The government today unveiled its long-awaited plans for smart meters and
smart grids, pledging to ensure real-time energy meters are installed in every
home and business by 2020 and releasing a report detailing the case for a
nationwide smart grid.

Under the smart meter plans, which were set out in the
government’s
response to its recent consultation exercise, suppliers will be tasked with
rolling out smart meters that both transmit accurate data to energy firms and
feature separate display units capable of showing a building’s energy use in
real time.

Energy minister Lord Hunt said, "Smart meters will put the power in people’s
hands, enabling us all to control how much energy we use, cut emissions and cut
bills."

The technology will be deployed using the so-called "Central Communications
Model", under which energy suppliers will be responsible for purchasing and
installing meters, and the data provided by the smart meters is then
co-ordinated centrally.

The government report argued this approach offered the best model for a rapid
and cost effective roll out, noting that it "combines strong incentives for
energy suppliers to deliver a high quality service to their customers [while]
making it easier [for customers] to switch between suppliers".

Some respondents to the consultation had warned that tasking energy suppliers
with rolling out the technology would drive up the cost of the roll out as
suppliers would be forced to visit the same street a number of times. However,
the government said it would attempt to manage the roll out "so that as many
people as possible in local communities receive their new meters at the same
time", adding that it "intends to develop measures to promote co-ordination of
deployment at local level".

The new plans were accompanied by a
major
new report on the feasibility of smart grid technology, which argues that
widespread upgrades to the grid would allow the more efficient transmission of
electricity, support the roll out of renewable electricity, and when combined
with smart meters would allow businesses and households to cut carbon emissions
and save money by automatically managing their energy use throughout the day.

In addition, the Department of Energy and Climate Change (DECC) announced the
launch of a new £6m fund designed to support businesses developing smart meters
and smart grid technologies such as energy storage systems.

Lord Hunt said there was a strong economic case for the UK to accelerate the
roll out of smart grid technologies that are currently being explored by
governments around the world.

"Smart grids will help manage the massive shift to low carbon electricity
such as wind, nuclear and clean fossil fuels," he said. "Globally the business
of developing smart grids has been estimated at £27bn over the next five years
and the UK has the know-how to be part of that."

However, shadow energy and climate change secretary Greg Clark said the
government’s timeline for rolling out the new technologies lacked ambition.

"Yet again, the Government is delaying when urgency is needed," he said. "
Smart meters are sorely needed to give families greater control over their bills
and to help the UK to meet its climate change targets. Sticking with the same
slow timetable for rollout by the end of 2020 will leave the UK lagging behind
yet again. The industry says that it can move faster, which is why a
Conservative government would accelerate the timetable for rollout to ensure
every family has the opportunity to benefit from a smart meter by 2017 at the
latest."

The announcements were broadly welcomed by the emerging smart grid sector,
but observers warned that smart meters would have to be supported by wider
energy efficiency policies if they are to achieve the desired outcome of curbing
energy use and carbon emissions.

"UK households want more than just a figure for energy usage – having a
display box is only the first step," observed Graham Butler, utilities sector
lead for IBM Global Business Services, the IT giant that is currently
undertaking a number of high profile smart grid pilot projects around the world.
"Utilities need to educate consumers on how they can use the information
generated by smart meters to reduce bills and develop smarter ways of managing
their energy usage."

His comments were echoed by Joel Hagan, chief executive of UK smart meter
specialist Onzo, who warned that smart
meters on their own were "virtually useless".

"While smart meters will result in more accurate bills, they will not provide
people with the information they need to manage their energy usage and cut
costs,” he said. "Consumers will only change their energy consumption if they
can understand how much energy they are using when they switch on the kettle or
put the washing machine on."

Hagan added that the government had undermined the development of the sector
by again delaying the final decision on precisely what data and functionality
the meters should incorporate.

"Today’s plans for smart metering rollout yet again raise more questions than
answers," he said. "There is no clarity on what the energy display should do,
and this prevents the industry from innovating and progressing development in
time for rollout."

The government’s response document said that it would now "consider further
what specific requirements should apply in cases where it is clear that the
individual consumer does not wish to have a free-standing display… This work
will include the minimum common information which should be provided to all
consumers."

Managing the rollout of smart meters could also prove more difficult than the
government anticipates, according to a new survey of 2,000 people by consultancy
giant Ernst & Young, which found that only half of respondents would be
prepared to make and keep an appointment to have a meter fitted during the week.

"One of the most significant costs of the rollout is installation costs, and
these are going to be driven to a great extent by how willing people are to make
and keep appointments," said Alison Kay, partner in Ernst & Young’s power
and utilities group. "Over 50 per cent of the respondents said that a small
financial incentive would encourage them to make and keep an appointment. These
figures reveal that relatively small incentives could help offset the
potentially high costs of low rates of access for installation."