Smart meters will increasingly replace conventional gas and electricity meters as national grids become more flexible, efficient and adaptable to renewable energy technologies such as wind and solar. They offer a wealth of intelligent functions including the ability to inform consumers how much energy they are using, via a display installed in their home. They can also communicate directly with energy suppliers thereby eliminating the need for staff to visit homes to read the meter. They do this by sending out a signal, rather like a mobile-phone signal, which delivers the meter reading straight to the energy supplier. It works the other way round as well, enabling the energy supplier to send information to the display in consumers homes.
The UK government’s Department of Energy and Climate Change (DECC) is currently involved in a smart meter roll out program. The government will in future require energy companies to install smart meters for customers and is currently establishing rules and regulations to ensure that they do so in a way that is to the benefit of the consumer, including rules around data access and privacy, security, technical standards for smart metering equipment and specific requirements for vulnerable consumers such as elderly people and the disabled. The aim is to make smart meters a standard fitting in UK homes by 2020, although there will not be a legal requirement for householders to have one installed. Most UK householders will have a smart meter installed by their energy company at some point between 2016 and 2020.
What are the real benefits of smart meters for consumers? Six important ones are visibility, savings, accuracy, cleaner energy for consumers, the ability to set targets for green energy installation and encouraging consumption at different times of the day through time of use tariffs.
The importance of smart meters for the visibility of information for consumers lies in the fact that with current conventional meters it is very easy for householders to use more energy than they actually need. However, smart meters enable consumers to see exactly how much energy they are using and when they are using it. It can also hold historical information about past energy use so that householders can compare their present level of energy consumption with past usage. This in turn enables householders to save money by reducing their household energy bills. British Gas has found that many of its customers are pleased with the user-friendliness of smart meters and the ability to find out quickly how much energy is actually being used and how to manage energy use more efficiently.
These features enable smart meters to help consumers save money on electric bills. At present, householders receive estimated bills after the energy has been used. This creates difficulties in that it is often very difficult to compare costs with usage. In some cases, energy suppliers will provide online tools for consumers who install smart meters in their homes or businesses. These online tools are aimed at helping consumers to manage their energy usage more efficiently. British Gas is already doing this with their Business Energy Insight tool for business customers. First Utility began to offer their customer’s smart meters back in 2010, although initially the company experienced a number of customer service problems. However, this enabled other companies to see how the technology performed. Very soon afterwards, British Gas got in on the game too and other companies such as Ovo Energy followed. The smart meter won’t, of course, save energy by itself, but if consumers learn to read the information it provides on the in-house display unit, the hope is that it will start to encourage a whole new pattern of energy consumption behavior.
Smart meters send accurate information through to the power company, eliminating the need to take estimates. They are rigorously tested even before they leave the factory, so there is no doubt about this. However, energy suppliers will also offer to test smart meters in the home when required to ensure the meter is doing what it should and providing accurate information. Additionally, some countries are requiring energy suppliers to provide test results in order to prove their equipment is supplying the right information, as well as requiring them to abide by particular standards such as those set by the American National Standards Institute. So far, tests have shown that the smart meters already deployed are just as accurate as analogue meters and in some cases even more so.
Cleaner, greener energy
According to Sacha Deshmukh from Smart Energy GB writing on BusinessGreen, government figures released by DECC have shown that the two million smart meters deployed in the UK so far are having a positive effect on the way people think about energy. Smart Energy GB’s Smart Energy Outlook research found that 84 percent of customers are pleased with the way the meters are operating, with energy efficiency being cited as one of the major themes of the report. The research also found that 79 percent of customers were encouraged to take steps towards reducing their energy use after having a smart meter fitted. Alongside energy efficiency, smart metering allows energy suppliers to collect data information about energy use which in turn allows them to analyse overall supply and demand issues. This in turn allows them to conduct much more efficient billing operations when it comes to electricity provided by intermittent renewable energy technologies and distributed energy resources. As conventional fossil fuel plants become more expensive to operate with increased penetration of the market by renewables, this will become increasingly important for utilities, particularly with regard to cost. Furthermore, with positive regulatory environments set by governments, smart metering will actually encourage renewable energy deployment in new markets, such as energy storage, demand reduction or powering car batteries and household appliances.
Green energy targets
Then is the setting of targets for renewable energy deployment. Smart meter data will enable governments and other organisations to create environmental initiatives aimed at limiting the environmental impacts of energy use.
“The smart meter market is expected to prosper, owing to the recent impetus from renewable energy and smart grid implementation” said Frost & Sullivan research analyst Neha Vikash, speaking to mobile communications company Vodafone. “Smart meters are required for integration of renewable energy. Europe is focused on meeting the 20-20-20 targets, which is a necessary driver for increase in renewable energy and the third energy directive targets 80 per cent smart meter penetration in the residential sector by 2020.”
In the UK, more than 30 percent of the country’s electricity supply could come from renewable sources by 2020. However, renewable energy is dependent on weather patterns and that means renewables are intermittent. For this reason, smart meters are required to finely balance energy supply in a market that by its very nature has to provide stable supplies. It means much greater control over how energy is provided. That is a radical change in the way most countries in the world supply energy to consumers and smart metering occupies an essential place at the heart of this transition.
An essential part of this transition will be the increasing use of time-of-use tariffs. These are different to the current electricity bills sent to customers thus far in that they split daytime and evening energy consumption into different time periods, each of which has varying price blocks. This enables energy companies to create tariffs adjusted to ‘off-peak’ periods with lower prices and encouraging customers to adjust their consumption so that they use energy when it’s cheaper. This is a matter of personal planning. For example, why switch the washing machine on when people are coming home from work and making cups of tea, switching on lights, using microwave ovens and so on? It may be more economical, using time-of-use tariffs, to wait for an off-peak period with the benefit that consumers will be charged less on their bills as a result.
There are indeed some people who are questioning the implementation of smart meters and smart technology in the same way as they are questioning deployment of renewable energy. However, increasingly, most people across the world are recognizing that things have to change in the way the world uses energy. Smart meters is just one way in which to do that.