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What Benefits Will Smart Meters Bring?

December 15, 2016

By Paul Homewood 

 

 

 

The UK Government wants energy suppliers to spend £11bn on installing smart meters up and down the country.

According to their assessment, the benefits should outweigh the cost:

 

image

https://www.gov.uk/government/publications/smart-meter-roll-out-gb-cost-benefit-analysis 

 

As Comms expert, Nick Hunn, showed last month, the government has underestimated costs by at least £1.6bn. But what about the supposed benefits?

 

 

This is the summary according to the BEIS study. These savings relate to the period 2013-2030.

 

image

https://www.gov.uk/government/publications/smart-meter-roll-out-gb-cost-benefit-analysis

 

 

 

Supplier Savings – £8250m

Let’s start with the biggest chunk, supplier savings.

Within the total of £8250m, the BEIS analysis identifies:

  • Avoided site visits – £2.99bn
  • Reduced inquiries and customer overheads – £1.21bn

 

Other benefits not costed include easier supplier switching, improved theft detection and debt management.

 

The smart meter programme has been in gestation for a number of years now. There was a time when everybody had their meters read, and substantial savings could be made by going digital.

Nowadays most people have access to the internet, and it is very simple to simply go on line to enter meter readings, which in turn generates automatic billing.

Rather like Tony Blair’s disastrous attempt to computerise the NHS, technology has passed the smart meter programme by.

The reality is that any savings accruing to energy suppliers are likely to be tiny.

 

Energy Savings – £5302m

This of course is, ostensibly, the main objective.

In BEIS’s words:

With near real-time information on energy use and costs, consumers are expected to make energy savings through enhanced energy efficiency behaviour.

 

I have long been dubious about this. If people really want to save money, they will do what they already do – turn down the thermostat, turn off the fire, and so on.

There may be a short period when people look at their newly installed smart meters and get a shock to find out how much that bath just cost.

But I suspect that most will quickly become disinterested.

There is actually a good analogy. Most cars these days have little computers telling you your mpg. But how many of us decide not to  make a trip because of what that black box has told us?

 

Carbon Savings and Air Quality Benefits – £1392m

I think we can safely ignore carbon savings, which according to BEIS account for nearly all of this supposed saving, £1290m.

Consumers are not financially better off because there is less CO2 in the air.

Air quality savings are only estimated to be £98m, which over 18yrs is irrelevant. In any event, there is absolutely no evidence that emissions from a modern CCGT plant have any health effect.

And if there was, the government would not be encouraging biomethane, biomass plants or CCS technology.

 

Peak Load Shifting – £943m

The hope, of course, is to shift a proportion of electricity generation to cheaper off-peak times, thereby reducing the need for quite as much peak standby capacity.

Whether this can be done voluntarily via pricing mechanisms, or compulsorily by switching off supply remains to be seen.

Either way, spread over 18 yrs, the saving is only £52m a year. This is small change compared to the cost of providing standby capacity, already running at £1.2bn a year and likely to rise to over £2bn before 2030.

Put another way, it is like taking a sledgehammer to crack a walnut.

 

Network Related Benefits – £839m

According to the BEIS blurb:

Network operators will be able to improve electricity outage management and resolve any network failures more efficiently once a critical mass of smart meters has been rolled out; and they will be able to realise further savings from more targeted and informed investment decisions

 

Which all sounds rather woolly!

 

 

SUMMARY

We are looking at a cost of at least £11bn, all of which will ultimately be passed onto consumers.

As with all such grandiose, government led projects, costs are likely to end up much higher than that.

As for savings, I’ll be generous and accept those quoted for peak load shifting and network, a total of £1.8bn. In my view, any other savings will be so small as to be irrelevant.

So we have a project that is likely to cost consumers at the very least £9bn, and quite likely much more.

And all for what?

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44 Comments
  1. Dung permalink
    December 15, 2016 12:44 pm

    It seems to me that the whole of the government’s activities here are illegal.

    1. The public never asked for nor voted for energy savings at a time when energy is cheap and plentiful all over the world.
    2. Polling says that the public do not believe in human induced CAGW (which as usual makes them a lot smarter than our politicians).
    3. I can not think of any other basic need in the UK is only satisfied when the government feels in the mood.
    We really should not tolerate this stuff!

