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British Smart Meters cost £28 million EACH

May 1st, 2018 |  Published in Smart Energy  |  11 Comments

That’s right.  Britain’s smart meters are now officially the most expensive smart meters in the world.  For those of you who have not been following the story, let me provide a brief précis.  Back in 2010 the Government mandated that every home in Britain should have a smart gas and a smart electricity meter by 2020.   Instead of using off the shelf smart meters, they decided to design their own.  DECC worked with some vested industry interests to do a classic Government IT committee job, producing the most complex smart meter specification the world has seen.  That design was called SMETS1 – short for Smart Metering Equipment Technical Specification.  Not only was it the most expensive, but it was also insecure.  When GCHQ looked at it and considered the potential implications of connecting it to our national infrastructure they demanded a redesign, resulting in the SMETS2 specification.  SMETS1 meters look as if they won’t work with the SMETS2 software infrastructure, so any SMETS1 meters already installed will probably need to be replaced.  Throughout this fiasco, the Government has not relaxed its requirements for every home to have a smart meter fitted by 2020, which means fitting around 50 million new meters.

Which brings us to today.  The SMETS2 meters are enormously complex and are pushing the limits of the industry to design them.  With the 2020 deadline barely 30 months away you’d hope that the bulk of them would be fitted by now.  But I’ve just been talking to contacts in the industry who have told me that currently there are only around 80 SMETS2 meters fitted.  Do the sums based on what has been spent so far on the GB smart Metering programme and you’ll find that it equates to around £28 million for each of these meters.  It is an obscene example of a Government IT project going wrong.  But it gets worse.  Not only will the overall project cost consumers around £12 billion, it has the potential to destroy Britain’s leading position in the development of the Internet of Things.  It also seems to be exerting a curse on any Government minister involved in the project, with Amber Rudd, our former Minister for Technical Illiteracy the latest to feel its effect.

A quick word of warning if you have a smart meter – don’t rush to rip it off the wall and sell it on eBay for a couple of million, as yours won’t be one of the SMETS2 ones.  These 80 meters have all been fitted to the homes of staff from meter manufacturers and energy companies.  That’s because they’re still prototypes which they’re trying to get to work.  As I’ve said before, designing complex electronic products to be interoperable is very hard even when you know what you’re doing. And in the case of the GB smart meters, few of those involved do know what they’re doing.

If you’re wondering how I got to that estimate of £28 million, I’d like to explain.  Unlike BEIS and DECC before them, I’m a firm believer in being open about where numbers come from.  So whilst they’re continuing to spend our money on expensive lawyers to fight Freedom of Information requests, here’s the breakdown of how these meters have ended up costing so much.

As the Government has put pressure on energy companies to get on with meter installations, they’ve been busy installing SMETS1 meters, despite the fact they know they’ll probably have to replace them.  That because they’re being threatened with draconian fines if they don’t.  However, that means that all of these SMETS1 meters are essentially redundant – they’re effectively prototypes to test out the system.  I’m going to assume that around 10 million of them have been fitted so far, at a total cost of £888 million for the meters and a further £414 million to install them.  The latter is based on BEIS’ estimate for installation; consumer feedback suggests installations typically need multiple visits, so it’s probably a conservative estimate.

Most of the IT infrastructure for the meters to talk to has already been developed and put in place to create the DCC – the central Data Communications Company, which collates all of the readings and manages the meters.  The total estimate from BEIS has recently risen from £780 million to £1 billion for the overall IT budget and I suspect around 60% of that has already been spent.  Then there’s the cost of the mobile contracts to control and receive data from the meters, which is budgeted at just over £2 billion to cover the period up to the end of 2025, when the GPRS network is likely to become obsolete.  Quite a large chunk of that is still to be spent as we’ve only 10 million meters out there at the moment, so I’m only going to include £65 million as having been spent so far.  BEIS also identify £1.42 billion of “other” costs, which includes funding  Smart Energy GB – the marketing arm of the Ministry which is trying to persuade us all to fit smart meters.  In 2016 BEIS more or less doubled their budget from £97 million to £192 million, presumably because they’d already spent most of it in failing to persuade consumers that smart meters were worth having.  The recent campaign they commissioned from AMV BBDO comparing smart meters to microwave ovens, kettles and TVs is one of the most facile WTF pieces of Government propaganda I’ve ever seen.  Orwell’s Minitrue would have shipped all of those involved straight to Room 101.  What’s scary is that I suspect it ate up most of Smart Energy GB’s new money, so I’m putting in £284 million for the total “other” spend so far. 

