Energy suppliers in the UK are struggling to deal with the government’s target of delivering a smart meter to every home in the country by 2020, citing complexity of the devices and other issues.

Failure to meet the target, part of an £11bn infrastructure delivery, could potentially carry a fine of up to 10 per cent of global turnover for British Gas-owner Centrica, EDF, Eon, Npower, ScottishPower and SSE. The companies are also frustrated by the rising costs of building and maintaining the IT infrastructure needed to support smart meters, which is now estimated at £3.13bn over 18 years, up from an earlier estimate of £2.47bn.
Smart meter installation
Consumers also stand to lose out: the costs of delivering smart meters are ultimately passed on via energy bills. The meters are meant to provide accurate, real-time data on how much energy customers use and an end to the opaque practice of estimated billing.

So far the devices fitted are first generation technology — known as “Smets1”. These are generally more expensive, less sophisticated and are considered less secure than the second version — Smets2 — which was intended to be the main model rolled out to the market.

An IT programme that will allow suppliers to communicate with the newer devices via a central network has suffered long delays. Crucially there is a chance the older devices will go “dumb” if a customer chooses to switch energy provider, as the new utility company may not be able to access the data.

Ministers and the company in charge of delivering the IT programme — the Data Communications Company (DCC), part of the UK-listed outsourcer Capita — are aware of the danger that early devices may go dumb and are working on a solution for making switching simpler.

Bad publicity is also resulting in some resistance by householders towards meter installation.

A spokesman for the Department for Business, Energy & Industrial Strategy says it is sticking to the 2020 deadline and insists the programme will deliver significant benefits.

“Smart meters are a vital upgrade to our energy system and will take £300m off household energy bills in 2020 alone, after taking into account all costs. “Nearly 7m smart meters have already been installed, consumers are seeing real benefits, and a vast majority of them would recommend their smart meter to friends and family.”

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