    • mikewaite permalink
      December 15, 2016 1:36 pm

      If rich bankers can get a High Court judge to put the brakes on Brexit, despite the voters agreeing to a referendum and then voting for Brexit, how difficult would it be to get the Smart meter campaign stopped or at least questioned in Parliament by a similar High Court action given that we never voted for it ? Or did we ? Was it smuggled into the Tory .election manifesto?

      • Dave Ward permalink
        December 15, 2016 2:14 pm

        “How difficult would it be”

        I suspect a LOT more difficult! The Anti Brexit campaign is being pushed by the same establishment lefties who have managed to get governments around the world to roll out green policies. Smart Meters are just part of the plan to drastically reduce energy use (and CO2 emissions). The establishment hate the idea that us “little people” might actually want to decide what’s best for us.

    • Derek Buxton permalink
      December 16, 2016 11:07 am

      I agree with Dung, I too feel that it would be illegal for government to bring in “smart meters”, their only use will be for some jobsworth in an overheated office to shut down our supply at will. You cannot save energy the way cash can be saved. The only means of saving are by flooding the high valleys and using the head of water to drive turbines. Great, except we do not have such valleys in England and once the water has been used it will take more power to put it back, much more. Stupidity on stilts. It is the governments job to ensure a secure, affordable energy system. Unfortunately it would appear that there are some things which only they can do, sadly they lack any principles or knowledge that would enable them to do such things.

      • catweazle666 permalink
        December 17, 2016 2:42 am

        “their only use will be for some jobsworth in an overheated office to shut down our supply at will”

        Worse than that, I’m afraid Derek.

        “Computer say ‘NO’!”

  2. stewgreen permalink
    December 15, 2016 12:44 pm

    UK has 26.7 million households
    So £9bn split between them
    9,000/26.7= £337 each
    ……………………. (not including all the other subsidies extra network costs you pay for green-energy)

    Some Green mafia guys will be earning money from that £9bn

    • EricHa permalink
      December 15, 2016 2:35 pm

      http://www.theregister.co.uk/2016/11/30/gov_warned_of_smart_meter_debacle_by_cabinet_office_four_years_ago/

      The cost of installing smart meters in Italy is £75 per meter and £127 in France, in contrast to £390 per household in the UK,
      Someone is trouserring £250 at least.

      Another part of the saving from having smart meters is not needing meter readers visiting the property but according to the GAS ACT 1986 Standard conditions of gas supply licence gas meters must have a safety inspection at least every 2 years. So they might save on a few inspectors but not all of them. (links to ofgem didn’t work but I found this)
      http://forums.moneysavingexpert.com/showthread.php?t=1507247#19

      • John F. Hultquist permalink
        December 15, 2016 7:25 pm

        I live in a district in Washington State. A few years ago the Utility installed new digital meters. The new meter sends a signal that can be read from an airplane (someday from a drone when regulations allow). Utilities found out years ago that trying to get the user to send or transmit a reading just mucks things up. Thus, until the new meter was put in a person would travel and visit every user once each month, reading the meter — sometimes with binoculars. This saves some money and reduces the rise in rates that comes with rises in wage, equipment, and supplies. It is not a “smart” meter in the sense of that proposed in the UK.

        We already try to be “smart” about energy use (a 100% electric house). Some of the studies I’ve seen about the savings start with the assumption that no one has ever turned out a light, installed better equipment, or stopped standing in front of an open refrigerator wondering what to eat for lunch.
        As a tiny tot, we had an actual “ice box” (a chunk of ice in a wooden cabinet). If we kids opened it and did not act fast, mother would swat the laggard on the back of his/her head. We learned about smart energy use as soon as we were big enough to open that door.

  3. December 15, 2016 12:47 pm

    Nice appraisal Paul.

    £9bn investment to save £1.8bn = £7.2bn loss… sounds about right for government thinking, no doubt a good % will filter back into MPs pockets.

