A snag in the smart meter plan?
Smart meter installation targets loom large, but have consumers read the memo? Exclusive Utility Week research has revealed more than 50 per cent are unsure about installing one.
It’s now eight years since the smart meter rollout was first announced, and the cut-off date for the deployment of first generation (SMETS1) meters approaches (June 2018). There are millions of SMETS1 meters in the field and more are being deployed every day, as suppliers work to keep up with the rollout targets. Meanwhile, the final testing of second generation (SMETS2) meters grinds on.
For those customers who have had a smart meter installed, the future looks bright. A third of respondents to Utility Week’s survey, carried out in association with Harris Interactive, said they had seen savings on their energy bills, and almost two thirds (59 per cent) said they had better visibility of their energy costs. But the high penetration of SMETS1 meters, coupled with persistent challenges in bringing SMETS2 meters to market, is problematic.
This is for several reasons, including the fact that many customers remain stubbornly unenthusiastic about the idea of adopting the technology. In a survey of just over 1,000 GB adults, Utility Week found that 25 per cent of respondents said they are not interested in getting a smart meter. Meanwhile, 24 per cent said they need to find out more before making the decision to get one installed, and a further 5 per cent said they are worried about the decision to get one – meaning cumulatively over 50 per cent may choose not to get a smart meter installed.
Add to this the sub-optimal experience that a big chunk of SMETS1 smart meter customers are experiencing when they attempt to switch their suppliers – around 65 per cent of consumers who have tried to switch supplier post-smart meter installation have lost smart functionality, according to Utility Week's research – and you’ve got yourself quite the conundrum.
None of this is slipping under the radar either. Instead, widespread national press reports are making a field day of negative smart meter news, and doing nothing for consumer confidence.
For the industry itself – whose inconveniences tend to glean slightly less national sympathy – there’s the lingering concern of DCC enrolment challenges down the line for SMETS1, and a continued need to support the higher technology and installation costs of SMETS1 meters while the SMETS2 niggles are worked out. The need to keep meeting targets also poses a growing risk of stranded SMETS1 assets.
In response to the latter issue, the Department for Business, Energy and Industrial Strategy recently launched a consultation to gain industry feedback on possible ways in which it could soften the SMETS2 transition deadline. It has suggested possible derogation arrangement for suppliers rolling out SMETS1 at scale, in order to avoid supply chain inefficiencies and, crucially, any stalling of deployment. But this potential reprieve does little to ease the urgency with which suppliers are working to achieve the long-anticipated offer of truly smart meters.
It’s not all bad news. The proportion of respondents to the Utility Week survey who said they would need to find out more information is a decrease on the 29 per cent which gave the same reason when Utility Week conducted a similar survey six months ago. Market observers predict this is attributable to the smart meter campaign run by Smart Energy GB.
Ernst and Young advisory partner Rob Doepel described the outcomes of the survey as “unsurprising at this stage in the rollout”. “Smart Energy GB are doing a great job – it’s no mean feat targeting not just one segment of society but the entire population, and the results show there is now a fantastic increased national awareness,” he told Utility Week.
Mark Brenton, energy specialist at Harris Interactive, agrees, but says the results highlight the challenges suppliers face in persuading “late adopters” to install a smart meter. “They need to see real evidence that having one can help save them money on their energy bills,” he said. “The research shows that still only a third of those who now have a smart meter state that this is the case.”
Clearly wanting to answer the same questions, Smart Energy GB commissioned its own, comparable survey in August, and said of those surveyed (almost 10,000 people), most who had gone through the installation process were “very satisfied with their smart meters, with around three quarters (76 per cent) saying they would recommend one to others,” according to a spokesperson from the company. “And as the pool of people with smart meters grows, the number of people who would recommend the new technology does too – now more than 4.5 million people.”
Back in the Utility Week survey, the incidence of multiple visits to install the meters fell from 13 per cent six months ago to nine per cent. However, the number of people surveyed who said they had seen “no benefit” from having a smart meter installed also increased to 16 per cent, up from 12 per cent six months ago. Only a third had seen savings on their energy bills since installation. Around a third suggested having a smart meter has had no impact on them in terms of energy engagement.
Brenton described these reactions as “disappointing”, and said “this will be a real concern for those hoping that smart metering will be a game-changer in terms of consumers engaging more with energy, but perhaps the advent of smart technologies could change this going forward.”
But Doepel countered that the nature of the challenge has changed: “The task now is to make people aware of what smart metering will be able to do for them in the future – it’s not the changes in your energy usage or bills that are the exciting bit, it’s the fact that because your usage can be monitored, suppliers will be able to tailor a tariff to your exact needs, that suits your specific lifestyle and you as an individual. That to me is exciting, and that’s what the marketers – and the suppliers – need to be focussing on now. That to me is what will make the difference.”
And in good news for suppliers, the results of a more recent Smart Energy GB report commissioned in October show this is far from unattainable, and may simply be a matter of time. The report, which looked in to detailing behaviour change following a smart meter installation, found those who have had a smart meter for more than two years are more likely to say that they understand what they need to do to save energy around the home, and the longer people own their smart meter, the more likely it is they will have implemented energy saving changes.
Infographic: Consumer attitudes towards smart meters
Source: Utility Week, in association with Harris Interactive
Where are we at?
The government and Ofgem have a target to roll out 53 million gas and electricity meters to all homes and small businesses in Great Britain by the end of 2020. In its latest quarterly update, published in November, the government said there are now more than 8.61 million smart and advanced meters in homes and businesses in Great Britain, installed by both large and small energy suppliers.
But it is SMETS2 or SMETS2-compatible SMETS1 meters that households need. SMETS2 meters offer functionality that is critical to the success of the smart meter rollout and the delivery of its value case for both customers and the energy industry. This is because core SMETS2 functionality includes providing “first gasp” and “last breath” notifications to network operators of outages and supply restoration. It also includes completely transparent billing for customers, and seamless switching between suppliers.
This ability to switch with ease is the flagship promise that smart metering has been sold to the public on. And despite the many other advantages smart meters will afford consumers and businesses if all goes to plan, this promise is the least the scheme should be seen to be delivering if it wants to instil confidence. Unfortunately, at present this is far from a reality – despite the advanced stage of the rollout, with its looming 2020 deadline for completion.
An engaging prospect?
The clock is ticking on the smart meter rollout. However, research carried out by Utility Week, in association with Harris Interactive, shows that a worryingly large amount of the population are still disengaged with the devices. According to the survey, 25 per cent of people are “not interested” in getting a smart meter. And it also shows a high level of ignorance about how the entire process works: two thirds (67 per cent) said they are not aware that the rollout is funded by bills.
In terms of consumer engagement with the smart meter installation process, Audrey Gallagher, director of energy supply at Energy UK, told Parliament last week that it was still too early to truly assess the public appetite for smart meters.
Giving evidence during the committee stage of the Smart Meter Bill – which effectively extends the potential rollout period – she said that the ramp up in smart meter installation had “not yet really started in earnest”.
Responding to the Harris findings on level of consumer interest in smart meters, a BEIS (business, energy and industrial strategy) spokesman points to “continuing” rises in installation with nearly 350,000 of the devise fitted every month of this year.
A spokesman for Smart Energy GB insists that there is “no reason” why anyone should not want to upgrade to a smart meter, with its own research showing that nearly in eight in ten people report benefits in terms of how they buy and use energy.
On the issue of public ignorance about how their meters are funded, both BEIS and Smart Energy GB point to how the recovery of smart meter costs from energy bills is the same as for their traditional counterparts.
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