Lightbulb

By Jonathan Spencer Jones

The installation of real-time energy displays and smart meters and improved billing for energy are among the proposals to increase awareness and encourage households in the UK to invest in and adopt energy efficient practices.

The proposals, which are contained in the government’s energy review 2006, ‘The Energy Challenge’, are among wide ranging measures aimed at saving energy and thereby contributing to a reduction in the country’s carbon emissions as well as to its energy security. The long term goal is an overall 60% reduction in carbon dioxide emissions by 2050.

The review, which was released last week, says that government considers that real-time displays can play a key role in helping households to reduce their energy bills. While the extent of energy saving that can be delivered to UK households by such displays is currently being tested by Powergen – the results of which should be available in 2007 – analysis indicates that starting a 5-year rapid roll out programme to install the displays in 2007 could lead to 0.3 MtC saving by 2010, rising to 0.4 MtC by 2020.

The estimated cost of such roll out is £2-6 (US$4-11) per year to energy bills over the 5 year period, but it should more than pay for itself through energy savings and hence reduced bills.

Looking to more sophisticated monitoring of energy usage the review highlights the potential of smart meters, commenting that the government also considers it should examine the scope for these and their costs and benefits.

Preliminary analysis suggests that the full benefits of smart meters would not be realised unless there was a full roll-out. However, such a programme could have serious implications for energy prices, potentially increasing annual gas and electricity payments by £20 (US$37) each for ten years.

The review notes that trials providing the opportunity to explore the wider benefits of smart metering to the UK economy, co-funded by government and the energy suppliers, will start this winter, with results available from 2008. These will include testing the effectiveness of smart meters in comparison with cheaper options such as improved billing and real-time displays, and they also should include testing the value of gas smart meters. Indeed the government expects the metering industry to develop technology for gas customers similar to that already available for electricity.

The review notes that the Carbon Trust is conducting a smart metering trial among small businesses to promote awareness and build support for smart metering. Once the results of this trial are available towards the end of 2006, the government will discuss with relevant parties how to address the barriers to smart metering in the business sector along with ways of improving awareness and information on energy efficiency.

The review also highlights the importance of energy billing, noting that between 25 to 50% of domestic bills supplied by energy suppliers at any one time are estimated. The government proposes that it will mandate, from 2007 onwards, improvements in the information provided in domestic customers’ energy bills, requiring bills to provide comparative historic energy use in graphical form, supported by information on energy efficiency.

There will also be consultation on how to improve the frequency with which customers are provided with accurate bills. At present, energy suppliers are obliged to read meters once every two years. Replacing this requirement with a requirement to read meters annually, while also allowing suppliers to meet their obligations with customer self-reads may well improve information available to customers without increasing the regulatory burden on suppliers.

Even if the provision of historic information only delivers modest changes in behaviour, this proposal is estimated to be highly cost-effective. A reduction in household energy use by 0.25% would save 0.08 MtC by 2010 and just under 0.1 MtC by 2020, with the proposal adding a one-off cost of 10-20 p (18-37 USc) to a household energy bill in the first year.

Similar provisions will also be introduced into the business sector, for customers not currently covered by half-hourly electricity and gas meters – the absence of timely energy data and the provision of accurate bills having been identified as a barrier to energy efficiency in this sector.

Alan Dick, industry consultant and metering.com’s regional editor in the UK, says he is encouraged by the recognition of the potential contribution of customers in improving energy efficiency and meeting emissions targets and that new trials are to be undertaken to clarify how this might work in the UK's competitive market environment.

Commenting that he was associated with the industry trials of new technology metering in the mid-1980s but the structure and market forces evolving after privatisation in 1990 inhibited further development of more sophisticated metering systems, Dick says: “I have always felt that the customer should be more involved in the supply/demand process and, for the first time in many years, I am optimistic that something really will happen to make smarter meters a reality.”