  4. Ian Magness permalink
    December 15, 2016 12:49 pm

    “And all for what?”
    You get a Nobel Peace Prize for saving the planet?
    You get an Ed Davey Award for excellence in energy efficiency?
    You get a Blue Peter badge?
    etc
    etc
    etc

  5. Joe Public permalink
    December 15, 2016 12:54 pm

    *The* major facility of smart meters is simply their ability to enable implementation of Time-of-Use (AKA Time-of-Day) charging to domestic & smaller non-domestic consumers.

    In UK, it’s been mandatory for larger consumers for decades. “1/2-hourly charging” AKA Maximum Demand charging.

    A site’s peak electrical consumption over a 1/2-hour period determines the Maximum Demand for that billing period.

    In addition to the unit p/kWh charge, the supplier then applies an extra charge based on the Max Demand, to *all* consumption within a billing period. Say 1 month.

    A factory running an extra 1kW electric fire during the ‘peak’ 1/2-hour, could raise the cost of *all* electricity used at that site for production, lighting, heating, etc, for that *entire* month.

    Peak Load Shifting *will* be the major outcome.

    • December 15, 2016 2:55 pm

      There certainly is an argument to be made for “load management” and that can only be sensibly done through smart meters.

      Who of us would not use the washing machine or tumble drier or try to organise the central heating in a way that minimises our energy bills. The problem at the moment is that it is not easy (as far as I know) to sign up for a tariff that makes that a realistic exercise.

      My son and his wife have a little device that sits by the phone and tells them how much electricity they have used so far that day; they don’t seem to pay much attention to it and the figures never look particularly frightening anyway. I said it reminded me of those wonderful offers — “yours for as little as 80p a day!” which sounds like damn all until you realise that translates into £280 a year. The figures are for consumption only which is hardly a great incentive to switch anything off.

      If we are right in our pessimism (or paranoia!) that one of the long-term objectives is to give suppliers direct control over electricity then there is going to be uproar when the general populace suddenly discovers one cold and windless night that while the freezer and the central heating may be working the TV/phone/internet aren’t.

      I hope sanity is restored before we reach that stage!

      • Dave Ward permalink
        December 15, 2016 4:14 pm

        “Who of us would not use the washing machine or tumble drier in a way that minimises our energy bills?”

        It’s often suggested these should be run during the middle of the night, when there is plenty of spare capacity on the grid. Unfortunately, many cases of machines catching fire makes this a risky proposition. To say nothing of being woken at 2am when the spin cycle starts! I deliberately left central heating out, as these systems are designed to run unattended. However there are options for storing heat in well insulated tanks, but the current push for “Combi” boilers means that few are aware of such things, and modern houses are frequently lacking in space to fit them anyway.

      • RogerJC permalink
        December 15, 2016 5:19 pm

        A few year ago my electricity supplier decided that my meter was 20 years old and needed to be changed. The new meter was termed a ‘Smart Meter’ and I had no choice but to accept it if I wanted to continue receiving electricity.

        The big sell was no more meter readers calling and a little device to tell me how much power I was using. This sat on the mantelpiece and mostly displayed a nice green light. If I put the washing machine on it went orange and then red for a short while while it heated up the water. It also goes red when the microwave is used or when my mother uses the stairlift. So I guess it’s telling me I can save money by not doing any washing, eating only cold food and banning my mother from going upstairs.

        As for no more meter readings the guy who called last week told me that the mobile phone network in my area was not capable of reporting the readings so he would be coming for the foreseeable future!

        I do have a nice green nightlight but otherwise a useless device and a useless meter at an unknown cost to the supplier which will be rendered even more useless if true smart meters are ever rolled out.

      • December 15, 2016 6:00 pm

        “banning my mother from going upstairs”.

        Great Gore Almighty, You should ban her from the house & stop her watching TV

        Send your mother down to the river to do the washing, she can kill some animals on the way back (for fresh warm food), get her chopping wood to keep you warm & her fit.

        Her generation voted for the governments that put us where we are, so she owes us big time
        .
        This is not a time to be sentimental; having reached 97% of all tipping points, we have a planet to save.

