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2020 target for smart meter roll-out 'will not be met'

2020 target for smart meter roll-out 'will not be met'

The Government's target for energy companies to offer smart meters to everyone in England, Scotland and Wales by the end of 2020 won't be met, the public spending watchdog has warned – and the roll-out is likely to cost more than expected.

An investigation by the National Audit Office (NAO) has found technical problems are hampering the roll-out, with around 70% of first generation SMETS 1 smart meters going 'dumb' after customers switch. Some 943,000 meters are now thought to have lost their smart functionality, and are unable to communicate with their owner's new energy supplier.

The NAO also found that the Department for Business, Energy and Industrial Strategy's assumption that the roll-out would cost £11 billion – the equivalent of £374 per dual fuel household – "underestimates the true cost of rolling out smart meters". Costs have risen by at least £500 million since that estimate was made in 2016, the equivalent of an extra £17 per household.

For full help on how smart meters work and the pros and cons, see our Smart Meters guide.

Most smart meters go 'dumb' if households switch

Smart gas and electricity meters give automatic meter readings which are sent straight to your supplier, theoretically ending estimated bills.

There are two types of smart meters:

  • First generation SMETS 1 meters have already been installed in over 12.5 million homes. However, they frequently stop working when customers switch supplier.

  • Newer SMETS 2 meters don't have that problem – you can switch and be sure that your meter will remain smart. However, earlier this week it emerged that just 138,000 of these have been installed so far.

The NAO found that the roll-out of SMETS 2 meters continues to face major challenges. Energy firms aren't currently able to install SMETS 2 meters in around a third of households in Great Britain, with the technology that links SMETS 2 meters to suppliers still not fully developed in some parts of the country. 

The NAO said suppliers installed seven million more SMETS 1 meters than planned after the Government underestimated how long it would take to implement the infrastructure and technical standards for SMETS 2 meters. 

The Department for Business, Energy and Industrial Strategy had planned to resolve the problem by connecting SMETS 1 meters to updated infrastructure, but this project has been delayed and the NAO said it is not certain if it will work as intended.

Energy firms 'falling short' 

The NAO's report also found that energy suppliers are "falling short" of their obligation to advise consumers on how to save energy – and that this will probably limit how much money households will be able to save with their smart meters.

While energy firms should provide guidance to customers when they install smart meters, the watchdog estimated that 2.1 million households with a smart meter have missed out on this advice.

NAO Comptroller and Auditor General Sir Amyas Morse said: "Costs are rising, and timescales slipping, but smart meters can still succeed over time...[the Department for Business, Energy and Industrial Strategy] has taken most of the decisions that matter on the programme so far. They now need to take responsibility for getting it back on track and protecting the interests of consumers, who will ultimately meet the bills."

Responding to the report, Energy Minister Claire Perry said: "Millions have already chosen to have a smart meter and take control of their energy use to cut their bills.

"We've said everyone will be offered a smart meter by the end of 2020 to reap these benefits and we will meet that commitment."

Additional reporting by the Press Association.