National smart meter rollout in planning in Northern Ireland

A nationwide electricity smart meter implementation is under development by Northern Ireland’s Department for the Economy.

The decision to go ahead with a smart meter implementation for electricity follows the completion of a cost-benefit analysis, which was prepared with KPMG and investigated a range of rollout scenarios.

Of these, a ‘fast’ rollout over six years starting in 2027 was found to deliver the highest ‘net present value’ of £301 million ($382 million, in 2022 terms) and a benefit-cost ratio of 1.57 and is the preferred option.

Conversely, the slowest ‘phased’ approach of replacing existing meters at end of life with a smart meter – estimated to run to about 2044 – also had a benefit-cost ratio above 1, albeit marginal at 1.17 but an NPV of just £71 million.

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Similar scenarios were also run for gas smart metering. However, the benefits were considered not to be significant and a gas smart meter rollout is not being pursued at this stage.

In this case, the ‘fast’ rollout benefit-cost ratio was marginal at 1.12 and the NPV was £41 million.

Implementation steps

As an initial step in the implementation, the Department for the Economy has indicated in its energy strategy action plan for 2023 that it intends to work with stakeholders building on an existing pilot of smart meters in Northern Ireland, while working on the plan.

Another key next step indicated is policy development.

Some other recommendations of the cost-benefit analysis are that centralisation is a key enabler of cost reduction and efficiency and stakeholders favour the network operator Northern Ireland Energy Networks, currently the ‘Metering programme owner’ for traditional meters, to lead the rollout.

Consumer behaviour change is also key to realising a significant proportion of benefits and an information campaign should be run to inform, encourage and provide education for the full range of consumer needs in Northern Ireland.

In its conclusions to the cost-benefit analysis, the Department for the Economy points to smart meters as supporting the five key principles of its energy strategy, i.e. placing consumers at the heart of the energy future, growing the green economy, helping network operators better understand their networks, replacing fossil fuels with renewable energy and creating a flexible and resilient system.

In Northern Ireland in 2021 there were 901,860 electricity connections of which 827,551 were domestic and 74,309 small and medium enterprises.

The gas connections totalled 296,018 in 2021, of which 288,662 were domestic and just 10,357 SMEs, although with the latter accounting for half the gas volume used.

Previous cost-benefit analyses for electricity smart meters in Northern Ireland in 2011 indicated only marginal benefit with an NPV of £8 million and benefit-cost ratio of 1.03, while a 2016 analysis was negative with an NPV of -£15.3 million and ratio of 0.95.

Similarly, earlier analyses for gas smart metering indicated negative NPVs and ratios less than 1.