BEIS to look again at cost of smart meters programme

The Department for Business, Energy and Industrial Strategy has said it will look again at how much its smart meters programme will cost, amid warnings that a predicted overspend could rise still further.

The department also claimed that it can still achieve its target of rolling out smart meters to three-quarters of UK homes by the end of next year – but admitted that this could be a “challenging” task.

BEIS has commissioned an updated cost-benefit analysis of the smart meters programme to report in summer, which will be made public, energy minister Claire Perry told the select committee that scrutinises the work of the department this week.

The programme, which began in 2009, originally aimed to install smart energy meters in every home in the UK by the end next year to help consumers save money by giving them a better understanding of their energy usage.

However, the programme has hit a number of roadblocks including delays in developing some of the technology required, and a problem with smart meters “going dumb” when consumers switch energy suppliers.

Energy suppliers now estimate that 70-75 per cent of households would have a smart meter by the 2020 deadline, the National Audit Office reported last year. The public spending watchdog also said the cost of the programme would rise to an estimated £11.5bn by the end of 2030 – £500m more than BEIS’s last estimate in 2016.

Some 12.8 million smart meters have now been installed – representing around 25 per cent of households – which will enable a “much better analysis” of the programme than previously, Perry said.

Also appearing before the committee was Darren Walker, senior reporting officer for the programme, who said the actual number of installations was likely to be higher as the 12.8 million figure was correct as of September and did not yet include those installed by small suppliers during 2018, which are counted up at the end of the year.

Responding to some MPs’ scepticism that as many as 75 per cents of households could have smart meters installed by the end of next year, Walker reassured the committee it was “certainly challenging but not out of the question that we can get to those levels”.

Both Perry and Walker acknowledged concerns that only 250,000 meters installed so far were second-generation SMETS-2 devices, which allow people to switch power providers remotely. BEIS had initially only intended to install 5.4 million first-generation SMETS-1 meters, but has already more than doubled that figure to make progress towards its target due to delays to the more sophisticated devices.