2nd September 2016

Smart meters: the truth behind energy's next big thing

Chris Roper, Writer


The UK government wants smart meters in all UK homes by 2020. Claiming cheaper energy, easier switching, efficient usage, and an end to estimated billing, it's no wonder the next generation of meters is causing quite a stir. 

Yet not all is good news. With security, stability, and cost concerns mounting, some major revisions may be in order to make it the very best outcome for customers.

Our customers often ask if we support smart meters, and the answer is not yet, but we will – this blog sets out our thinking. Until we do, your existing smart meter would work as a dumb meter, so you'd have to send readings manually until the government has put in place the right technology and infrastructure for the system to work. 

As you'll read in this blog, the smart meter system is very much in its infancy, and as such we're not yet throwing our weight behind it until we're confident it's good for our customers.

First, let's explain what a smart meter is.

Put simply, a smart meter is a meter that communicates electronically with those involved in the supply of your energy. More specifically:

1. You. By providing information on your current and past usage and how much you're paying. This could be via your mobile phone or other screens in your house.

2. Your energy supplier.

3. The parties that manage the energy network (those who own the pylons, cables and pipes).

4. The Data and Communications Company (DCC) that the government has authorised to manage the smart meter network.

5. Anyone else you allow access to your data (a price comparison site, for example).

So what does a smart meter offer, in theory?

Well, communicating directly with your energy supplier has some excellent benefits:

1. No more estimated bills. You no longer need to manually send meter readings – your meter will do it for you. So forgetting to send a reading won't mess with your bill.

2. More accurate bills. Your usage numbers are sent far more frequently – usually every hour (or half hour). This near real-time reporting means your supplier has a more accurate picture of your usage.

3. Easier switching. With near real-time reporting, moving to a new supplier is much easier. Closing and opening readings can be done automatically, and you can give comparison sites access to your data to get accurate advice on the best deal.

4. Easier sale of excess energy. Currently, if you have a feed-in tariff with solar panels, you can sell a maximum of 50% of what you generate. With a smart meter, you can sell all of it back, since all your generation data is available remotely.

5. Better pricing. With near real-time reporting, prices will better reflect the availability of energy, the time of day, season, and so on, meaning you can take advantage of cheaper periods to do energy-intensive tasks (using your washing machine, for example).

6. Efficient usage. Viewing your energy use on phones or other devices allows you to be a more efficient user (at least in principle, although field trials haven't always demonstrated much impact). 

As at 31/3 this year, energy suppliers have installed a total of 3.6 million smart meters in the UK, of which 2.75 million were domestic installations.

Those are quite big numbers, and prove the government's serious about a smart meter future. But is the plan right?

There has been a slew of complaints about the smart meter technology and infrastructure used in the UK – everything from the dangers of electromagnetic radiation, to data privacy. Some of which are easier to defend than others.

For example, the low-frequency radio waves used by smart meters are generally classed as safe (with emissions considerably less than TVs and mobile phones). Both the World Health Organisation (WHO) and Public Health England (PHE) have failed to find any conclusive evidence of harm at the levels associated with smart meters.

e-on smart meter

Installed smart meter (E.ON)

Other problems derive from limitations of the technology itself.

Instead of installing cheap, simple reporting meters, with added functionality managed by energy supplier servers, the government has insisted the "smart" bit be in the meters themselves.

When you consider that each meter must be interoperable (compatible with all suppliers), and cheap to ensure value for money and long term benefits, this invites extra layers of complexity that cost more money and potentially impact meter performance. And with vendors competing by adding a ton of potentially needless bells and whistles, everything gets very complicated indeed.

The government has tried to ensure interoperability by standardising meter specifications, and by creating the Data Communications Company (DCC) which will take your meter data and send it to suppliers. But with so many parties involved, it's possible the ball will be dropped somewhere, and when it does, customers will pay even more (in tax or energy prices) to fix a convoluted system. 

Security and privacy concerns are a real problem, too. Behavioural patterns inferred from usage data would be a boon to advertisers. And just this year GCHQ, the government intelligence agency, helped secure UK smart meters after flaws were exposed in meter tech used abroad (reported in the Financial Times, March 2016). Hacking will be an ever-present threat, requiring continual active monitoring, with holes quickly patched if found – a tough task for any well-designed system, but a mammoth obstacle for a flawed one.

For us at Octopus, despite the defects in current technology, we still believe in a smart meter future. In fact, the most powerful impact of smart meters might not even be in the home, but in the industry at large, where growing demand is putting pressure on an industry which needs to find a way to deliver reliable, affordable energy in a post-fossil future. Real time or near real time data would help manage demand, ensure sustainability, and make us more efficient users.

But it must be done right.

So we'll keep an eye on how the technology and legislation changes, and when the technology, costs, and benefits to customers are right, we'll work hard to bring you the very best.
image of Chris Roper

Chris Roper


Hey I'm Constantine, welcome to Octopus Energy!