Pros and Cons of Smart Meters
Overall the installation of Smart Meters across the country would seem to be a good thing but only by a small margin financially. Good or bad can be looked at in many different ways and whether you think that they're an advantage or disadvantage will depend on your needs and attitude. Let's look at the pros and cons of different aspects:
What are the advantages of smart meters?
- No need to provide meter readings: Smart meters' automatic transmission of information about your energy use including meter readings eliminates the need for you to get to your meter, write down your meter readings, and submit them to your energy supplier.
- Potential for savings: By giving customers insight into their energy use, smart meters can help households reduce their energy bills by understanding what energy appliances use and when.
- See your energy spend in pounds: By displaying your energy use not just in kilowatt hours but also in pounds and pence, smart meters can help customers understand how their energy use translates into spending.
- Free at point of installation: You won't have to pay anything directly to have a smart meter installed.
- No more estimated bills: With details about your energy consumption transmitted regularly to your supplier, you will no longer receive estimated bills based on your past use if you fail to submit readings. With accurate bills, you'll only be charged for the energy you actually use.
- Easier for customers on pre-payment meters: Smart prepayment meters and their In Home Displays can help households on pay-as-you-go tariffs better keep track of their credit balances, even issuing alerts when meters are running low. They can also allow customers to top up their meters via the internet or a smartphone app, eliminating the need for them to travel to a local shop.
- Benefit from time of use tariffs: Smart meters can help customers with time of use tariffs like Economy 7 and Economy 10 to more easily monitor their energy use and transfer more use to cheaper off-peak hours. Smart meters also allow much more complex time of use tariffs, ultimately giving different prices for each half-hour every day, enabling customers to watch gas and electricity prices rise and fall in real-time and adjust their activities accordingly.
- Reduced duration power cuts: Engineers will know much faster when power cuts have occurred and their location. This will enable them to make quicker repairs.
- Improve grid efficiency: By better understanding the flows of electricity and gas through the grid and distribution networks, enhancements can be focussed on where they are really needed.
- Reduce your environmental impact: With greater insight in your energy use, you can change your habits, not just to see savings on your bills, but also to reduce your energy carbon footprint. For example some smart tariffs allow customers to save money by using energy away from peak times or when there is excess clean electricity available, thus reducing the use of fossil fuels.
- Switch suppliers easily: By providing change over readings at exactly the right time and allowing automatic set up of credit/prepayment and tariffs, smart meters make switching suppliers much easier.
- Automate your home: Customers can opt for electric vehicles, heating systems and smart appliances, such as washing machines and dishwashers, that can connect to the smart metering system to access pricing data. Their activity can be programmed to automatically take advantage of cheaper rates, thus reducing the impact on the energy grid and saving money.
- Improved care monitoring: The Smart Meters for Independent Living (SMILE) project is a ground-breaking trial into the energy usage patterns of people with disabilities and older people living independently. The project uses this data to create a view of their daily routines and spot unusual changes in behaviour which could cause concern.
- High rates of customer satisfaction: Consumer watchdog Citizens Advice found that 80% of people who had a smart meter installed were satisfied with the installation process.
- More Supplier deals: Some of the best energy deals, with the cheapest gas and electricity, are sometimes only available to customers with smart meters. These may include personalised tariffs, tailored to your household's specific energy needs and use.
What are the disadvantages of smart meters?
- Change behaviour for savings: Smart meters don't automatically deliver savings. Customers have to actively engage with what their In Home Display is showing and change their behaviour based on its information, or they won't see their bills fall.
- Cost spread across all our energy bills: The smart meter rollout is estimated to cost nearly £14 billion, an expenditure that will be spread across all our energy bills over the next few years. The way the costs are being spread means that the maximum cost impact on a customers bill is an additional £11 a year.
- Smart meters may go dumb after switching: Most of the smart meters that have already been installed are first generation devices, which often 'go dumb', or lose functionality, after customers switch suppliers. The second generation of smart meters don't have this problem and most of the first generation meters are slowly being upgraded to prevent the problem.
- Not available to some customer on prepayment and time of use tariffs: While smart meters technically exist for households on prepayment and time of use tariffs and can make these tariffs easier to manage and find savings with, suppliers have been slow to upgrade their internal systems to offer these variants. The result is that some suppliers aren't offering prepayment and time of use on smart meters yet.
- Poor signal outside the house: Not all households have a good radio communication signal outside their house. If the signal is poor the meters cannot communicate to the supplier. In these circumstances a Smart Meter will still be installed but it will be "dumb" and you'll have to manually take meters readings.
- Poor signal inside the house: In large houses, those with thick walls or foil insulation, the signal from the communications hub on the electricity meter to the IHD (In Home Display) may not be good. If the signal is poor the IHD may only work intermittently which can be very frustrating.
- Privacy concerns: Some customers worry information about their energy use will be made available to third parties. However, UK law currently prohibits energy suppliers from passing on their information without the customer's explicit permission.
Do people like Smart Meters?
