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UK smart meter rollout years late and less than two thirds complete

Sub-£5 monthly saving per household on £13.5B energy reduction project

UK energy companies are only 57 percent through the rollout of smart meters nearly four years after the government's first deadline for the £13.5 billion project, according to the public spending watchdog.

In a report published this week, the National Audit Office (NAO) also found that indicative saving from smart meters equated to £56 annually per household, a little less than £5 each month.

Back in 2012, the UK government created a legal obligation on energy suppliers to make sure they completed the rollout of smart meters by the end of 2019. Subsequently, it pushed back the deadline three times, first to the end of 2020, then 2024, and then 2025. As of February 2023, the government launched a consultation on plans to have smart meters installed in 80 percent of homes and 73 percent of small businesses by the end of 2025.

In 2019, the government estimated the project would cost around £13.5 billion between 2013 to 2034, in 2011 prices. In that period, the overall benefits might be £19.5 billion, it found.

Estimated total savings over 20 years might mean very little to households currently struggling with energy bills.

In a statement, Gareth Davies, head of the NAO, said: "The rollout is now at a crucial point – and the department should ensure it has robust information on both the total costs and benefits of smart meters to make decisions from an informed position to maximise value for money."

The Department for Energy Security and Net Zero (DESNZ) must work with suppliers to "get the programme on track, for the benefit of millions of consumers and small businesses and government’s wider environmental goals," he said.

Installations are approaching the 60 percent coverage that DESNZ estimated in 2019 would be needed for electricity networks to begin securing benefits from smart meters, for example, through better informed decision-making on network reinforcement and outage detection and management.

Nonetheless, the NAO found three million, or 9 percent, of meters were not operating in smart mode as they should. Meanwhile, customers were struggling to maintain smart functionality when they moved to a new supplier. As of May 2023, suppliers had not moved around four million first-generation smart meters to the central platform service to ensure they maintain smart capability when customers switch.

Additionally, there were issues with the functionality of the central platform service Smart DCC, a subsidiary of Capita, said the NAO.

"In January 2023, [energy watchdog] Ofgem published stakeholder consultation responses which identified concerns that the central platform service was too focused on supporting future services rather than ensuring its reliability. In addition, some stakeholders told us that, at times, they found the service was unreliable and meant they were not able to achieve their expected benefits from the system.

"Smart DCC met most of its service level obligations between October 2022 and March 2023. Smart DCC's licence is due to expire in 2025."

Capita currently holds the licence for Smart DCC and Ofgem is responsible for "designing and awarding the next licence, which is expected to run to 2040".

In October 2019, the government insisted it was "confident" it would meet the new smart meter rollout date. Lord Duncan of Springbank, climate change minister at the time, told a committee of MPs that "when we move to the Star Trek phase," it will allow the "technology to be our friend." ®

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