Out-Law News | 10 May 2013 | 1:17 pm | 2 min. read
The Department of Energy and Climate Change (DECC) said that energy companies will have to deploy smart metering before the end of 2020. The previous target was for the systems to be in use before the end of 2019.
Smart metering enables a two-way flow of electricity and information that allows real-time information about demand for energy to inform the level of supply needed to meet that demand in a near-instantaneous fashion. Through the mass roll-out, approximately 55 million smart meters will be installed in every UK household and business. The Government has said smart metering will help to reduce unnecessary energy use and emissions and cut consumers' energy bills.
DECC said that it had revised the deadline following requests from within industry that it has received as a result of work being undertaken during the 'foundation stage' of the smart metering programme.
The foundation stage is a government-led transitional phase designed to ensure that ground rules for the industry-led roll-out are clear.
Amongst the work DECC has so far undertaken during this stage has been the running of a procurement for providers of data and communication services and a separate competitive bidding process to find a Data and Communications Company (DCC). The DCC would be responsible for operating the data and communications hub that sits at the heart of the smart metering system.
In addition, DECC has been involved in the process for setting specific technical standards for smart meters and has also been working on new rules that would improve consumer engagement with the technology whilst ensuring data privacy rights are observed by companies involved with then operation of the systems.
DECC said it was through these 'foundation stage' processes that it was asked to push back the deadline by which the rollout of smart metering will have to be completed.
"As part of the procurement process, DECC has tested with bidders for DCC service provider contracts, and with the energy industry, the time needed for the design, build and test phases of their programmes," DECC said in a new document on the Smart Meters Programme Delivery Plan. (3-page / 93KB PDF) "The consistent message was that more time was needed if the mass roll-out was to get off to the best possible start."
"We therefore expect suppliers to be ready to start their full scale roll-out by autumn 2015. Reflecting the extended period to build and test the systems required by industry, the end of mass roll-out will be moved from end 2019 to end 2020," it said.
Smart metering expert Chris Martin of Pinsent Masons, the law firm behind Out-Law.com, said that there would likely be a mixed reaction to the delay from companies involved in the roll-out of smart metering systems.
"The announcement by DECC is likely to be received positively by many of the industry participants responsible for delivering the roll-out programme," Martin said. "Ultimate responsibility for delivering the roll-out within the timescales set by DECC rests with the UK’s energy suppliers, and the so-called 'big six' suppliers, in particular."
"Due to delays in finalising certain aspects of the 'foundation stage' of the roll-out, such as the technical specification for the meters and the procurement of the data and communications hub that will be central to delivery of the full programme, the previously mandated completion date of 31 December 2019 was looking, at best, optimistic," he added.
"One of the dangers in a compressed delivery timetable is that the roll-out is delivered quickly, but badly," the expert said. "A consequence of that would likely be damage to consumer confidence in the roll-out. Given the emphasis that DECC has placed on delivering a successful consumer engagement strategy, today’s announcement is not particularly surprising.”
"It is likely the announcement will be less well-received by the firms in the supply chain who have geared up to deliver products and services as part of the roll-out programme. DECC's announcement will likely have an impact on demand in the short-term and a consequential detrimental impact on revenues to be generated from supplying the roll-out in the next 18 months or so," Martin said.