  6. sean2829 permalink
    December 15, 2016 1:14 pm

    Smart meters are all about managing demand which has become important in the age of renewables because you can’t manage supply adequately. When the wind doesn’t blow and the sun is not shining wholesale prices skyrocket. Smart meters allow retail prices to respond accordingly, which will force users to pay dearly or cut back.

  7. Dung permalink
    December 15, 2016 1:35 pm

    DEMAND SIDE MANAGEMENT:

    You eat, sleep, work and shit only when we tell you, otherwise eff off and do not bother us.

    • It doesn't add up... permalink
      December 15, 2016 9:47 pm

      You must hibernate in winter, and only work in summer. Salads in winter, but you may have a roast in summer. Do not shit in winter. I think they want us to become hedgehogs.

  8. December 15, 2016 1:43 pm

    What may happen, as already goes on in parts of California for example, is that you get to choose a tariff from a menu of options, e.g. standard or variable day rates. You’re left to decide which option will be cheapest for you – bad luck if you get it wrong.

  9. Gerry, England permalink
    December 15, 2016 2:01 pm

    I have had 2 wireless meter devices provided free by British Gas and Eon. I can confirm that while they are interesting for a while they were left around until the batteries went flat. I took them with me when I moved and they are still in a box….somewhere.

    I doubt that many off us are so well off we don’t keep some eye on our electricity use. I have a big server PC and if that doesn’t shut down in sleep mode it does use a lot of juice. The remedy is to put it in sleep mode when I leave it. Result – much less electricity used while still using the PC the same amount. But I think their savings to justify ‘smart’ meters will never happen other than people being so skint they can’t afford to use it. Candles all round?

    • catweazle666 permalink
      December 15, 2016 4:23 pm

      We bough an ‘Owl’ meter for about £25, mainly out of interest.

      After an hour or two of switching things on and off to see how much juice they used, my wife now uses it to monitor the usage because it tells her if the washing machine/dryer have finished yet.

  10. martinbrumby permalink
    December 15, 2016 2:05 pm

    Can there be serious doubt that the underlying Kunning Plan is to reduce our energy use when wind and solar are taking a nap and when they decide it will be in their best interest for us to make this little sacrifice?
    I’m sure you remember Dale Vince’s contribution from only the other day, we will get fermented grass based “low carbon” gas, whilst they get pure Methane.
    So roasting a turkey will take the best part of all day. Just as boiling even a ‘non-EU compliant’ old electric kettle will take 10 minutes or more.
    And then there was the National Grid man who let the cat out of the bag by pointing out that some people will shiver in the dark whilst their neighbour gets a more expensive tariff and ‘reliable’ electricity. Not necessarily paying the more expensive tariff. No doubt many ‘benefits’ recipients will be declared too vulnerable to shiver. No such luck if you are a little old lady who always worked and saved for her old age.
    A pattern emerging?
    Well, if you live south of Watford Gap, you should be fine. If you live anywhere near Westminster or Islington, you’ll definitely be fine.
    Otherwise, just be a member of the favoured ‘target’ groups.
    But still don’t run short of candles.

  11. Green Sand permalink
    December 15, 2016 2:12 pm

    I am not sure about this, is this a problem? Maybe someone with a greater understanding could comment if it is BS or not?

    https://takebackyourpower.net/how-to-opt-out-from-smart-meters-before-after-measurements-video/

    • Ex-expat Colin permalink
      December 15, 2016 3:56 pm

      Don’t think its been proven or disproved. It was a concern originally with mobile phones some years ago. Thats RF energy directly into our brains and again nothing was proven.

      If any work has been done on the topic its been suppressed I’d say. However, the wifi spectrum around us is getting rather busy.

    • catweazle666 permalink
      December 15, 2016 4:28 pm

      Had there been a serious problem with EM radiation, it would have become evident long since with the old CRT televisions that produced oodles of it.

      I wouldn’t fancy living under an HV electricity pylon, but the amount of radiation from a wireless router is IMO no problem at all.

  12. william james permalink
    December 15, 2016 2:19 pm

    On being overtaken by technology, the growth of smart thermostats (and more) such as Hive also offers alternatives to some aspects of smart meters. They already control heating and other devices: it would probably be straightforward to link them to real time price signals and programme them to respond as desired. Algorithms could also be developed easily to calculate actual/potential savings from different modus operandi of the devices they’re controlling, and for this to be displayed on apps or web displays.

