UK smart meters: a difficult journey to full residential take-up

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21 May 2013, Gas, Electricity

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The delay matters little in terms of the long-term aim of improving the UK's energy efficiency and it is certainly not a reprieve for the companies that must install the meters, as the amount of time they have to complete the program remains the same.

Smart meters provide retail-side benefits like demand reduction by removing the need to read meters, and load-shifting by showing costs of use at peak times. The meters themselves do not improve efficiency; they simply change consumer behavior by making them mindful of wastage. Distribution-side benefits also result, such as network automation and optimization, fault detection, and better integration with renewable generation. All this helps to reduce peak prices through the more optimal use of generation plants.

A factor in pushing back the program is the DECC's cautious approach in assessing stakeholder feedback on the time needed to ensure a fit-for-purpose communication and data service infrastructure for the rollout. The DECC is conducting a national tender to choose the data and communications service provider, while leaving the individual utilities to install the meters in their customers' homes. Even without the adoption of a single national standard British Gas (the biggest player in the residential market with 30% of total customers) and E.ON (third with a 15% market share) have already installed 1 million and 200,000 smart meters respectively. These companies have measured the size of the task and decided that the supply chain bottleneck risk as the installation program gathers pace after 2015 is greater than the risk of having stranded meters once technical standards are finalized.

By the end of 2020 approximately 50 million meters need to be installed. Even if the technical standards are agreed early it will be a big challenge to find enough skilled operatives to do the job. It is possible that an even bigger challenge will be breaking down the natural skepticism of the UK public, who generally dislike intrusions into their household.


www.datamonitorenergy.com / asken@datamonitor.com / @DatamonitorEN

Source: MarketLine

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