If we add those together we get a grand total of £2.25 billion, which has already been spent, at the end of which we have 80 working SMETS2 meters (assuming they are actually working, but that’s another story).  That equates to £28,141,000 per smart meter.

Fig. 1  Current smart metering spend in £ Billions

Time for a quick recap.  The industry:

  • Has a commitment to install 50 million smart meters by the end of 2020,
  • Has currently installed around 10 million which probably don’t meet requirements,
  • Has installed around 80 smart meters which might work, but we don’t know if they do,
  • Has absolutely no idea of whether these meters provide any benefits, but
  • Can and will add the costs of this fiasco to our energy bills.

Remember that every day which passes increases the costs that consumers will have to pay for this disaster.

It is scary that no-one knows whether there is a consumer benefit accruing from the costs of fitting smart meters.  I’ve sat in a House of Commons meeting where a senior minister at BEIS told MPs that we need smart meters because energy usage is increasing year on year and smart meters will stop it.  Except that’s not really true.  Gas usage is increasing, but BEIS’s own figures show that electricity usage is falling every year.  To justify the cost of the GB smart meters, DECC estimated the savings that customer would achieve by using In Home Displays .  However, these only really influence electricity usage, not gas usage and even for electricity their effect is questionable.  I’ve never seen a substantive piece of research which decouples the effect of an In Home Display on electricity usage from the underlying reduction in consumption that comes from improved efficiency in appliance design.  All those A+++ marking on appliances and EU regulations for more efficient phone chargers do have a real effect.  In contrast, the only strategies which reduce gas usage appear to be grants for insulation and possibly smart thermostats, neither of which are affected by smart meters.  So it seems that the Government calculations of benefits are based on conflating opposing trends.

There should now be plenty of data from the smart meters which have been installed to confirm whether they do have a lasting effect on energy usage.  If that were calculated, we would have a good idea of whether this programme is justified.  Almost every independent analysis of smart meters here and elsewhere in the world suggests it is not.  But none of that data from the UK is being released.  It’s a pretty simple exercise to perform but no-one is doing it.  Instead Smart Energy GB are promoting interviews using trite interviews from householders saying “how nice it is not to have estimated bills”.  I think we all agree with that, but ‘ve not heard one of them being told that there is a cost associated with that.  With the total program costed at £10.98 billion, that cost is £366 per household.  If the smart meter lasts twenty years, that adds £18 to your bill each year.  But if the meters need replacing after five years, which is looking more likely, then that’s £73 pounds each year.  Until we know whether they really do help you save energy, that’s £73 that will get added to your bill purely to avoid estimated bills.  Put like that, (a.k.a. telling the truth) I doubt even Smart Energy GB could sell the concept.

I don’t understand why this analysis is not being done.  With ten million meters in homes, some of which have been working for several years, that data will exist.  There are only three reasons that I can think of as to why we have not seen this evidence:

  • The analysis has been done, but showed that BEIS’ assumption on benefits are fictional, so the evidence has been buried, or
  • They’ve lost it. (But that’s not an excuse, as the meter specification allows the meter to store it, to cope with that eventuality.)  Or,
  • The industry doesn’t know how to do data analytics, nor the purpose of such analysis.

Given my experience of the industry, which still finds spreadsheets challenging, it is probably the last option.  Although if that is the case, and they don’t know how to use data analytics to transform their business models, then it’s a bit pointless installing smart meters to provide them with that data in the first place.  If they don’t know what to look for in an analysis, I’m sure any of the expensive consultants they’ve pulled in and who are charging an arm and a leg to keep this charade going will be happy to help.  Or if they ask nicely, I’ll explain it for free.  It’s not rocket science.

The limited lifetime of these meters brings me to another troubling aspect of the programme, which is the effect it will have on our effectiveness to become a leader in Internet of Things (IoT) technology.  Despite a number of appeals from the communications industry, our smart metering program has selected a raft of obsolete communications technologies.  The meters use a GB specific variant of ZigBee for the connections between meters and the ageing 2G GPRS network (which has already been pensioned off in much of the rest of the world) to send data back to the DCC and hence the energy suppliers.  That latter decision is committing mobile network spectrum to continue to support obsolete technology just at the point where the rest of the world in investing in infrastructure to support emerging standards for massive deployments of narrow band IoT (NB-IoT) cellular communications.

