While the UK government has decided to move ahead with smart metering for mediumlarger businesses by 2013, it has announced that further consultation and analysis is required before a final decision can be made on a rollout to homes and small businesses. Smart meters have the potential to reconnect consumers with the realities of their energy consumption. When one considers that the domestic energy sector currently accounts for 27 percent of the UK’s carbon emissions, it’s no big leap to suggest that an improvement in consumer habits stands to make a significant impact on reducing the country’s total CO2 output. While in the UK the debate rages on, its continental neighbours are moving apace.
Smart meters were introduced in the Netherlands in 2005 and led to the Dutch government proposing that all of the country’s seven million homes should have a smart meter by 2013. This mirrors the rollout of smart meters in Nordic countries including Denmark, Finland, Norway and Sweden which, combined, are trialling an estimated eight million smart meters.
But it is perhaps Enel’s installation of 30 million smart meters in Italy that holds the most significant lessons for the UK. The project, one of the largest rollouts undertaken to date, has proven the commercial viability and energy saving credentials of smart meters. In less than five years post installation Enel will have recouped its full investment cost of €2.1 billion and while in the UK average domestic energy consumption is increasing by 1.5 percent per year, in Italy annual power usage in smart homes is dropping by 5 percent.
So with the benefits so apparent, why is it that the UK is seemingly lagging behind?
It must be said that the UK market is considerably more complex than Italy’s in infrastructure terms. A suitable communications infrastructure is needed to allow the two-way communication between energy provider and customer that defines smart meters. In Italy the use of a powerline carrier model worked due to the high density homes, proximity to low voltage substations and commonality of energy retailer. However, in the UK, its deregulated market and supplier switching culture as customers follow the best deals means the situation is more complicated.
The intricacies of how smart metering could be rolled out to the UK have placed Britain’s energy retailers at loggerheads with the gas and electricity market regulator Ofgem.
Ofgem is pressing for an “as is” model applying all-out competition for all areas associated with the provision of metering systems. In contrast, the Energy Retail Association (ERA) wants to see the work awarded through a series of regional franchises, where meter managers bid to supply, fit, manage and collect data from all the meters in a particular area, irrespective of the energy supplier.
Each system will have its complications, and what is clear is that without knowing the selected rollout model or the supporting communication systems, the industry can’t start designing the interfaces and manufacturing meters.
Aside from the benefits to consumers and energy retailers, a national smart meter rollout would help the UK to achieve its carbon emission reduction commitments under the Kyoto agreement. That in itself seems a compelling enough reason to proceed.
The energy and communication sectors need to be working together to find a solution so that the UK can start experiencing the benefits of smart meters, just as our European neighbours are.