The energy regulator Ofgem recently published the results of its long-awaited Energy Demand Reduction Project, investigating how much energy UK householders could save by using smart meters.
The report makes fascinating reading for anyone following the government’s £11.3 billion plans to bring ‘smart’ electricity and gas meters to every home. These meters are useful for several reasons, including enabling greater balancing of demand on the grid. But 40% of the business case for the national roll-out is that meters will help people reduce their energy use. What this report and analysis by the National Audit Office shows is that unless they are deployed intelligently, smart meters are not guaranteed to bring any energy savings at all.
As has been said before on this blog, smart meters don’t save energy – people do. So how householders respond to the information they get from the meters, and what other services they receive, is crucial.
The study involved 18,000 households who had smart meters fitted and another 42,000 households that received other information. Its results suggest that:
- Smart meters can work. Interventions using smart meters were successful more frequently and had higher energy savings than those that didn’t involve smart meters. Apart from two trials by SSE, the study found no statistically significant energy savings as a result of any initiative that didn’t involve smart meters. This included energy efficiency advice, giving feedback on historic energy use, incentives to reduce demand and real time displays. But this doesn’t mean that these interventions can’t work – they may just have been poorly executed .
- The effects can vary hugely. Good communication with householders is critical to getting better results from smart meters. “Information needs to be clear, easily seen amongst other materials sent by suppliers…relevant and timely and kept up to date” the report says. This covers information both on how to use the displays and how to save energy. This is an important point to note for DECC in its assessment of the voluntary Code of Practice for Installation, currently being designed by the Energy Retail Association.
- Installation is an important time to engage householders. EDF found that “customers expected, and could have benefitted from, more engagement and instruction during the installation of smart meters and RTDs [real time displays].” But there is currently little incentive for suppliers to engage householders properly when installing meters, apart from for those companies who are seeking to distinguish their brand as being a leader in energy saving.
- Social benchmarking can work in the UK. Telling householders how their energy use compares to typical consumption in comparable households resulted in around 1% energy savings. This was one of the most successful interventions without smart meters, but other interventions produced higher savings (e.g. smart meters and real-time displays produced an average of 3%). Smart meters and benchmarking were not tested together, which other research suggests may work well. A new trial to test this combination in the UK has just been announced.
- Opt-in websites won’t work. Online services have the potential to help people reduce their energy consumption, but this potential is rarely realised because people don’t use them. No energy-savings were found from web-based interventions in the EDRP, and Google has just scrapped ‘PowerMeter’, its online energy metering tool that can connect with smart meters, because of an “inability to scale”. This is likely to be because voluntarily engaging with a web tool requires a lot of initiative from people, so only a few are likely to do it.
- Don’t bother with financial incentives. Paying people to use less energy once they have installed smart meters had no persistent effect on their energy use. In the one trial where it did work, it worked only for as long as the incentive was kept in place. Commitments to reduce consumption without specific rewards or targets did not work either.
- Alarms are annoying but people like traffic lights! The simpler and more persistent the communication, the better the response. Householders in one study rated a “traffic light” signal of consumption levels as their favourite feature of real-time displays. Unsurprisingly, an audible alarm signalling high consumption “attracted only negative responses”.
There are some problems with the methodology of the study – apart from Scottish Power customers, all of the householders who had received smart meters had actively opted to take part in a trial, meaning they were likely already to be more engaged than the population in general.
As the National Audit Office’s recent report on the smart meter roll-out found, “there are major risks the Department of Energy and Climate Change must address to achieve value for money” from smart meters. There is uncertainty about whether the smart meter roll-out will produce sustained behaviour change, and the NAO recommends that DECC develop a consumer engagement strategy “as a priority”. This may well need to include working with third sector organisations or local authorities as well as energy companies.
Smart meters – along with other interventions and if deployed well – have the potential to realise great savings across the country. But just installing a meter and leaving behind a manual is likely to achieve very little, and is potentially a bad use of government cash.
People save energy, not meters. So engaging householders before, during and after installation needs to be one of the scheme’s fundamental priorities.
Key questions now include – will data from smart meters automatically be shared? Who is the best person to communicate with householders? Will government mandate what kind of information and advice householders get? And when will DECC publish a consumer engagement strategy?