Kickstarting a new comms technology is always a chicken and egg situation.  Until there is network infrastructure and cellular coverage available, device manufacturers are loath to design low cost sensors.  This keeps the price of sensors high.  As a result, few are deployed and the network operators argue that there is no demand to fund a network.  It’s a Catch 22, where nothing happens.  Last year the GSMA recommended that EC member countries used their smart metering deployments as the lever to break this impasse, providing the momentum for millions of connections.  China is doing exactly that.  At the recent Mobile World Congress in Barcelona, Chinese companies disclosed that they deployed around 10 million NB-IoT nodes last year and plan to raise that to 180 million by the end of 2018.  Unless the UK Government comes up with some large projects to stimulate deployment at a similar scale, our IoT companies, which are some of the best in the world, will lose a test bed and direct their development elsewhere.  We can currently claim to lead in many areas of IoT.  That is threatened unless we can deploy at scale.  There is no better way to do that than a radical reboot of the Smart Metering program.

I would suggest to Richard Harrington – the current Minister in charge of accurate energy bills, that he takes the following steps:

  • Put an immediate stop to deployment and further development of the current programme.
  • Provide an independent analysis of current smart meter data to find out what the real benefits are and generate an evidence base.
  • Use this evidence base to generate the functional requirements for a second-generation smart metering deployment.
  • Work with experienced companies to develop and deploy smart meters which exploit the synergies of the new IoT networks.

Or to put it another way, stop wasting money and apply some common sense.  Smart meters can be good.  Bad smart meters are not.

Smart Metering does seem to be a poisoned chalice in the career of any Minister in charge of it, regardless of their political affiliation.  Ed Miliband lost his Prime Ministership, Chris Huhne had to resign for perverting the course of justice and Amber Rudd has just lost her role as Home Sectretary.  Regardless of the reasons for their fall, their inaction in stopping so disastrous a project has cost the consumer dear, so I suspect few tears will be shed for any of them.  One can only hope that the present incumbent at BEIS – Richard Harrington, has enough integrity, intelligence and business expertise to see the scale of the mess and bring it to a close before the Smart Metering curse halts his Parliamentary ambitions.  Perhaps he should consider for once that it might be important to put the interest of constituents and country before the vested self-interest of the industry and his civil servants.

 

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

11 comments ↓

#1 John Greenway on 05.03.18 at 7:51 am

Hi Nick,

Agree with all the sentiments you’ve written (I don’t have enough inside Smart Meter roll out knowledge to challenge or support your content, but can believe it).

The British Govt. has lost sight of the original aim, which was energy consumption reduction. The EU mandated Smart Meters as a solution, but in recent years have not pushed for adherence as they know that consumer behaviour does not change significantly (1% reduction for electricity in mainly electricity only homes based on a study in France).

You briefly mentioned in your piece energy conservation measures as a better Return on Investment alternative. On a floor area basis, heat requirement by need in individual rooms fulfills this requirement.

In countries where Thermostatic Radiator Valves (TRV) are mandated, and TRV’s located at the top of the radiator, this is how home occupiers control room temperature. Where the typical mechanical ones are replaced with electronic TRV’s (stand alone or as part of a wireless / IoT Smart Home / Smart Heating system) typically a 20% – 35% energy consumption reduction is achieved with better comfort for the user. Remember, this energy reduction is in homes where the TRV is the prime control.

Think of a typical British heating system where the whole home is heated twice / day (including unused rooms in the morning, and unused rooms for a significant period of the evening), even with popular Smart Heating products. What could really be saved?

The average Brit has better heat management control in their car these days than they do at home. What did the car cost new, GBP 15,000? What is the market value of the home, GBP £200,000?

What did their Smartphone cost, £500? For this sort of sum a wireless / IoT electronic TRV solution could be reducing their heating energy consumption with payback in 24 – 40 months.

Surely this type of solution is a better “green” alternative than the behaviour changes required to achieve the payback on Smart Meters, even on your lower estimate of GBP 18 cost / year.

#2 Paul Homewood on 05.08.18 at 9:01 am

“I would suggest to Richard Harrington – the current Minister in charge of accurate energy bills, that he takes the following steps”

I would add:

“Teach users how to read meters!”

#3 Alasdair on 06.05.18 at 10:52 am

To me these smart meters are dangerous; for they are little more than spies in the cupboard.
They can inevitably be hacked.
They move control from the consumer to the supplier.
They are an invasion of privacy.
They will distort the market to the advantage of the better off and degrade sensible energy policy.
They generate stealth taxes.
They can be used to impose sanctions on those considered undesirable at the whim of authority.
They do not appear to provide much in benefit.

In fact I don’t really like them.

#4 AndyR on 06.06.18 at 8:08 am

Thank you Nick.

