The rollout of smart electricity and gas meters is being undertaken on a global scale, with the EU implementing a smart metering policy requiring 80 per cent of households to have smart electricity meters installed by 2020. While this policy varies in different member states, it does set Europe to be the fastest penetration in the world during this time period.
An alternative to traditional meters, smart meters use real-time sensors, taking readings automatically and sending them via a range of technologies to energy retailers. According to the Department of Energy & Climate Change (Decc), the rollout will create £7 billion in benefits for suppliers and consumers over the next 20 years.
So what is the UK doing to ensure consumers and suppliers make the switch? The government is implementing a mandatory rollout of smart electricity and gas meters between 2015 and 2020 to households and businesses. This programme aims to roll out 53 million meters, which will affect 30 million premises and businesses at a cost estimated by Decc of up to £12 billion.
Unlike elsewhere in Europe, UK energy suppliers are responsible for funding, planning and delivering the installation of the smart meters, including home monitors and displays. As a result, energy suppliers need to adapt their business models, including upgrading their information technology, billing systems and internal processes to handle data; procuring equipment; and recruiting and training staff. To date there have been more than one million domestic smart meters installed in the UK, with the majority of installations funded by competitive meter asset providers (MAPs). Given the large funding requirement of the mass rollout, the complexity of the programme and the corporate credit rating pressure on energy suppliers, innovative and flexible financing for the procurement and installation of smart meters will be a key item on the critical path for all UK energy suppliers during the mass rollout.
Given these ambitious rollout plans and targets, smart meters will remain at the top of the agenda for energy ministers across the EU over the coming years.
Daniel Wong, head of Macquarie Capital, Europe