GB Smart Metering no longer financially viable

Last week the British Infrastructure Group (BIG), comprising 93 Members of Parliament and the House of Lords, delivered a devastating report on the British Smart Metering Project.  Titled “Not So Smart”, their headline assessment is that it is a “roll-out which is set to become yet another large scale public infrastructure project delivered well over budget which fails to deliver the expected benefits.”

It is very gratifying to see the issues I’ve been writing about for the last six years confirmed.  In the past, the energy industry and civil servants have succeeded in pulling the wool over the eyes of various Parliamentary Committees, who, lacking adequate technical expertise, have simply repeated the mantra that the project is more or less on track.  The British Infrastructure Group have cut through that obfuscation.  In their summary they suggest that the average consumer saving will be reduced to just £11 per year.

Whilst I applaud this report, I fear that the group members may still be wearing their rose-tinted ermine.  Their conclusion about the reduced savings comes from looking back at BEIS’ numbers from 2016.  If you look forward at the additional problems and costs which are still in the pipeline it becomes clear that the GB Smart Metering programme is no longer financially viable.  Rather than a saving of £11 per year for each household, it’s more likely to result in an increase in annual energy bills of £67 for the next decade.  With the publication of this report, the last vestiges of BEIS accountability have been ripped away.

Let’s examine what is still going wrong.

Inflated user benefits

In looking at benefits, the report failed to make a distinction between customer behaviour change for electricity and gas usage.  There is some evidence that an In Home Display (IHD) providing real time feedback may nudge a consumer into changing electricity use.  But as far as anyone can tell, there is no similar evidence in the case of gas.  That’s because gas usage is only displayed every half hour, at which point you’ve no idea whether it was being used for cooking, heating the house, or doing the washing up.  With no linkage, there’s no nudge, so there’s no saving.  Despite this, DECC and BEIS have always claimed their 2% reduction extends to gas usage, accounting for half of the total consumer savings.  The general consensus is that they made this up to provide a positive net benefit for the project, despite the absence of any evidence.  Hence at least half of the £11 annual saving is probably mythical.  Mike O’Brien – the energy minister in Gordon Brown’s Government, who had a smart meter installed in 2010, admitted this week that he “barely looked at it, didn’t use it.  We got rid of it”.   Which is probably the reality that BEIS tries so hard to ignore, i.e. there are no consumer savings – the whole project is racking up unjustified costs which will end up on our energy bills.

Unnecessary Smart Gas Meters

The only reason for smart gas meters is to avoid sending round meter readers, although they still need to do bi-annual safety checks.  However, the decision to include gas metering drove the whole technology choice of the project, with some unintended consequences.  It’s a very expensive case of the tail (the gas meter) wagging the dog. 

Once you include gas metering, all of the communications technology decisions became dependent on the gas meter.  Because a gas meter is battery powered, it has to use a really low power wireless technology, removing simpler options which other countries have used for electricity-only smart metering programmes, such as power line carrier (i.e. using the electricity distribution network to backhaul data which is widely used on the continent) or LPWAN.  That restriction led to the initial selection of ZigBee, which the meters use to talk to the communications hub and the IHD.  This has spawned an incredibly complex firmware stack which is far beyond the level of the industry’s technical expertise.  Despite BEIS’ excuses, this is the main cause of the delay in developing SMETS2 meters, as most of the participants are way out of their technical depth.  That is before you add in the development of the alternative 868MHz HAN for homes with thick walls, which adds another level of complexity and has been largely specified by people with no background in RF engineering.  (If you haven’t been following the story, the SMETS2 meters are the ones which don’t go dumb when you change supplier, unlike the current SMETS1 meters, which require you to have another meter fitted, then another, then another, whenever you switch supplier.)

Only 80 SMETS2 meters have been installed

The BIG committee asked the right question and discovered that of the 11 million Not So Smart meters installed so far, only 80 of them meet the required SMETS2 specification – something which BEIS is keeping very quiet about.  Just to be clear, that is only eighty out of 11 million – 0.0007% of the installed total.  What the BIG group weren’t told is that those 80 SMETS2 meters are all installed in the homes of industry personnel, where they have access to dedicated engineering support.  That’s because they are still very early prototypes.  It is an indication of just how far the industry is from completing the design and starting to mass produce them.  Despite Government deadlines telling energy suppliers to stop fitting SMETS1 meters and start installing SMETS2 meters, all that happens is that the deadline keeps moving back, as the SMETS2 meters aren’t available.  There’s very little confidence that we will see interoperable meters available in volume before 2020.

Enrolling SMETS1 meters

The report makes the point that the decision to devolve meter design, supply and installation to energy suppliers rather than the DNOs was “a mistake with profound consequences”.  It required the creation of the DCC, with all of the consequent costs, delays and problems.  There is a real worry that a significant proportion of the 11 million SMETS1 meters already installed may never be integrated into the DCC, although it looks likely that Capita, which has the contract for the DCC, will happily burn through more hundreds of millions proving that.  As Ed Davey quotes in the BIG report, “the case for stopping more SMETS1 meters being used is becoming overwhelming”.  Each meter that needs to be replaced adds around £200 of cost to the programme, so we are looking at a potential £1 – 2 billion additional project cost at the current rate of deployment. 

