Out-Law Analysis | 24 Aug 2018 | 2:48 pm | 4 min. read
It is easy to view smart meters in isolation, but many other existing and anticipated technologies in the home, energy and vehicle markets depend on their use. It is one of the reasons that Pinsent Masons, the law firm behind Out-Law.com, identified smart meters as one of the smarter energy technologies of the future.
Despite this, there is a real prospect that the anticipated adoption of smart meters in the UK will fall below government's original expectations.
The meters have the potential to reduce unnecessary energy use and emissions and to cut consumers' energy bills, and the UK government has set a target for their installation across the UK by the end of 2020 – it has said more than 50 million smart meters could be installed under the initiative.
UK electricity and gas suppliers are under an overarching obligation to take all reasonable steps to ensure that a smart meter is installed on or before 31 December 2020, but consumers are not forced to accept them. To aid the scheme, the suppliers have been under a licensing obligation to submit smart meter roll-out plans. The largest of those suppliers – those that supply to 250,000 or more gas, electricity or dual fuel customers – have also been required to submit binding annual milestones for the installation of smart meters alongside those plans.
In recent months, Ofgem, the UK's energy regulator, has taken particular interest in suppliers' engagement strategies amidst concern that consumers are not taking up the option of having a smart meter installed in as large numbers as had been hoped.
This has potential implications for innovations that could benefit consumers and businesses alike.
Earlier this month, the Department for Business, Energy & Industrial Strategy (BEIS) highlighted the role smart meters have to play in enabling 'vehicle to grid' (V2G) technology. V2G is just one of the new smart energy solutions being developed from the use of electric vehicles.
Bidirectional electric vehicle charging stations provide for charging the batteries in electric vehicles and discharging the electricity those batteries store when the vehicles are not in use. The technology offers users the potential to charge their vehicles at off-peak times at associated lower rates, and supply electricity back to the grid directly, or via third party aggregators, at times of peak demand and receive payment for doing so.
BEIS praised V2G technology offered by OVO Energy, highlighting the company's approach to tariffs which incentivise electric vehicle users to charge the vehicle batteries during off-peak hours and supply excess stored energy back to the grid.
V2G solutions, like those provided by OVO and other energy suppliers, are made possible because suppliers can set 'time-of-use' tariffs to incentivise more flexible energy usage on the basis of the data on consumption recorded by smart meters. The meters also let energy users monitor and control their own consumption more easily.
The BEIS press release was a welcome intervention to highlight the enabling role that smart meters have to play. Further advocacy like that could help warm consumers to the technology.
In May, Smart Energy GB, which champions the roll out of smart meters in the UK on behalf of the government, reported on a survey it carried out further highlighting the link between smart meter usage and adoption of electric vehicles.
According to the survey, more than third of UK drivers (34%) would be more interested in buying an electric vehicle if they had a smart meter, and 33% said they would be more likely to purchase an electric vehicle if they could programme it to charge automatically at home when energy is cheapest.
With this in mind, the government's Electric Vehicle Homecharge Scheme (EVHS) deserves greater attention.
The EVHS, overseen by the Office of Low Emission Vehicles (OLEV), provides grant funding of up to 75% towards the cost of installing electric vehicle charge points at domestic properties across the UK. A similar Workplace Charging Scheme provides grants to businesses that install electric vehicle charging points at their premises.
The importance of improving the infrastructure needed to support the widespread use of electric vehicles has been recognised by the government.
It successfully steered The Automated and Electric Vehicles Act 2018 through parliament, enabling further regulations to be introduced to require large fuel retailers or service station operators to provide, and make available for use at prescribed times, public electric vehicle charging points. The regulations could also further stipulate performance standards for those charging points and a duty on operators to fix faults and publish information about their charging points, such as their location and operating hours and what the available charging options are.
In addition, the government's recently published 'road to zero' strategy, which is designed to support its previously stated goal of ending the sale of new petrol and diesel cars and vans by 2040, has a heavy focus on supporting electric vehicle use.
According to the strategy, the government wants at least half of new cars built by 2030 to be "ultra low emission" and "almost every car and van to be zero emission" by 2050. To support that objective, the government said it plans to require electric vehicle charging points to be installed in new homes in England.
The growth in use of electric vehicles will spur new business models in the energy market and encourage the development of new products and services. Like with V2G, smart meters will be at the heart of those innovations.
Smart meters will allow suppliers to strengthen their customer engagement. They will, within the bounds of data protection law and activated privacy safeguards, know more about customers' energy use and daily lives. In addition to flexible new tariffs, suppliers could offer smart home solutions to smart meter customers – current examples include remote thermostats and security cameras, but the 'internet of things' promises further opportunities in the future.
Smart meter enabled technology that is convenient to use, serves a useful purpose and is not prohibitively expensive will be attractive to consumers and present potential new revenue streams for businesses. This is why it is vital that the government and industry step up their advocacy of smart meters.
Lauren Jones is an expert in smart energy contracts at Pinsent Masons, the law firm behind Out-Law.com.