Government sets 2020 goal for smart meter rollout

The government has today released its long-anticipated plans for rolling out smart meters to every home and business in the UK with the publication of a new consultation document outlining how energy companies should manage the installation of the technology.

The proposals set a goal of ensuring every home and business in the UK has smart meters installed by 2020, capable of providing real-time, accurate electricity and gas use data that will make it easier for people to reduce the amount of energy they use, switch suppliers, and ultimately take advantage of smart grid technologies.

"Smart meters will empower all consumers to monitor their own energy use and make reductions in energy consumption and carbon emissions as a result," said energy and climate change secretary Ed Miliband. "Smart meters will also mean the end of inaccurate bills and estimated meter readings."

Under the preferred rollout option, the government will adopt a "central communications model" where energy suppliers are responsible for installing and maintaining smart meters, but the transmission and management of the data to and from the device will be handled by a new nationwide body.

However, the government said it would also consider two alternative approaches as part of the consultation, which would either see individual energy companies manage all aspects of smart metering, or require the establishment of regional franchises to handle the installation of the meters while the data is managed by a new national body.

"This is a big project affecting 26 million homes, and several million businesses, so it's important we design a system that brings best value to everyone involved," said Miliband.

The three proposals will now be open to consultation until 24 July 2009 and are likely to further fuel a long-running debate among energy firms about how best to roll out the technology.

The Local Government Association and some energy industry insiders have called for the adoption of a regional franchise approach, arguing that it will be far more cost effective to send one team to carry out installations on a street than require each energy firm to carry out installations only for its own customers. However, some within the industry are fearful that the absence of competition in such an approach will make the franchises more costly and reduce the likelihood of the most effective meters being installed.

Based on the government's impact assessment, the rollout of smart meters will deliver net benefits of £2.5bn-£3.6bn over the next two decades, in the form of lower bills and reduced costs for energy firms.

It said that the technology will also underpin the shift to a lower-carbon energy infrastructure, allowing energy firms to offer more sophisticated tariffs that reduce the price of energy used at off peak times, and making it easier for them to feed energy from customers who deploy micro and community-level renewable energy generation systems into the grid.

Smart meters would also support smart grid technologies capable of turning off electrical appliances such as fridges and washing machines at times of peak energy use and make it easier to manage the electric car recharging infrastructure that is likely to be required if the government's plans for increased use of electric vehicles prove successful.