    • Dave Ward permalink
      December 15, 2016 4:25 pm

      Putting yet more of our life under “Smart” control is to run an ever greater risk of being hit by hackers. This very aspect is under intense scrutiny. British Gas have already been forced to improve security on their Hive thermostats:

      http://stopsmartmeters.org.uk/british-gas-forced-to-change-burglars-dream-hive-smart-heating-app/

      Even if you don’t find your heating misbehaving, most of these “Internet Of Things” devices have woefully poor security, and are being actively targetted for Denial Of Service attacks.

    • It doesn't add up... permalink
      December 15, 2016 9:40 pm

      I listened to the radio ad for Hive: £9/month or £108 per year to save “up to” £150 in energy costs. Doesn’t take much of a shortfall to be a losing proposition for the consumer, although doubtless Hive make a handsome return, probably including green subsidies somewhere.

  13. John Smith permalink
    December 15, 2016 2:34 pm

    This could be one of the biggest B.S. overkill tech ideas our government has thought of to date. I keep getting bits of paper from my supplier telling me what a great thing a smart meter could do for me. It is the only paper thing I get from them because I manage my account online, provide my readings online and make payments online. I don’t know what a meter reader looks like because I live so far out in the country that they don’t want to venture here. As for a wireless linked devices using the mobile networks: forget it. The mobile operators also forgot about us out here. If they want to install a satellite system to get onto the internet like I have, then they can do it at their own expense. In fact if electricity gets much more expensive, then I will bypass them (suppliers) all together and just install a bigger generator outback. After all I already have a )small) back up for the many times the supply fails anyway.

  14. December 15, 2016 4:14 pm

    We are all aware that the bureaucrats at BEIS (formerly at DECC) will lie through their teeth to get what they want. They know that the Ministers are technologically ignorant and will be totally taken by the figures and the propaganda. The Sir Humphreys are alive and flourishing more strongly than ever. You would never think that bureaucrats are supposed to be honest and totally neutral.

    • Tim Hammond permalink
      December 15, 2016 4:35 pm

      They probably are, kind of. But bureaucrats have to bureau (or whatever the verb is for what they do), so they do. This is exactly the sort of thing they love, because it costs lots, has many diffuse benefits that will be difficult to measure (i.e. disprove) and which makes them look busy and important and “doing something”.

      The problem is having a permanent group of people who have to do so stuff – I have seen it in the private sector when you have a department dedicated to something as well. They just cannot not do stuff.

    • Derek Buxton permalink
      December 16, 2016 11:17 am

      True, for some years I have never thought that of our non civil servants. they need a reminder as to just who they work for, not themselves!

  15. Coeur de Lion permalink
    December 15, 2016 4:31 pm

    I hope that my smart meter will ring a bell when it starts to hike my costs on a windless night. It’s my right as a citizen. Otherwise the reduction in demand won’t happen. Have they thought of that? At what level? Any time of day or night? What a mess.

  16. December 15, 2016 4:34 pm

    Tip : Mainline corps are signing up to backup. Here in Brigg There will be 3 PS next door to each other: the original Centrica (which acts as embedded grid generator), the newish small straw 80MW PS, and Centrica are building a new 50MW gas due to them signing a 15 yr Rapid Response contrast. The deal also includes a similar plant in Peterborough, a 49MW battery complex in Cumbria, 370MW Kings Lynn CHP

  17. December 15, 2016 5:01 pm

    Smart meters are just one item in our generation’s idea of not working harder but “smarter”, of increased efficiency and effectiveness in our lives. Originally, the thought was to have a reduced workweek, on the basis that only a certain amount of work “needed” to be done. Play time was to replace worktime. That fell through. As efficiencies and effictiveness increased, more stuff was found to be done.

    I produce at least 4X the workplace output today than what I did 30 years ago, and yet I am more harried and under the gun than ever. The problem is that employers want workers working, and people want meaningful activity to fill their lives. Efficiency and effectiveness do not lead to a satisfying situation if people feel or are seen to be twiddling their thumbs.

