Background to the report

Smart meters are a modern type of gas and electricity meter. Unlike traditional meters, which register a running total of energy used, smart meters can record half-hourly price and consumption data and provide automatic meter readings to energy suppliers. When linked to in-home displays, smart meters also provide households with information on their energy usage and costs.

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The government sees smart meters as a critical feature of an efficient, decarbonised power system as they can encourage consumption patterns that are more aligned with an energy generation mix that increasingly draws on intermittent renewable power sources such as wind and solar.

In 2011, government set out a vision for every home and small business in Great Britain to have smart meters and set an intention to effectively complete the rollout in 2019. This target has been adjusted on three occasions, and in 2022, the government introduced a new four-year regulatory framework with binding targets for suppliers. Government is consulting with suppliers and other industry stakeholders on its proposal for the regulatory framework for 2024 and 2025. This proposal includes a target for suppliers to install smart meters in at least 80% of the homes they supply with energy, and in 73% of small businesses, by the end of 2025.

Scope of the report

This report assesses the progress of the Department for Energy Security and Net Zero (DESNZ) and its predecessor department in leading the smart meter rollout since our last report in 2018 and the extent to which some issues we identified in that report have been addressed.

We have also assessed DESNZ’s approach to tracking and managing the costs and benefits of smart meters, and how well it is set up for both the remainder of the rollout and the transition to industry-led governance once the rollout is completed. We have used our findings to make recommendations aimed at supporting DESNZ to maximise the value for money of the remaining rollout, drawing on our experiences of auditing other major government programmes.

Conclusions

Since 2018, DESNZ has overseen important progress in addressing many of the technical challenges that prevented many smart meters working. The smart meters that have been installed are beginning to demonstrate benefits, including potentially helping to achieve power sector decarbonisation. DESNZ has a proposal under consultation to achieve at least 80% household smart meter coverage by 2025, well behind its original target to complete the rollout by 2019.

DESNZ is at a crucial point in the rollout and the decisions it takes now will determine the extent to which it can maximise value for money from the remainder of the Programme. DESNZ should ensure it has robust information on both the total costs and benefits of smart meters to make these decisions from an informed position, particularly on the merits of different approaches to the rollout after 2025, including considering at what point the Programme can end. This would also allow it to provide transparency on the overall costs and benefits of the Programme. While DESNZ and suppliers collaborate in many areas, they disagree on the reasons for the delayed rollout. Both sides need to work constructively together on the future of the rollout, including considering the merits of new incentives and regulations that increase take-up of smart meters.

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Publication details

Press release

View press release (14 Jun 2023)

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