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Select committee inquiry

Progress on smart meter roll-out

Closed

Energy and Climate Change Committee · Opened 15 September 2014 · Closed 15 September 2014

6 recommendations · 4 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“Plans to install energy saving smart meters in every UK home and business by 2020 are in danger of veering off-track and could prove to be a costly failure because the project has not been driven forward effectively, the Committee has warned.”

The committee's words, from the inquiry page on parliament.uk ↗.

What it found

In the committee's words, from the summary of 9th Report - Smart meters: progress or delay? ↗

Smart meters, which allow energy suppliers to get remote electricity and gas readings from households and businesses using mobile phone-type signals and wireless technologies, should benefit customers through savings from energy usage and efficiency. In 2013 we first looked at the Government’s programme to roll-out smart meters to 100% of UK homes and businesses by 2020. This inquiry reviewed the progress of the roll-out and we have been disappointed by the ongoing policy delivery challenges which the Government has failed to resolve:

• Technical communication problems with multiple occupancy and tall buildings which should have been resolved by now • Compatibility problems between different suppliers and different meters • A slow start to full engagement with the public on meter installation and long-term use • A delay by the Government-appointed communications infrastructure company which has further set back confidence in the programme • A reluctance to improve transparency by publishing the Major Project Authority’s assessments on the smart meter programme These policy problems are symptomatic of a national programme that the Government has left largely to suppliers and failed to drive forward effectively. Consequently, we do not believe that near-universal smart meter roll-out will be achieved by 2020. Without significant and immediate changes to the present policy, the programme runs the risk of falling far short of expectations. At worst it could prove to be a costly failure. The Government must urgently seek industry-wide solutions to the technical challenges that remain. It should also give serious consideration to whether it is possible to reduce costs to consumers by streamlining the roll-out of smart meters, perhaps through more active participation of network companies. For the Government to succeed with this nationwide project, it must now grip the reins and take a more active role to support the industry-led roll-out. Getting it right will eventually cut energy usage and bills for 30 million homes and businesses in the UK. Getting it wrong risks embarrassment for the Government through public disengagement with a flagship energy policy and a costly missed opportunity.

What the government said

The government responded on 26 March 2015.

Summary written by Accountability Index from the government's response.

The Government welcomes the Committee's report and says the roll-out is "making good progress", agreeing with some recommendations (such as keeping the In-Home Display offer) and disagreeing with others.

  • It agrees that the obligation on suppliers to offer In-Home Displays to all domestic customers "should be retained", but disagrees that Government should identify a smart app, saying industry should innovate.
  • It disagrees with the recommendations to relax SMETS1 requirements, publish a plan on an installer skills shortage, and assess a greater role for network operators, stating that the energy supplier-led roll-out is "the right approach".
  • On the DCC delay, it "notes" the recommendation and says the DCC expects to deliver operational services from April 2016, with up to six months of contingency that will be "strictly governed".
  • It commits to publish a consultation at the end of March 2015 on HAN solutions, and to consult on enrolling SMETS1 meters into the DCC.

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 15 September 2014 to 26 March 2015.

