Don’t blame smart meters for our energy woes. Truth is, we just don’t generate enough power
Welcome to Britain, where our Victorian infrastructure creaks and leaks. Alas, so does the shiny new stuff. Last week, the Government admitted that far more energy smart meters were broken than it had previously thought.
There’s a lot of guesswork involved, but the meter counters estimate there are about 4m broken devices, rather than 3m. The cost of the programme has sailed past £13bn, with you and I paying the bill. Now consumers have something else to worry about: forced energy rationing.
As energy analyst Kathryn Porter explained: “Electricity system operator and the regulator suggest that people can delay cooking meals, doing laundry or having baths, ignoring the reality that demand reduction is generally required at dinner time.”
While meters are emerging as the instrument of rationing, however, they are not the cause.
Two key features of smart meters should not be controversial. First, remote billing, when done reliably, is something we should all welcome. Manual meter reading is an anomaly in a supposedly 21st-century digital economy, and makes as much sense as Amazon delivering parcels by horse and cart. Nobody objects to that part.
We should also welcome the second big feature, which is the requirement for time-based bill settlement. The Smets 2 specification requires meters to be able to take readings every half hour, creating 48 tariff slots every day. This has positive supply side impacts that can benefit consumers. As one industry insider explains: “There are hordes of semi-idle staff at the likes of the big six [energy] companies weighing down on consumers’ bills. Enabling half-hourly settlement erodes a big chunk of the heavyweights’ advantage.”
Once consumption can be mapped rapidly to wholesale trading, the smaller retailers should benefit. Time-based billing exposes waste, and encourages innovation. No doubt some academic, somewhere, is writing a piece for the London Review of Books on how time-based settlement is an example of wicked “neoliberalism”, by imposing a market on bewildered consumers. But energy is already a market and we should want it to work more efficiently.
The really controversial part of smart meters, described by Porter, is charging you more when you most need it.
By studying Uber, a pioneer of surge pricing, we get a big clue where the problem really lies. Uber can’t require that its casual workforce clock in to work – but it can incentivise them to. When Uber introduces surge pricing, it does so to increase capacity, and make more cars appear where they are most needed. Rates go up for drivers, and so those already on the road shift over from one location to another, to try to capture demand.
However, the surge pricing envisaged for energy is a one-sided conversation: it’s all stick and no carrot. Consumers are being clobbered for one very simple reason: we don’t have enough energy. In 2007 the EU announced its energy strategy, devised by a former teacher and Latvian Communist Party member called Andris Piebalgs. He set a target of a 13pc reduction in use across the bloc by 2020. Rather than get producers to make more, we would all try to use less. The target came from a deluded belief that because so much heavy industry had left Europe, with correspondingly big falls in CO2 emissions, the rest would be easy too. In fact, reducing energy merely punishes the consumers and industries that are left. The next year Piebalgs admitted it didn’t really add up: “A radical change in consumer behaviour is needed if we want Europe to be more energy efficient,” he wrote.
As I write, we’re importing 25pc of our power, an astonishing amount for a country blessed with natural resources and know-how. We produce only two thirds of the energy we did in 1999 but there will be days to come when no one has any spare to lend us. So pursuing energy scarcity is much worse than a botched meter programme.
It’s a catastrophic, civilisational-scale error and all energy companies can do as a result is coerce consumers to use less. We’ve designed a system that suits them, not us. Anger is justifiable but taking it out on meters is like blaming waiters for an appalling meal, not the cook. Blaming devices just lets the guilty off the hook. If we had an abundance of energy, nobody would mind the meters.