The UK government has mandated that every home be fitted with Smart Meter technology by 2020 at a total cost of tens of billions of pounds – and they’ve left it up to the UK’s energy suppliers to foot the bill. The rollout slots in to the government’s green agenda based on the premise that if customers are able to better visualise and understand their energy consumption through Smart technology, they’ll then be in a position to change their attitudes and behaviours towards gas and electricity use for the better. Additionally, customers will be able to realise the practical benefits of accurate bills and no more meter reads, thanks to two-way remote communication enabled between a customer’s meters and their energy supplier.
Given this investment signifies one of the biggest changes to the industry since privatisation in the 1990s, how will success be measured to the three main Smart Meter stakeholders – the government, the suppliers and the consumers? At present, quantitatively it’s difficult to say due to a lack of precedents in the UK’s rollout model – it’s the first worldwide to be supplier led. If the government’s success is primarily measured by energy consumption reduction, then 2.8% and 2% drops in energy demand for Electricity and Gas scenarios respectively (as assumed by DECC and Ofgem in their 2010 UK Smart Meter rollout impact assessment) are significant energy savings, yet the figures are hardly jaw-dropping. On the supplier side, the cost of the rollout is very material and there exists a challenge to ensure Smart programmes break-even, as if they do not then tariffs are likely to rise. Suppliers will need to ensure they offer customers compelling propositions with value-adding potential (think of bundles, much like the mobile phone industry, including improved functionalities and higher-spec tech offerings for an additional fee per month/year) to ensure their Smart rollouts are a financial success.
Finally, the success of Smart Metering from a customer perspective is likely made up of a few factors – whether Smart can allow them to trust their energy supplier more; if their customer services experience improves; the degree to which they’re contributing to a “greener” lifestyle; but currently most importantly is the amount of money this technology will save them. In order to aid customers in cutting their ever rising energy bills, energy suppliers must ensure that this exercise isn’t just about installing new technology in customers’ homes, but properly educating them about it and other sustainable practises for that matter. By doing this, the other customer gains (trust, service, green) will also be further realised.
Posted by Steve Springett on the 31st of October 2011
