Three major headaches for ‘Gaz and Leccy’ revolution

1 They won’t actually save you money

DOUBTS remain about whether the ambitious scheme will really save consumers money.

The Department of Energy and Climate Change (DECC) believes the technology will enable customers to learn more about how much power they use and so work out how to cut their bills.

It estimates bills will fall by £26 a year by 2020 and £43 a decade later as consumers cut their electricity usage by 2.8 per cent and gas by two per cent.

But an early study of 743 Dutch households with the meters found they only used 0.9 per cent less gas and 0.6 per cent less electricity than those with old meters.

The European Commission itself has pointed out that of the 19 EU countries that have carried out an analysis of the likely costs and benefits, five have concluded that electric smart meters will lose money and three are not introducing the scheme. For gas smart meters, 12 of the 19 countries ended up with ‘negative’ results.

Here, the National Audit Office pointed out that households would have to keep their energy use down year after year for costs to materialise. Yet ‘the evidence on longer-term behaviour change’ is ‘limited’.

Experts say if smart metering is to save families money, they must change their behaviour by using less power or by running appliances at different times of day. Merely having a smart meter only saves the energy firms money, as they no longer have to send people out to do readings.

Overall DECC says the project will cost £10.9billion but create benefits worth £17.1billion for consumers and suppliers.

However the NAO has stated that the economic benefits ‘are subject to a wide range of uncertainty’, and pointed out that the hoped-for savings have been reduced by £2.1billion recently thanks to better calculations.

In addition, it is by no means guaranteed that all consumers will end up with smart meters in their homes, let alone use them.

One supplier told the NAO that ‘up to 20 per cent of customers will refuse to have smart meters installed’ and two firms fear added costs from dealing with ‘reluctant customers’.

If fewer people sign up, energy usage will not fall and so the predicted savings will not arrive.

2 Technology hasn’t been tested yet

THE proposed smart meters will not work in a third of British homes, according to the National Audit Office spending watchdog.

The meters need to communicate through a form of wireless communication.

Yet the UK has chosen a littleknown ten-year-old system called ZigBee rather than the betterknown wi-fi or Bluetooth.

ZigBee does not work in highrise blocks, because the meters tend to be located in basements too far from people’s flats, and will also struggle in buildings with thick walls.

Critics say Britain has developed by far the most complicated form of smart metering in the world, greatly increasing the costs and risks.

Elsewhere in Europe, the energy networks are responsible, allowing them to send meter readings directly through power lines. In Italy a simpler system has cost just £1.5 billion.

In Britain the retailers are running the scheme and in addition to the actual meters, ministers have insisted that every home be given another box – known as an InHome Display – that lets users see what they are currently spending on power.

Paul Nickson, British Gas commercial director for smart metering, admitted: ‘There is not a technical solution for high-rise buildings.’ Trials may lead to smart meters in flats being connected by cables.

The NAO said: ‘Suppliers are still developing a home area network radio system for up to 30 per cent of premises.’

A wireless network that works for all but five per cent of homes will not be finished until at least 2016.

The meter readings are sent from homes to the energy companies by mobile phone signal, but this means the system will not work in some rural areas.

The Government’s latest Impact Assessment admitted the wireless coverage may be ‘difficult to achieve’ in remote or mountainous districts.

In addition, not all of the energy firms have developed ‘viable’ systems that work for customers who pay for their energy in advance, the NAO said.

3 They are vulnerable to hackers

THE Government insists smart meters will be safe from hackers and cyber-terrorists.

But a risk assessment carried out by the energy watchdog, Ofgem, identified ‘a range of threats such as cyber, viruses and malicious software. The potential impacts… range from fraudulent transactions for financial gain… to compromise of critical operations such as remote disablement.’

This means that criminals could break into the system and try switch off the supply to millions of homes at once, leaving the national grid crippled.

The dangers were considered so great that in 2012 the Government spy agency GCHQ and its cyber protection offshoot, the Communications-Electronics Security Group, dramatically intervened, delaying the entire project. Experts from the CESG and the body that protects major assets, the Centre for the Protection of National Infrastructure, joined a top-level body called the Security Technical Experts Group that has held monthly meetings to assess the risks.

The final guide to how these security controls will work is still months from completion.

One project insider said the security systems should have been planned from the start, but instead, were a ‘desperately late add-on’.

He warned: ‘You just shouldn’t do things this way round. The security spec is a sticking plaster. The risk is that as soon as holes are plugged, others will open up.’

Idan Edry, a former military intelligence officer who is now a senior executive at the Israeli firm Nation E, a world leader in energy cyber security, said he has studied the UK system carefully, ‘and I can tell you, it has nothing like enough protection’.

It would leave customers exposed to being hacked: thieves could steal millions from prepaid energy accounts. More seriously, it created millions of portals into the energy supply system for cyber terrorists, who could use them to cripple large parts of the network.

Last month the National Audit Office said the security challenges ‘should not be underestimated’.