Smart meters could save only 2% on energy bills, MPs warn

Household smart meters could save consumers as little as 2% on their energy bills, MPs have warned ahead of a £10.6 billion nationwide roll out.

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Starting in earnest next year, the roll out will see around 50 million smart meters installed into more than 25 million homes in Scotland, England and Wales.

Supporters say smart meters, which show consumers how much energy they are using and how much it costs, allow homeowners to take control of their energy use, and boost competition in the energy market.

However, in a new report the MPs of the Public Accounts Committee (PAC) say smart meters will, on average, save consumers just £26 a year. 

The installations will cost £215 per household, with customers to be charged an annual amount on their bills to cover the cost. This charge will peak at £11 in 2017.

“Despite consumers footing the bill, they can on average make a saving of only 2% on the average annual bill of £1,328 by the time the roll out is complete,” said Margaret Hodge, the chair of the PAC.

“Even this is conditional on consumers changing their behaviour and cutting their energy use.”

Richard Lloyd, executive director of consumer group Which?, added, “As consumers will ultimately foot the bill for smart meters, the programme must be done at the lowest possible cost and ensuring that consumers benefit, not just suppliers.”

The report also warns that by the time the roll out is completed in 2020, the technology may be obsolete, as customers will be able to receive the same information on their smart phones.

However, voices from within the industry have questioned these criticisms. 

“I have been surprised how simplistic a viewpoint has been put forward. Imagine the backlash if [the Department of Energy and Climate Change] had come out two years ago and said smart meters for everyone – provided you have a smart phone,” said Richard St.Clair, managing director and vice president of sales at leading smart meter provider Elster Metering Systems.

“The bigger issue is the install cost – where we are also seeing unbalanced opinions. Everyone in the UK would receive a new meter installation anyway in the next ten years, on average, so it is only the acceleration and the cost of In Home Displays that is additional,” he added.

“One could argue the efficiency gains of doing them all together could probably outweigh the additional cost elements – but that is just a gut feel.

“The rest of the economics are quite sound but the conversation needs to move on to what smart meters can give us in the near future. Electric vehicles should enter the mainstream within the next five years, and without smart metering this would cause major disruption to local grids.”

Photo: Richard Rutter via Flickr

Further reading:

Smart energy meters: the smart revolution is coming

Ofgem calls for wide-ranging competition inquiry into energy market

‘Big Six’ energy firms admit to failing customers

Public engagement ‘essential’ to successful energy technologies

Energy UK launches guidelines to educate customers on smart meters