BEIS sent out a consultation in April about what to do with SMETS1 meters, and is currently processing the responses.  One option is to force energy suppliers to replace all SMETS1 meters.  However, the day after the report was published, Robert Cheesewright, the Director of Policy at SmartEnergy GB, happily told the World at One that “all of the SMETS1 meters will be enrolled – it’s no hassle – it’s just like your phone getting an update”.  That’s not an unusual stretching of the truth for those involved in this project. 

Fake Ads and Institutional Innumeracy

If you live in the UK, you’ll have seen the adverts which Smart Energy GB are currently running to persuade consumers to install smart meters.  I’ve looked at the calculations behind them and all of their numbers are wrong.  For example, Smart Energy GB claim that you could charge your phone for 177 years based on your energy savings.  That’s rubbish – if you do the calculation correctly you’ll find it’s only 16 years.  The number of extra baths you could have from the alleged savings is 16, not 115 and the number of cakes you could bake is 64, not 236. 

I don’t think there is a deliberate intent to deceive, as Smart Energy GB have published their calculations; what they show is an abject level of incompetence.  Their mistakes range from thinking that 2 times 12 is 212; failing to realise that electricity and gas have markedly different prices; getting formulae wrong; failing to understand the physics of how battery charging works, an inability to calculate percentages; misreading much of their source data and then getting its context wrong.  I’ve referred these adverts to the Advertising Standards Agency and you can read the gory details here.  It is shocking that Smart Energy GB can spend £192 million on these campaigns without having the most basic level of numeracy.  Smart Energy GB are funded and directed by the energy suppliers, which means you’ll be seeing around £6 added to your energy bill for the cost of propagating these lies.  But this institutional innumeracy appears to be par for the course both within Smart Energy GB and at BEIS.

Obsolete Comms            

The majority of smart meters communicate with the DCC using GPRS – a twenty year old, 2G telecoms standard.  In many countries around the world 2G and 3G networks are being turned off as operators refarm existing spectrum to support more 4G users.  The UK has been slower than most to do this, but UK mobile operators do not expect to continue supporting 2G or 3G networks much further than 2023.  At that point the communications hubs in around 20 million homes will need to be replaced, at an additional cost of around £2 billion.  In-home coverage for 4G and 5G is poorer than it is for GPRS, which means an increased number of users will subsequently find themselves in “not spots”, where their meters become dumb.

Obsolete Thinking

Much of the current smart metering programme was put in place ten years ago by people with very little understanding of technology.  There are good reasons for smart metering, but recent advances, such as the decrease in battery costs, suggests that smart meters per se may be a last century solution.  Adding 3 – 4 kWh of battery storage with integrated smart metering, local pico-grid energy sharing, outputting data to a user’s smartphone (saving the cost of an IHD) and employing NB-IoT connectivity could probably be delivered by DNOs at a similar cost per home as the current programme.  That would have the advantage of essentially flattening GB household electricity demand and would allow the design of a very different grid.  That is only one suggestion – the point is that we are at a stage where the solution should be part of an integrated grid strategy, not just a rework by BEIS of the current disaster.

Taking all of these factors into account, the Not So Smart report from BIG is only scratching the surface.  Their headline statement that consumer savings have been reduced to £11 per annum comes from the BEIS’s 2016 impact assessment, which was already riddled with inaccuracies.  What we’ve learnt since is that:

• The overall costs may have increased significantly from £11 billion. The BIG report mentions that it could be as high as £20 billion.
• There may be up to a £2 billion cost to replace unenrolled SMETS1 meters.
• There will be a £2 billion cost to replace current comms hubs when 2G is turned off.
• There is no evidence of any consumer savings from gas smart meters, wiping out half of the savings.
• If everyone behaves like Mike O’Brien, which they probably will, it negates any other savings.
• Smart meter lifetimes around the world are closer to 10 years than BEIS’ assumption of 25 years, which wipes out the long-term benefits, and means the whole charade will be repeated in ten years’ time, and
• Smart Energy GB will probably ask for another £200 million for more fake adverts.

The consequence is that it is now clear that there is no economic case for continuing the current programme.  All that is going to happen is that our energy bills will go up to pay for this fiasco.  If the costs rise to £20 billion and the meters only have a ten year life, that means everyone will see their energy bill go up by around £67 a year.  The Government plan has always been to pass these costs on to consumers, which is a cunning trick.  It means the costs don’t appear on the Treasury books.  If they did, the project would almost certainly have been cancelled by now.

It’s nice to see that some in Parliament have noticed the truth and I applaud BIG for publishing this report.  They call for urgent action.  Please alert your MP to this report – it’s available at the British Infrastructure Group’s website, as every day this project rolls on it just adds to the cost of all of our energy bills. 

Read more about this ongoing Government disaster at www.nickhunn.com