Smart thinking in Smart Meters: why is there still mistrust?

Four years ago, the British government pledged that by 2020, all homes would have a smart meter. Yet this promise quickly fell flat, and was changed to just an ‘offer’ during the Queen’s speech, just a matter of weeks later.

Indeed, after the official statistics on the adoption of smart meters were released last year, it revealed how much the government fell short in its claims that every UK home would acquire one. Only 31 per cent of homes owned one by 2020, thus grossly missing the 2017 target.

What could have possibly gone awry in the national rollout, and why is there such a lingering mistrust of the consumer? Finding the origin of these issues is imperative, as the consumer’s acceptance of smart meters remains an integral part of meeting carbon reduction targets.

As CEO of two sustainability-focused heating and energy businesses, much of my time is spent discussing the roadmap to the government’s objectives (a 68 per cent cut by 2030, net zero by 2050). This investigation often highlights one key statistic that, without a defined and clear homes strategy, will impede these targets: 40 per cent of UK emissions come from households.

Without the acceptance of smart meters by consumers, reductions in harmful emissions and environmental clean-up will remain hard to achieve.  Given the importance the role of the consumer, it is important to investigate why they still remain doubtful, and how the industry can take the necessary steps to reduce their reluctance.

Consumer apprehension

Providing UK households with smart meters is a simple procedure. A free-to-install device that monitors energy usage and leads to a reduction in bills seems like an enticing and environmentally-friendly option.

So why has this pledge been so unsuccessful?

Trust between the consumer and the six major UK energy companies (or the “Big Six”) plummeted during the initial commencement of the government’s announcement. While installation of the smart meters was free, maintenance and admin fees were added automatically to the consumer’s energy bills. The contradiction in the government claims fuelled mistrust in the consumers, thus leading to only 31% of homes owning a smart meter by 2020.

The Big Six increased the cost of bills, maintenance and administration prices increased too, raising the total cost of a smart meter to around £130. Although initially advertised by the Big Six and the government as a ‘free’ and efficient money-saving device, smart meters were now widely perceived as a costly burden for consumers.

Simply, the Big Six were effectively charging the consumer for the £11bn roll-out covertly through energy bills and hidden admin and maintenance fees, which massively underestimated the true cost of the rollout, as believed by the national audit office.

Breaking the vital trusting relationship between business and consumer by not delivering what was promised led the project to greatly fall short of the government’s initial promise. Further exacerbating this mistrust, was the fact the technology of the smart meters was proven to be erratic.

Due to the responsibility of the rollout being assigned to the major energy companies, who are often engaged in consumer-based competition, the technology strategy implemented was disjointed and unclear. If smart meters only functioned with the energy company that provided them, consumers often found the smart meter would fail to function if they switched their energy provider.

The government used the Data Communications Company (DCC) to ensure that infrastructure would run smoothly. However, it took the DCC three years to begin making first-generation meters compatible when switching energy suppliers, therefore punishing those who acquired smart meters earlier in the launch.

However, by this time millions of consumers owned smart meters, oblivious to the fact that switching supplier rendered them dysfunctional. Yet again, consumer’s confidence in the technology of the smart meters dropped drastically.

What can the energy industry do?

The energy industry needs to improve education for smart meter consumers. A YouGov survey revealed many smart meter owners believe it doesn’t generate lower bills, and a mere 7 per cent of households with smart meters claimed to have received reduced bills.  An astonishing four million smart meter owners do not operate them in smart mode, rendering them completely redundant.

This is a serious shortcoming the energy industry must recognise in order to begin a comprehensive messaging campaign.

This should include simple instructions detailing the use of smart meters, and a description of the impact switching to smart meters has on the environment. Without implementing this, consumer mistrust will continue, and a fantastic opportunity to change consumer habits and behaviour will be missed.

It is worth emphasising the potential of smart meters in the government’s efforts to reach carbon neutrality. The government reaching its target of complete household insulation would have been the equivalent of removing 600,000 cars by 2030.

This is a huge benefit from what is seemingly a change. However, with a lack of consumer trust, we are faced with half of the public being ambivalent towards the technology. The apathy of the consumer towards this technology is demonstrated by the fact most smart meters are only installed when energy companies contact the consumer.

This must be changed. A knowledgeable consumer base, knowing all the benefits of having smart meters, would be eager to make the switch. But with the mishandling the rollout by the Big Six, consumer apprehension is completely understandable.

It is a wise choice for the consumer to switch to an independent clean energy supplier. Unlike the Big Six, independent suppliers are not using bills and hidden additional costs to rebound from £11bn worth of government invoices. And unlike the majority of the Big Six, independent suppliers often use smart meter installation experts. Outfox the Market works alongside a third party, SMS, who use expert engineers to ensure all generations of smart meters remain compatible and functional.

Smart meters still present a great and exciting opportunity for us to reach carbon neutrality. If the energy industry is to sufficiently aid in the clean-up the environment, it must first clean-up its smart meter strategy.

And fast.

Keith Bastian is the CEO of Fischer Future Heat and Outfox the Market