensure that meters are made SMETS1-compliant prior to the SMETS1 end date”. However, the government has yet to set an end date, leaving providers unsure whether to wait for SMETS2, or to deploy first-generation meters in the knowledge they’ll need either upgrading or replacing.
“The reduction in deployment costs that SMETS2 represents might tempt some to go with a ‘Big Bang’ approach to the switch, quickly curtailing their procurement of SMETS1 and replacing them with SMETS2 assets, which are up to 50% cheaper, and reduce the exposure of being left holding redundant assets,” said Tom Hargreaves, senior consultant for energy and resources at analyst firm Baringa.
For companies that wait, there could be a race against time to fit the newer devices before the deadline. This could lead to under-trained engineers fitting devices that have already been blamed for house fires. There’s also a risk that SMETS2 will face familiar teething troubles. “[With] SMETS2 being launched near the peak of the rollout... suppliers will have a much shorter timeframe to learn and improve,” said Hargreaves. “The largest suppliers will be deploying thousands of these meters per week while making the transition.
“If suppliers are going to be successful, they need to usethe time between DCC go-live and the end of SMETS1 wisely, balancing the required learning about SMETS2 and the DCC, while still installing enough meters to mitigate the huge installation peaks most of them are facing going into 2018/2019.”
Heads in the sand
Amid the confusion and escalating cost of this huge national infrastructure project, the Department for Business, Energy and Industrial Strategy is keeping its cards close, declining to comment in any meaningful way.
And there’s little appetite from any political party to challenge the status quo, as all played a part in launching the project and seem determined to push it through despite its problems. “It’s a classic government project – it’s been designed from the wrong end by the wrong people. We’re putting crap into homes that will add hundreds of pounds onto people’s energy bills,” said Hunn.