Smart meters: An answer to the looming energy crisis?

    November 5, 2012

The Problem and smart solutions

We already know that the UK is heading for an energy crisis. By 2015, the closing of some coal power stations means the total capacity of the grid will be just a few percent above peak-time load. A cold snap or a supply side problem could then lead to an energy shortfall. In a developed nation like the UK, this might seem unimaginable, but it has been a growing reality for some time.

There are generally considered to be two ways to deal with this problem – increasing supply, or reducing demand. It is not quite this simple however; during off-peak times (the night for example), there is plenty of energy to spare. Could the answer therefore be to encourage off-peak use, rather than generate more electricity? Smart technology is a potential means to achieve this.

Smart technology could be in the form of smart meters or smart appliances. A smart meter takes over from your normal gas and electricity meter and works by informing both the customer and the supplier in real time the energy use of the home. In an ideal scenario, the customer is given a tariff whereby off-peak energy use is much cheaper than peak use, encouraging them to use the smart meter’s data to change their energy use patterns.

What is the government saying?

The UK government fully backs smart meters. The DECC website states that, “The Government’s vision is for every home in Great Britain to have smart energy meters”. The plan will include mass installation between 2014 and 2019, with energy companies footing the £10 billion pound bill, which is eventually likely to be passed onto consumers.

The government’s projected benefits are well above this £10 billion cost however, with only 40% of the potential savings coming from changing customer practice. Most of the savings are from the supplier side, as they will save on meter readings and make further savings in reduced customer overheads.

This follows a number of smart meter installations across the globe. In Australia for example, the Victorian government is introducing a ‘Time of use’ tariff in 2013, after several years rolling out a mandatory smart meter across the state. Pilot programmes at various stages of completion are also taking place in many European countries; perhaps the most advanced is in Italy, where Enel SpA has provided smart meters to its entire 30 million customer base.

Are they worth it?

Perhaps the most important question to ask is, how effective are they? The meters themselves are not able to reduce energy use on their own – they must work in conjunction with the consumer. If the customer simply carries on using their appliances as they have always done, there is zero benefit to them or to the environment. The critical point is getting the end user to engage with the meters.

Also important is for energy companies to offer a variable rate tariff dependent on energy demand; this encourages users to change their consumption patterns, and to use smart appliances, which can work with the meter to carry out tasks during off-peak periods (using the washing machine at night or heating your water before peak times for example).

Energy companies are of course keen to help install this technology. It means a more efficient electricity supply for them and it allows them to collect detailed data on energy use on the individual level.

What about smart meter criticism?

It is fair to say that smart metering has had a controversial birth. In the US in particular, there has been vociferous opposition to the meters in some areas. This can be put down to a lack of understanding of the new technology and the mixed results seen in the initial pilot schemes.

The cost of upgrades and appliances is considered a major obstacle. Smart appliances able to connect with the meters are often expensive, whilst energy companies have in some cases tried to pass on certain ‘hidden’ costs to the consumer. There are also privacy concerns associated with the meters. Working on a wireless network, the meters have the potential to be hacked and give away extremely detailed information on the life of an individual, but this is not an insurmountable problem. In Italy, Enel SpA uses a low voltage power line to communicate with the meter, rather than a wireless connection. This has lead to a smoother roll out with far less opposition than in other countries.

Another fundamental question is whether energy is a ‘when you need it’ commodity, or whether the cost-benefit of time-shifting the demand is worthwhile. Is it something that should be down to the individual – i.e. it will only work if the customer wants it to work, or is it something that can benefit anyone, even without an interest in changing their energy use?

With the UK mass roll out of smart meters set to begin in 2014, there is still some time before they will become an everyday sight in the UK. We will be hearing more of the successes and pitfalls of the systems in other parts of the world in the coming years and perhaps how best to utilise the system to help reduce energy bills whilst helping the environment.

Find out more about how smart meters work in the home here.

Pin It on Pinterest