Smart metering gaining momentum in the UK - 15 May 2009

The UK government in October 2008 announced that it would mandate smart meters for all households. The project has since developed greater clarity in planning and timing. Smart meters will be compulsory by 2020, paving the way for a low-carbon smart grid and saving customers and energy utilities between £2.5 billion and £3.6 billion over the next 20 years. Customers with smart meters use up to 15% less energy, given that they are immediately aware of usage and costs, while utilities save on manpower and related costs, and gain from managing a more efficient energy infrastructure.

The smart meter project, involving the replacement of about 47 million domestic and 3.7 million business meters, is to be started in 2012 and will cost upwards of £8 billion to implement. Utilities will shoulder the cost initially (up to £340 per household), but will be able to recoup at least some of these costs through charging customers. However, the idea is that the meters will essentially be ‘cost-neutral' in that the cost of hardware will be offset by lower bills resulting from having the meters installed.

One of the key ‘pluses' of the project is that smart meters will make it easier for householders to sell power back to the grid. This would place the UK closer to schemes adopted elsewhere in Europe. In Germany, for example, the government legislated several years ago that utilities are obliged to buy back home-generated power at prices several times higher than consumer tariffs.

The Department of Energy and Climate Change this month launched a consultation to determine a number of outstanding issues, including the delivery model and the minimum functions which smart meters should have. As for delivery, there are currently three plans on the table: in the first scenario, utilities will supply and install smart meters and also undertake data management, in the second the utilities will be responsible for meters but a separate company will deal with data, and in the third a new company will be created to undertake all these responsibilities.

The project's timetable - a full 11 years to completion - is tardy by European standards: in Italy most residences had smart meters installed a couple of years ago. Yet the UK is on track, and operating in sympathy with developments internationally.

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