Government unveils plan to force suppliers to accelerate smart meter rollout

The government has today revealed a fresh plan to accelerate the rollout of smart meters, as it looks set to fall well short of its original goal to install 53 million smart meters in homes and businesses across the UK by the end of 2020.

The Department for Business, Energy and Industrial Strategy (BEIS) published proposals today that would force energy suppliers to meet new annual installation targets in order to ensure 85 per cent of the UK's gas and electricity meters are smart by 2024.

BEIS said the new policy would "maintain" smart meter installation rates post-2020 and bring a host of benefits for consumers and the wider energy system, including both £19.5bn of economic benefits through savings on energy bills and system efficiencies and a 45 million tonne reduction in carbon emissions.

"Replacing traditional gas and electricity meters is a vital upgrade to our national energy infrastructure," said Climate Minister Lord Duncan of Springbank. He added that the new plan "will deliver even greater benefits for households and reduce emissions - helping the UK to meet its net zero 2050 target".

However, many will see the new policy as a tacit admission of the government's failure to meet its ambition to convert most of the Britain's meters to smart meters by the end of 2020.

The goal to offer every home and business in Britain a smart meter by 2020 was originally expected to see around 53 million smart meters installed. Energy suppliers have been under a legal obligation since 2012 to "take all reasonable steps" to install smart meters in homes and businesses across the country.

However, deployment rates have consistently fallen short of that required to meet the 2020 target. The latest data released in August suggests just 15 million smart meters have been installed since 2012. The government insists it is "on track" to install 30 million smart meters by the end of next year - still well short of the original goal.   

The rollout has also been plagued by technical problems, with millions of 'first generation' smart meters installed in the first few years of the rollout going 'dumb' when customers change their energy suppliers.

A comprehensive network of smart meters is seen as crucial for transitioning the UK's electricity system to a smarter footing by enbaling time of use pricing and better real-time management of supply and demand. The government itself has admitted a critical mass of second generation smart meters is necessary for the benefits of real time pricing and live consumption data to be realised.

There are currently around 50 million gas and electric meters in operation by large suppliers across Great Britain. To reach the government's proposed 85 per cent threshold, some 42.5 million will need to boast smart functionality by 2024.

Revised estimates suggest the rollout will now cost £13bn, up from original estimates of £11bn. The rollout is largely paid for by energy bill payers.

The government did not reveal the precise level of the new targets for energy suppliers, but it did confirm energy companies will have different goals depending on their progress to date and their market share.

BEIS insisted the use of mandatory rollout goals, which would come into effect in 2021, are essential. Without them, officials said Britain would not reach 85 per cent smart meter coverage until 2031.