Embrace smart meter rollout or go bust, big energy firms warned

The UK’s big six energy companies have been warned that they face going out of business if they drag their heels on the nationwide switch to smart meters.

While large energy suppliers publicly support the £11bn government scheme to offer the meters to every home and business by the end of 2020, some are installing them slowly and privately complain of the cost.

Sacha Deshmukh, the chief executive of Smart Energy GB, the body behind the Gaz and Leccy adverts, said energy firms must change to survive.

“Some legacy companies, of the old large six, have really embraced the fact that the only choice they have for the long term is to embrace this. You can either embrace this or fight it and find your business will be gone in less than five years,” he said.

Q&A

What are smart meters?

Smart meters are electricity and gas meters that automate the process of sending readings back to energy suppliers, and show billpayers the cost of energy in real-time. The UK government has set energy suppliers a target of offering one to every home and business by the end of 2020, or face penalties. Advocates for the meters say they will enable new tariffs for consumers, such as time-of-use deals that use pricing to encourage households to use less energy at peak times. That could help National Grid manage peaks and troughs in renewable power generation.

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Deshmukh said that the meters would help lower barriers to entry in the energy market and give consumers more choice.

Companies such as Tesco and Sky would soon offer energy as part of a bundle of services, he predicted. “Almost anyone who’s in any retail market will have energy as part of their package.”

In an interview with the Guardian, Deshmukh admitted the programme had been delayed but disagreed with Lord Teverson’s warning that ministers are “living in la la land” about hitting the 2020 deadline.

“Yes it’s been delayed. Now we’re getting back on track,” he said. The causes of those delays – establishing the national communications infrastructure for the meters – were now in the past, he claimed.

More than 8m meters have been fitted in homes, and new installations are currently running at 13,000 a day or 400,000 a month.

Consumer group Which? has calculated that installers will need to fit 24 meters a minute, 24 hours a day, every day, to meet the 2020 goal.

Smart meters are not being installed fast enough to hit the UK’s 2020 deadline

Smart meters installed by large energy suppliers in domestic properties, millions

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Guardian Graphic | Source: BEIS

Deshmukh said the installations would peak at 1.2m per month, but would not be drawn on when the industry would reach that rate. He also insisted there are enough installers to fit them all. Unions have raised this as a concern.

The first-generation meters that account for almost all the installations so far have also come under fire for going “dumb” after customers switch supplier, a problem which industry chiefs say has tarnished the scheme.

But Deshmukh said such interoperability issues were limited, and he was confident they would be fixed by an upgrade this autumn. He also defended the government extending a deadline for fitting the older meters, saying it was “important to keep the pace going”.

The government’s spending watchdog is reviewing the economic case for and rollout of smart meters. Smart Energy GB said the rollout costs accounts for £20 of an average £1,1000 bill. Deshmukh said that not only was the economic argument overwhelming, but the meters were essential to bring forward more green energy.