Smart cookies go for smart meters?
In case you’ve not heard of smart meters, they are electrical contraptions that show you exactly how much it costs you (in electricity and £sd) to run a bath, make a cup of tea or watch Neighbours. However, according to British Gas (who also sell electricity), about £1 in every £4 spent on heating is currently wasted, with televisions left on standby and mobile phone chargers that are left plugged in at all times are contributing to the £1.3 billion that is lost every year through British households not fully switching off electronic gadgets.
British Gas felt so strongly that smart meters could be a useful marketing tool, that they commissioned some research by some economic sorts in Oxford, and between them they have worked out that British homes and businesses could be nearly £14 billion better off thanks to smart meters. Unfortunately that is not £14 billion each.
The report analyses the costs and benefits of smart meters from 2012 to 2030 and finds that, the national roll out of smart meters will cost £11.5 billion, but the benefits of smart meters could total £25.3 billion, which would mean an overall gain for the country of nearly £14 billion.
In detail, the report suggests that smart meters will give
> £11.2 billion in energy savings for households and businesses. The report finds that smart meters, by helping households and businesses see the energy they use and by providing personalised energy advice, will help save the average household 5% (around £60) on their yearly bill.
> £10.7 billion in efficiency savings for energy suppliers. Unfortunately, the report authors have clearly not met may energy providers as the report expects “much” of these savings will be passed onto consumers by giving them additional reductions on their energy bills, rather than going straight into shareholders’ pockets.
> £3.2 billion in generation related savings. This is known as the knock-on effect. Lower energy demand from smart metering will reduce the amount of energy generated. The savings will be made from reduced costs around the trading of carbon. Again, not something that normally impacts the pocket of your average consumer.
So, whether or not we are better off depends entirely on who is paying for the smart meter roll out. If it is the consumer, through green levies or by increases in energy bills, then really, we will all be worse off, spending £11.5bn for a £11.2bn saving. The Department for the Environment's own figures suggest they are anticipating an increase in bills at 2015 followed by a redutcion in bills in 2020, so unless those energy companies really do give us back all the money they are saving, it looks like the consumer is the mug here.
However, all may not be lost-we could change supplier. Andrew Tessler, Senior Economist at Oxford Economics, said that “in addition to the energy consumption savings identified in our report, our research also highlights that smart metering… can greatly reduce the time and convenience costs of switching suppliers for customers.” Of course, this presupposes that any energy company will be any better a prospect to switch to.
And there are other question marks over the report’s findings. Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "This report is a welcome first step in opening up the debate about smart meters and starting to explain the benefits to consumers… However, many of the benefits highlighted in the report rely on consumers changing their behaviour - our research shows that less than half of consumers know what a smart meter is (45%) while just over a third (35%) have heard of them but have no idea what they do. If consumers are to fully realise the cost savings, they can no longer be kept in the dark.” Arf arf.