We tend to come at this from an energy and data perspective rather than a wireless/technological one so it is very informative to read about your experiences and insights.

FWIW BEIS launched a SBRI competition in January this year with a modest budget of £8.8m to develop software tools that use smart meter data to encourage energy saving.
https://www.gov.uk/government/news/saving-energy-with-data-from-smart-meters-apply-for-contracts

Unfortunately it seems that there is still no money available to investigate actual energy data or assess the combined effect of the roll-out so far. Like you, we suspect it will be minimal and a fraction of what could be achieved with simple stuff like subsidising the cost of insulation (which incidentally was working quite well until someone in government with experience in banking decided that a loans-based system would be better).

This last competition arrived off the back of a DECC ‘Smart Metering Non-Domestic Early Learning Research’ reseaerch contract from 2015 (worth about £300k) which finally reported in November 2017.

Unfortunately the work contracted was a qualitative survey of attitudes to smart metering rather than hard numbers about the actual savings that may have been facilitated. Among the 41 businesses surveyed it seems like only one was using the arrival of the smart meter to kick start an energy efficiency drive – most were either doing it already or just using their meters for the bills.

In the non-domestic sector CIBSE estimate that the cost of active energy management should be of the order of 10% of total energy spend and while there will always be scope for improvement, half hourly metering has been around for a long time and ‘Smart’ energy management in the non-domestic sector does not look very different to what most are doing already with automatic meter reading and (AMR) and building management systems (BMS). If there are impacts in the domestic sector it is not likely to be sensible to extrapolate from what businesses are doing.

The potential to use smart metering for demand side response is probably one of the biggest drivers for the technology – in theory it could save us from some pretty expensive grid reinforcement work, something that will be increasingly important if we are looking to electrify transport and heat.

#5 Nick on 06.07.18 at 8:36 am

Andy,
Thanks for that. It has always struck me as ironic that there is an enormous gulf between those supporting smart meters, who espouse the value of the data collected, and the ability of those collecting the data to do anything with it. With 11 million connected meters it should be trivially easy to determine what the savings are and for how long they apply, but despite repeatedly asking, no-one is doing that. When I was at Onzo we collected data from around 30,000 homes using clip-on energy sensors and saw some immediate savings, but usage trending back to normal after six months. Given those users were self-selecting and interested in energy saving that was probably as good as it is going to get. Yet we’re constantly fed the story that we will go on saving year after year.

There is an interesting paper from from the Centre for Urban Research in Australia looking at wider smart home devices (Smart home control – Exploring the potential for off-the-shelf enabling technologies in energy vulnerable and other households). They point out that putting in these devices may actually increase usage. Not surprisingly, the industry is doing quite a good job of keeping quiet about that.

On the demand side, I reckon that for about the same amount of money as the smart energy program you could install a connected 3.5kWh battery in every home in the UK, which will more or less smooth out demand and could also act as a smart electricity meter (http://www.nickhunn.com/smart-power-smart-meters-and-smart-batteries/). That has the big advantage that it doesn’t rely on consumer behaviour change – you’re using technology to actively help, rather than just be hopeful.

#6 Benton on 06.13.18 at 12:08 pm

That is a lot of money lost or to be lost. I understand that all SMETS2 are fitted with CyanConnode RF software. Interoperable, passed by GCHQ, yet is only going to be used in ‘NOTSPOT’ areas (no signal). It can be put into high-rise buildings, cover distances and is low cost. As it is already built into SMETS2 why not use it as main source. It would save a lot of money especially when SMETS1 have to be replaced as useless.
The question is why does the Government not insist on using these for low cost and efficiency. They have been showcased abroad as virtually 100% reliable.

#7 AndyR on 06.14.18 at 11:19 am

Ha ha – we are very familiar with the idea of smart devices increasing energy consumption. It shouldn’t be too surprising given that most are designed to turn stuff on rather than turning it off! Having said that, there *may* be an argument in vulnerable homes where persistent underheating causes damp, mould and health problems. For the rest of us it is hard to justify turning the heating on remotely in an empty house so that it is precisely 21 degrees as you walk through the door.

One of the problems is that many older UK homes are not really controllable. A poorly insulated dwelling with an over/undersized or poorly balanced heating system, with sticky TRVs and no zoning will be challenging to control – the learning algorithms will constantly be fighting with the system. We have monitored non-domestic systems with optimal start algorithms and poorly placed sensors that produce a whole range of unpredictable results, particularly when the system response is slow.

