However, a recent National Audit Office (NAO) report reveals that the rollout pace is lagging behind schedule, posing challenges for DESNZ in meeting its revised targets.
The government aims for every home and small business to be equipped with a smart meter to achieve net-zero targets and facilitate financial savings for households and small businesses.
Significant challenges
The NAO, an independent auditor of public expenditure, reported that the government and industry have managed to overcome some significant challenges impeding the programme. For instance, they have collaborated with industry experts to advance smart meter technology, enabling its deployment in more homes.
However, the NAO report pointed out several challenges in meeting the DESNZ’s present targets, including a shortage of installation engineers and supplier disputes. The latter argue that they have already catered to the ‘low hanging fruit’ or customers who express an interest in the devices. Hence, they urge new policies that encourage the rollout – such as mandatory replacing broken traditional meters with smart meters. DESNZ has responded by challenging suppliers to enhance their performance with installation targets and invest more in device deployment.
The Department’s predecessor, BEIS, projected in 2019 that the benefits of the smart meter rollout for consumers and small businesses would amount to £19.5 billion. However, owing to recent high energy prices and emerging technologies that boost savings, the actual benefits per meter are anticipated to exceed expectations.
Higher than projected due to engineer shortage
In the same analysis, DESNZ predicted the total rollout costs to be £13.5 billion. This is expected to increase as average installation costs are higher than projected due to reasons such as the engineer shortage. While suppliers initially shoulder these costs, they are eventually passed on to consumers via energy bills. Both the costs and benefits have been delayed due to the slower-than-planned rollout.
The government first imposed a legal obligation on energy suppliers in 2012 to complete the smart meter rollout by the end of 2019. Although it was implied that suppliers should take ‘all reasonable steps’ to install smart meters in all homes and small businesses in Great Britain, no clear target percentage was provided for a completed rollout.
Since then, the government has deferred the completion deadline three times, shifting it to the end of 2020, 2024, and finally, 2025. In February 2023, the government introduced a consultation plan for 80% and 73% smart meter installation in homes and small businesses by the end of 2025.
57% are now smart
According to recent data, over 32 million meters in Great Britain, or 57% of the total, are now smart. However, about 9% of these smart meters were reported to be malfunctioning in March 2023.
The Infrastructure and Projects Authority previously rated the smart meter programme as ‘amber,’ indicating that while successful delivery seems feasible, significant issues require management’s attention.
The NAO advises that the government should update data on programme costs and benefits to maximise value for money from the programme. Further, it recommends that DESNZ and suppliers collaborate to resolve disputes and tackle the reasons for the slower-than-planned installation rates.
Gareth Davies, the head of NAO, said: “The government has made recent progress in rolling out smart meters across Great Britain. 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. DESNZ must now 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.”