Smart meters are far behind an already downward-revised target for nationwide penetration in Britain, show data published on Friday.
Domestic smart meter deployment as of mid-2015 (2.5% penetration) is behind levels targeted for the end of 2014 (3.5%), and far behind levels targeted for the end of this year (8-9%).
While smart meter deployment rates accelerated rapidly in the second quarter of this year, suggesting that energy suppliers are finally clicking into gear, they are still off target to complete a national roll-out by the end of 2020.
At present quarterly installation rates, it would take more than 40 years to complete the installation of smart meters across Britain.
The slow deployment reflects a government struggling to reconcile targets to increase energy efficiency and cuts in carbon emissions, both of which are capital-intensive, with an austerity budget and a focus on limiting consumer bills and costs.
Both the British government and opposition parties have relentlessly pressured energy suppliers to cut bills, with the goal of protecting household incomes in the aftermath of the financial crisis. That is difficult to square with a smart meter rollout which will be implemented by suppliers, and funded entirely through consumer energy bills. Little surprise, then, that suppliers have failed to step up, and the timetable is slipping.
Smart meters deliver live data on energy use both to the energy consumer and their supplier. That will benefit energy suppliers, by eliminating home visits to read traditional meters, and drive energy savings for energy consumers.
They will also deliver long-term strategic benefits, by giving grid operators far more granular detail of the low-voltage distribution network; ease grid integration of distributed renewable power; and enable time-of-use pricing which rewards users for switching to off-peak consumption, thus driving system savings through load shifting.
In its original impact assessment, the Department of Energy and Climate Change (DECC) calculated that a nationwide smart meter rollout would deliver benefits of 17.1 billion pounds, compared with costs of 10.9 billion.
The latest figures, however, show a continuing moving of the goal posts in the installation timetable.
In 2013, DECC targeted the rollout cumulatively to reach about 25% of all meters by the end of 2015 (see Figure below). Last year, the department cut that near-term target to 8-9%.
Actual data for mid-2015 deployment, published on Friday, showed that deployment had reached 1.193 million meters in domestic properties, or 2.5% of the total 47.9 million gas and electricity meters in operation (both sets of data apply to the nine largest suppliers).
At the same time, DECC on Friday quietly changed the timeline for large-scale deployment, to 2016-2020, from 2015-2020. DECC said on Friday: “Most householders will then have smart meters installed by their energy company in the period between 2016 and 2020.”
The energy regulator, Ofgem, still says: “Most households will have smart meters installed by their energy company between 2015 and 2020.”
Recent UK energy cut-backs to keep within a 2010 austerity budget, imposed in the aftermath of the global financial crisis, include a proposed scrapping of most support for onshore wind and solar power. These initiatives involve large up-front costs, which deliver benefits over the longer term through zero fuel costs. In the case of smart meters, long-term benefits include lower bills as a result of efficiency savings both for consumers and suppliers.
DECC’s chart of the cost impact of smart meters below shows how benefits are skewed towards the long term. But the department may now be all too focused on the short term.