Lots of us are familar with the ‘rebound effect’ but fewer will have come across the ‘prebound effect’ (http://www.cam.ac.uk/research/news/the-prebound-effect) where policy makers overestimate the effects of energy saving technologies. A large part of the effect is thought to be down to budget conscious consumers maintaining lower temperatures in their homes to save money. Anyway enough on heat!

Under the current tariff system we can’t make the sums add up for domestic PV/battery systems – typical payback is generally in the order of 20 years or more which is too long for most individuals. As a national infrastructure project it certainly makes more sense, although I can imagine it might be more economic to deploy at a neighbourhood level or on the 11 kV network where I am told that the network operators are effectively ‘blind’ to patterns of demand.

In the non-domestic sector a number of groups we work with are looking at storage both with and without generation. The main drivers are resilience and avoiding TOU/peak charges. However the difference between the red/amber/green rates has fallen this year which affects the economics on that one. We are hoping to measure and model a couple of MW scale systems later this year so it will be interesting to see how the technical and economic arguments stack up.

#8 Benton on 06.15.18 at 8:30 am

Hello Andy..
I don’t know if your comment related to my message.
What I was saying is that smart meters are currently using a SIM system run by Telefonica.
The CyanConnode RF is for filling the gaps in mobile phone coverage, there a lot of poor signal areas in UK, it is built into all SMETS2 meters which are just becoming available but will only be switched on if SIM system fails. One wonders why as it is cheaper.
By RF it connects smart meters via a small hand sized collection box (DCU) situated somewhere amongst 200 odd houses and can link to another DCU if needed to keep continuous contact. The system is very low priced, is what they call interoperable so can switch from Supplier to Supplier easily.
This whole system would have been cheap for the Government, easy to install, Security proof etc. and probably finished completely by 2020. Of course much cheaper at end of day for customer.
Their latest improvement lets customers (if they want to) connect to IoT through it, as it is I understand multi platformed which is quite handy for suppliers of various electronic items around the house which at present often do not connect easily.

#9 AndyR on 06.15.18 at 4:39 pm

@Benton
Sorry, I was responding to Nicks earlier post and didn’t see yours. Thanks for the heads up on CyanConnode RF though! We have however struggled in the past with data logging via GSM in poor signal areas and will check this technology out.

#10 Benton on 06.16.18 at 10:37 am

Thanks Andy..
Nick has referred to CyanConnode in the past. Their main interest was originally India as an emerging market. They have recently completed a project in Mysore doing end-to-end, virtually 100% successful and was ‘showcased’ by Indian Government.
They are based in Cambridge and are up to date with current software. Being incorporated in next generation SMETS2 means they can be switched on at any time to cover poor reception areas. To me it is logical to switch them all on and use them everywhere. These DCU (or nodes) work collectively so if stationed all over a City can reroute themselves keeping constant contact. They are virtually foolproof working in any climate and low cost. They also brought out a retro fit which ‘smart up’ existing meters, a simple low cost option whilst Utilities are sorting out their problems.

#11 Nick on 06.17.18 at 2:09 am

I’m not sure what percentage of meters may have Cyannode within them – I wasn’t aware it had been included. I wonder if GCHQ does?. In the SMETS2 world, the wide area connectivity resides within the comms hub, not the meters. They communicate with the comms hub using a variant of Zigbee. Everything out there today uses ZigBee running at 2.4 GHz, bu this doesn’t have enough range for around 25% of homes, so BEIS has commissioned a UK proprietary 868MHz variant, which adds additional cost and risk, which should be appearing in meters sometime soon. How much more range that gives is open to debate, as most of the design was largely academic. Incidentally, we only need this because of the requirement for In Home Displays, and we only need those because DECC needed to invent imaginary customer savings to generate a fictional net benefit for the whole project. Hence we need in home displays, which led to ZigBee in electricity and gas meters, hence comms hubs, etc, etc. But it’s been good for the civil servants and consultants.

In terms of the wide area connection, the country was divided into three areas. Telefonica won the award for two of them and are shipping comms hubs with GPRS. The Northern area was won by Arqiva, who are using their proprietary Flexnet solution. It’s probably a better option, although everyone is keeping quiet about the fact that it doesn’t meet the EU mandate that smart metering should not use proprietary technologies.

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About Creative Connectivity

Creative Connectivity is Nick Hunn's blog on aspects and applications of wireless connectivity. Having worked with wireless for over twenty years I've seen the best and worst of it and despair at how little of its potential is exploited.

I hope that's about to change, as the demands of healthcare, energy and transport apply pressure to use wireless more intelligently for consumer health devices, smart metering and telematics. These are my views on the subject - please let me know yours.

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