Do smart meters justify the hype?
The Government claims new meters will reduce energy usage and lower people’s bills. Is that true? Sam Meadows finds out
Lynn James admits she has always been obsessive about saving money. So much so that she has built a career as a money advice blogger. So when the 41-year-old heard about a device that could help her track her household energy use in real time, and give her the cost in pounds and pence, she jumped at the chance. She had a smart meter installed in her Hertfordshire home last September.
“I got a little bit obsessive with checking it for the first few months,” she said. “You’d switch the kettle on and work out it would cost you 35p to run for an hour.” She even started competitions for her three children where, if they managed to save a certain amount of energy, they could keep the difference in cost.
Smart meters were first widely introduced with much fanfare in 2012, and lauded as a way for consumers to “take control” of their energy usage and save money.
But this weekend, a panel of MPS warned that the £11bn roll-out has been continually delayed, and risked coming in massively over budget. The report, by the British Infrastructure Group of Parliamentarians (BIG), also estimated that the average annual saving was just £11 – around a third of what the industry had been touting.
So has the whole programme, which rivals major infrastructure programmes such as Crossrail in terms of cost, become an expensive flop? And when will ordinary households start to see the benefits?
What are smart meters?
A smart meter replaces your existing analogue meter and tracks energy use in real time. It comes with a display device, which can sit on your kitchen work surface, and gives you a figure for how much energy you use.
Smart Energy GB, the self-described “voice of the smart meter roll-out”, says this gives consumers control of their energy use and will result in savings. But experts are beginning to cast doubt on these claims.
The roll-out is still effectively in the testing phase, although this was meant to come to an end two years ago. Only four million first-generation smart meters were supposed to be installed while energy suppliers got their heads around the programme. There are now estimated to be more than 12million.
Costs are ballooning, with the BIG report stating that the original £11bn budget could exceed £16.7bn.
Although the meters are installed free, with energy companies bearing the brunt of the cost, they are, ultimately, paid for by customers. Some estimates suggest that as much as £420 is added to energy bills – and that’s for all customers, not just those with a smart meter.
Will they save us money?
There is some evidence to suggest that they will. A study by British Gas of 78,000 of its smart meter customers found that, on average, they saved 3pc on their energy bills. This equates to £30 per £1,000 spent.
This tends to be because seeing live energy usage in cash terms alters attitudes. Research carried out last year by Smart Energy GB found that 69pc of people with a smart meter became more conscious of their energy use, and 82pc took at least one step to reduce their consumption.
Mrs James said: “I used to use the tumble dryer every day, even just for a few bits. Having the smart meter has made me think, ‘Should I really spend 50p a day on drying clothes when I could hang them up?’.”
However, these new habits tend not to last long, according to Dr Rob Gross, of the Imperial College Centre for Energy Policy and Technology. He said: “There is some evidence that giving people an in-home display does make them more mindful of their energy consumption, but there’s also evidence that that wears off.” Mrs James admits her level of interest eventually waned.
The claims on how much users save have also been strongly challenged. Smart Energy GB told The Daily Telegraph that Britain could save £560m a year if every household got a smart meter, and that the savings per household could run into hundreds of pounds a year by 2030.
However, the BIG report casts doubt on those claims, reporting that savings so far have been just £11 a year.
Writing in the report, Grant Shapps, the Conservative MP, said: “Although the entire programme has been funded by customers through higher energy bills, unlike energy suppliers themselves, they are not presently guaranteed to see the majority of the savings that do materialise. The roll-out is, consequently, at serious risk of becoming yet another large-scale public infrastructure project delivered well over time and budget.”
Another key issue standing in the way of customers making a saving is that more than half of the first generation of meters lose the ability to track energy usage in pounds and pence and send automatic readings to the supplier – known as “going dumb” – when a household switches supplier. Estimates from comparison sites suggest switching can save consumers more than £200 a year.
A fix to the switching issue is meant to be in place by the end of the year, but has already been delayed twice, and close to a million more nonswitchable meters could be installed before then. The Telegraph has urged the Government to pause the roll-out until this fix is in place.
What about the future?
The way Britain uses energy is changing. Electric vehicles will soon be common on our roads – within a decade, Dr Gross said – meaning that the cost of refuelling your car would fall on your energy bill.
Dr Gross said: “At the moment, the biggest consumer of energy is heating our houses; in the future, it could be electric vehicles.
“It will be in the interest of consumers to charge them when it’s cheap. That’s when smart meters will really come into their own.” Dr Jonny Marshall, of the Energy and Climate Intelligence Unit, said it could even be possible to sell charge from your car’s battery back to the grid when you do not plan to use it.
He added: “Smart meters aren’t so much about saving energy but using it when it’s more available or when it’s lower cost. You aren’t going to get a meter in your house and then stop using your washing machine.
“But you could get notifications when it might be cheap to charge your car or run your dishwasher.”
Wider use of smart meters will also open the door to “time-of-use” tariffs. Some consumers fear that suppliers could jack up the cost of electricity at peak times. But Dr Marshall said consumer groups were working to make sure that energy suppliers didn’t “profiteer off uninformed customers”. He said: “Without a smart meter you would have no idea how much your energy will cost.”
That might be true of the future. For now, you’re looking at a saving of a tenner a year.
‘The main consumer of energy is heating our houses. In the future it could be cars’