    A government program to install smart meters meets the three needs we have discovered drive our outlook these days: an appearance of efficiency, effectiveness and full employment activity. All the cost, all the physical workd, all the industrial stuff-making may or may not be net energy saving but everyone is philosophically satisfied and, more importantly, gainfully employed. Especially government departments.

    When did a cost or effort saving invention result in smaller governments or companies and more leisure time for workers? Less hardship, yes, but smaller, less consumption, less expense, reduced budgets? Our modern car uses less fuel and is more comfortable, but it is so much more complicated and requires so much more sophisticated maintenance by more people. One nuclear power station vs a million wind turbines: we choose as a culture NOT to pursue a simpler way.

    The smart meter rollout is a symptom of a problem, not a solution to one, I am saying. As long as we focus on the rationale for a specific item , we will miss the pattern and be surprised by the next silly thing that comes along.

    Full, meaningful activity is the goal. Efficiency and effectiveness provide meaning, but they actually make the fundamental goal – full, meaningful activity – harder to achieve.

  18. Greg permalink
    December 15, 2016 5:05 pm

    I attended a meeting about wind energy a few years ago and the head of our local utility was in attendance. The meeting was sponsored by the PEO – Professional Engineers Ontario (Canada). The head of the utility talked about the ‘advantages’ of billing by high usage times, but also mentioned that the new smart meters would allow the utility to selectively cut your power off remotely and individually. This would allow the utility to cause brown outs in case of supply issues. We aren’t close to this problem in Ontario because an excess of renewable tariffs has driven away so much of our users we have an excess of power. We have nuclear plants boiling water and venting steam, and Niagara Falls (free power) at 25% capacity so we can pay solar and wind farms.

  19. December 15, 2016 7:24 pm

    At Dave above.Security is the most important factor concerning Smarts.The Govt.should stop this criminal insanity now.It will be hacked.I suspect that hackers are salivating right now,waiting for the system to be operational.Some country with malevolent intentions,terrorist groups,or a hacker in his attic,we as a nation will be dead in a week.Anarchy is coming folks,courtesy of your Govt.

  20. martinbrumby permalink
    December 15, 2016 8:19 pm

    A couple of readers ask how to avoid having a Smart Meter. My energy provider (First Utility – chosen because their %ge of renewables was one of the lowest) said that I had to have a new meter (OK, although it cannot be older than 15 years) and that it would be a Smart unless I opted out. Which I did, obviously.
    The old boy who turned up to do the job asked again if I was sure I didn’t want ‘Smart’. I told him that, with the greatest respect, he could put the Smart Meter where the sun don’t shine.
    He chuckled and said he was of the same persuasion and that a surprising number of other customers were also opting out.
    It will be interesting to see how it all turns out.

  21. BLACK PEARL permalink
    December 15, 2016 8:26 pm

    Its all about control
    Ability to presisly target users when there isnt enough juice in the grid.
    Switching you off remotely when the wind doesn’t blow & the sun doesn’t shine

  22. It doesn't add up... permalink
    December 15, 2016 9:33 pm

    I don’t think there’s a lot of scope for intra day peak shaving left. This chart is compiled from the demand data by half hour over 2015 from National Grid, and shows the typical, peak and low daily demand patterns:

    There’s less than 5MW between the sustained level during the working day and the evening rush hour peak. To shift demand significantly into the night we’d need to be working shifts on a very large scale. At best you could “fill in” the lower demand night time hours by charging electric vehicles or the like, but you’d still have to keep the electric trains running during rush hour – or switch them to diesel!

    The only way to save on capacity would be through storage on a simply enormous and uneconomic scale, designed to outlast an extended period of cold weather in mid winter at the very least – and preferably to provide seasonal storage, saving power generated in summer for use in winter. It doesn’t fly.

    • It doesn't add up... permalink
      December 15, 2016 9:33 pm

      er…less than 5GW of course…

  23. December 16, 2016 3:54 pm

    Thanks for this. Received call myself couple of weeks ago from some johnny in EDF. Told him to sling his hook. Perfectly happy periodically to submit a reading on-line. Not a burden at all. He seemed non-plussed.

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