  1. Oral evidence 2 sessions
  2. Report 7 Mar 2015
  3. Government response 26 Mar 2015
  4. Correspondence 2 letters

What it recommended 6 recommendations · 4 conclusions

1We first identified the technical challenge of multiple occupancy and tall buildings for smart meters...
Recommended (the committee's words)
We first identified the technical challenge of multiple occupancy and tall buildings for smart meters in 2013. The Government has established working groups with industry to address this issue but suppliers remain dissatisfied with the level of progress to date. We recommend that the Government take a firmer, co-ordinating role to steer those involved towards an effective cross-industry solution. DECC should use its smart meter working groups, identify the preferred solution and establish a clear timeline to address the issue of multiple occupancy and tall buildings.
2As interoperability is at the heart of the Government’s framework on smart meters, the Government...
Concluded (the committee's words)
As interoperability is at the heart of the Government’s framework on smart meters, the Government and the DCC should relax requirements for early smart meters that fall just short of SMETS 1 compliancy to be replaced by 2020. This could reduce cost and inconvenience for consumers.
3Technology has moved on since it was made obligatory for suppliers to offer In- Home...
Recommended (the committee's words)
Technology has moved on since it was made obligatory for suppliers to offer In- Home Displays (IHDs). It is essential that all meters are compatible with smart phones and tablets as smart technology is now commonplace and apps would provide more flexibility for both suppliers and consumers and would improve interoperability during the mass roll-out phase. However we are conscious that there are many UK households who still lack access to smartphones and other smart devices. On balance we recommend that DECC and Ofgem maintain the mandate for all suppliers to offer IHDs. We also recommend that the Government and suppliers work together to keep costs down and identify an affordable smart app which can be used with all smart meters. In this way all customers can be offered a choice which meets individual customer preferences.
4We are very concerned about the impact the DCC delay will have on customers during...
Concluded (the committee's words)
We are very concerned about the impact the DCC delay will have on customers during the mass roll-out phase for the smart meter programme. The target of 100% smart meter installation by 2020, which is already in danger of being missed, will be made even harder to achieve by this delay. It is also likely to increase the number of SMETS 1 meters installed by suppliers, creating future interoperability problems for customers who then have to install SMETS 2 meters. The DCC must urgently find ways of incorporating these early meters into its communication infrastructure and of simplifying the extremely long smart energy code. Following the end of the DCC consultation period, the DCC should report jointly with the Government on the impact that this delay will have on the roll-out and in particular on consumers, identify what measures will be taken to get the roll-out back on track, and explain how any additional resources will be provided.
5Despite the Minister’s confidence, we are concerned that the current shortage of installation engineers makes...
Recommended (the committee's words)
Despite the Minister’s confidence, we are concerned that the current shortage of installation engineers makes it unlikely that the 100% roll-out target will be met by 2020, and may affect the installation costs passed on by suppliers to customers. We recommend that the Government publishes a detailed plan and timetable to address this skills shortfall, and consults suppliers to identify which regions and customers will be most affected by it ahead of the 2020 roll-out deadline.
6The existing roll-out arrangements may now be too advanced for a transfer of responsibility for...
Recommended (the committee's words)
The existing roll-out arrangements may now be too advanced for a transfer of responsibility for installation. However, given the potential benefits of DNOs playing a greater role in the roll-out, we recommend that the Government urgently conducts and publishes an assessment of the feasibility of requiring a more active participation of the network operators in the roll-out programme.
7It is clear that helping 28 million households, including vulnerable customers, to understand the benefits...
Concluded (the committee's words)
It is clear that helping 28 million households, including vulnerable customers, to understand the benefits of smart meters and to continue using them once installed will be challenging. We want the Government to report periodically on the impact of smart meters on low-income households. While Smart Energy GB’s appointment has been supported we also want evidence from this communications agency, and from Government, of a clear engagement plan to persuade the public of the advantages of installing and using smart meters. We are concerned at the reported high drop-off rates after one year of installation. Smart Energy GB’s plan to use third parties, such as community groups and public broadcasters, to engage the public is wise and we encourage this approach.
8We believe that the potential benefits of Time of Use tariffs working in conjunction with...
Concluded (the committee's words)
We believe that the potential benefits of Time of Use tariffs working in conjunction with smart meters are very substantial. Energy suppliers should continue to pilot the use of these tariffs and feedback to Ofgem the extent to which they help change consumption patterns and lower bills. We agree with the Government and suppliers that the public need to have a better understanding of Time of Use tariffs before the universal adoption of compulsory Time of Use tariffs can be considered.
9While progress has been made since we first looked at the Government’s smart meter programme...
Recommended (the committee's words)
While progress has been made since we first looked at the Government’s smart meter programme in 2013, we do not believe that near universal smart meter roll-out will be achieved by 2020. Long-known technical challenges of multiple occupancy and tall buildings should have been resolved by now. Other technical issues around interoperability such as the migration from SMETS 1 to SMETS 2 lack a clear plan for resolution and the DCC delay has damaged confidence in the programme. The slow start to full engagement with the public means Smart Energy GB must now step up delivery of their communications programme. We want the Government to remain ambitious about securing the maximum benefits from smart meters as soon Smart meters: progress or delay? 21 as possible, particularly in relation to energy efficiency and consumer bills. The Government must monitor the impact of the programme to ensure that low income households, in particular, are benefitting. However, the benefits of smart meters will only be fully realised if the Government sets and keeps within a budget limit on the cost of the overall programme. We also consider that the Government should publish the Major Project Authority’s assessments of the smart-meter programme.
10Without significant and immediate change to the present policy, the programme runs the risk of...
Recommended (the committee's words)
Without significant and immediate change to the present policy, the programme runs the risk of falling far short of expectations. At worst it could prove to be a costly failure. The Government is at a crossroads in relation to smart meter roll-out. All the problems which we have identified are symptomatic of a national programme whose management the Government has left largely to suppliers. The Government must give serious consideration to whether or not it is possible to reduce costs to consumers by streamlining the roll-out of smart-meters, perhaps through more active participation of DNOs. The Government must also take a more active role in driving forward the industry-led roll-out, seeking and facilitating industry-wide solutions to the technical challenges that remain. Getting it right will eventually cut energy usage and bills for 30 million homes and businesses in the UK. Getting it wrong risks embarrassment for the Government through public disengagement with a flagship energy policy and a costly missed opportunity.

Evidence

Oral evidence sessions 2

Correspondence 2 letters