Skills shortage & supplier disagreements hampering UK smart meter rollout Smart Meter on a Kitchen Worktop Displaying Current Electricity and Gas Usage
The UK smart meter rollout programme, estimated at £13.5 billion ($17 billion), is expected to increase in price and face challenges in delays, according to a new report from the National Audit Office (NAO), which finds a skills shortage, supplier disagreements and faulty smart meters in need of remediation.
NAO, the UK’s independent public spending watchdog, has found that the government’s smart meter rollout is proceeding slower than planned and that the Department of Energy Security and Net Zero (DESNZ) will have new challenges in meeting its latest set of targets.
The watchdog’s report, Update on the rollout of smart meters, released today, finds that, although government and industry has overcome some of the most pressing challenges facing the smart metering programme, there are several challenges in achieving current targets.
Gareth Davies, the head of the NAO, commented on the rollout, stating how, although government has made recent progress, “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.”
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Skill shortage & supplier disagreements
According to NAO, one such major challenge to the UK smart meter rollout has been a shortage of installation engineers and disagreements with suppliers.
Said suppliers, states the report, argue that they have exhausted the ‘low hanging fruit’ of customers who want devices and therefore call for new policies to support the rollout, such as mandating that any new homes built have a smart meter installed by default.
According to the report, only one out of 13 large suppliers achieved both its 2022 electricity and gas smart meter installation targets.
In total, these 13 suppliers installed 3.7 million meters against their combined target of nearly five million.
A 2019 analysis from DESNZ forecasts the total cost of the rollout at £13.5 billion. It is likely, however, states NAO, that the cost per smart meter will now be more as average installation costs are higher than expected, because of, for example, a shortage of engineers.
Such costs are initially borne by suppliers and fed through to households via energy bills. Both costs and benefits have been delayed by the slower-than-planned rollout.
On three occasions government delayed the deadline for the completion of the rollout, first to the end of 2020, then 2024 and then 2025. DESNZ believes that these targets will galvanise supplier activity, even if it means targets need adjusting over time.
In February 2023, the government launched a consultation on plans to have smart meters installed in 80% of homes and 73% of small businesses by the end of 2025.
Smart meter technical issues
57% – more than 32 million – of all meters in Great Britain are now smart. However, according to the report, another major issue with the rollout has been smart meters not working as intended.
Of installed smart meters, DESNZ’s data shows that around three million (9%) as of the end of March 2023 are not operating in smart mode and are indistinguishable from a traditional meter.
This is because, for example, the meters are still waiting to be commissioned (such as in new build premises) or due to communication issues.
According to the NAO, stakeholders are concerned that target frameworks incentivise suppliers to prioritise installing new smart meters, rather than fixing issues with previously installed smart meters.
As of 5 May 2023, states the watchdog, around four million first-generation smart meters had not yet been migrated onto the central platform service by suppliers to ensure they maintain smart capability even if consumers switch suppliers, despite the government’s requirement that this was completed by the end of 2022.
In their report, to ensure the smart meter rollout programme maximises value for money, the NAO recommends government updates data on programme costs and benefits.
DESNZ and suppliers also need to work together, they state, to overcome disagreements and address the reasons that installation rates are slower than planned.