The government are carrying on with Smart Meter installations boosted by customers liking the experience. Recent surveys from August 2017 and March 2019 have shown:
- 9 in 10 people with smart meters say they are satisfied with the installation process.
- 8 in 10 people with smart meters say they have a better idea of their energy costs.
- 66% of people with smart prepayment meters say they would recommend them to family or friends.
- 80% of people who had a smart meter installed were satisfied with the installation process.
- 9 in 10 smart prepayment customers say that topping up has become easier since getting a smart meter.
Old traditional mechanical meters could get less accurate with age. This was often in the customers favour as they could stick and thus under record consumption. Unfortunately this can lead to customers getting a bill shock when they have a new meter installed as the monthly consumption suddenly jumps up. This bill shock isn't particular to a new Smart meter as it would also happen with a new traditional meter.
The other advantage of Smart Meters is that the reading will be taken at exactly the right time when your tariff changes or you move house.
There have been reports from researchers that Smart Meters can be inaccurate. Some tests have shown that power controllers, such as light dimmers, can prevent the smart meter recording accurately. However these meters used measuring techniques not used in UK meters and therefore UK meters should be accurate across the variety of load types found in a home.
The government's own business case for the roll-out of Smart Meters is only just positive, based largely on the forecast that customer will reduce their use of energy by understanding it better and being better informed.
If you already have a display at home, of the clip on variety, showing your energy consumption then you are half way there. The In Home Displays (previously known as Smart Meter Displays or Home Energy Monitors) provided with Smart Meters will do more though, in that it covers both electricity and gas, and can show your current bill. To save money you will need to take action such as turning off unneeded lights. The In Home Display will help you see when you're using more energy than usual so can be trigger for you to look around the house to see what's left on.
More advanced energy products in the future, such as a different rates for peak times, should allow energy conscious customers to save more money, however, ironically these conflict with the governments' drive to force suppliers to have a small range of simple products.
Apart from PAYG (Pay As You Go) the features a customer can play with are limited. You will no longer have to submit a meter reading and therefore should never get an estimated bill again. This is especially important when you change supplier or move house as things often go wrong there currently when people either don't provide reading or provide conflicting ones.
In time we expect that suppliers will provide better on-line analysis of your energy use, provided you give them permission to take half-hourly readings. The services offered in this area are currently limited.
The ability to purchase electricity and gas on a PAYG (Pay As You Go) basis is a big advantage of Smart Meters. Once you've paid, top up can be sent to your meter automatically without having to use chargeable key fobs. If communication to the meter is down you can still top up by entering the long reference number provided with your purchase into the meter, although this may not be an easy thing to do. For customers on PAYG who have difficulty with reliable communications and entering the long number, a separate number entry pad can be provided by your supplier. However it should be noted that many suppliers didn't start to offer the PAYG service until late 2018.
Privacy & Security
There are concerns from some groups concerning security of the data or privacy. Smart Meters have been built to the latest security standards and are very secure. Suppliers have to ask your permission to collect meters readings on daily basis, so you have control. Without your permission they can only collect meter readings on a monthly basis. Like any technical secure system today, such as banks and NHS systems, the weakest link is probably the staff involved along the way. If you are happy to use on-line systems for other purposes such as banking, it's likely you'll also be happy with your Smart Meter. If you have concerns you can ask your supplier to only collect one meter reading a month, this reveals very little about you. (Page updated: 2022-01-16)
Questions & Answers
Ofgem will also check that the rate of installation is high enough to cover most customers by June 2025, so suppliers can't get away with just giving a low figure.
If suppliers don't achieve this forecast then they get fined. For example EDF Energy was fined £350k in June 2018 for missing their own forecast target. (Updated: 2021-11-13)
This does not mean it will cost people more as, firstly you would have to agree to be on such a tariff, and secondly if you do not change your pattern of use it is likely to cost you the same as a simple tariff. The advantage is that if you reduce your demand at the times of high prices you will save money.
Smart meters make it easier to provide time banded rates as they can provide time bands at 30 minute intervals if required. (Updated: 2022-04-18)
Currently domestic and small business electricity use is modelled on a small number of average usage profiles. Obviously when you add up what was supplied and what was used they are not the same because of the use of average profiles. So the use of half hourly data will improve this and means that suppliers will have a more accurate wholesale energy bill.
This could improve customers' bills as the commercial risk for suppliers is slightly reduced.
This does not change tariffs for customers or what data domestic customers allow their smart meters to send unless they agree. (Updated: 2021-06-17)
On SMETS1 and earlier meters there have been problems with customers losing Smart functionality when changing supplier, this is addressed by the new DCC system which supports SMETS2 meters and upgraded SMETS1 meters. (Updated: 2019-10-21)
- More accurate bills
- Smart meters mean the end of estimated bills, and the end of overpaying (or underpaying) for your energy
- No one has to come to your home to read your meter; you do not have to submit meter readings yourself
- Better oversight and management of your energy use with a real-time data display in your home potentially saving you money.