Page last updated at 23:02 GMT, Wednesday, 29 April 2009 00:02 UK

What smart meters will do for you

Money Talk
By Garry Felgate
Chief executive, Energy Retail Association

Smart meter display next to a gas hob
Smart meters will let you monitor gas and electricity use

A revolution in the way you think about and use energy in your home is about to get underway.

The government is poised to announce how it intends to roll out electricity and gas smart meters to every household in the UK by 2020.

Calling this a revolution may seem overly dramatic.

However, this will be the impact of the transfer from existing "dumb" meters to new, smarter alternatives.

Quite simply, keeping your existing meters is like sending a telegram instead of installing wireless broadband.

The government, along with the energy industry, is now involved in devising the best way of getting this massive project underway to replace 46 million meters - in 25 million British homes - by the year 2020.

This is a huge undertaking, ranking alongside the digital switch-over and the introduction of North Sea gas to homes in the early 1970s.

So what are smart meters?

Smart meters are fundamentally different from ordinary gas and electricity meters.

This display will put you in total control of your energy use

They provide a real-time, accurate, record of the gas and electricity you are using, day and night, and how much it costs.

Crucially, your new smart meter will include a display device that will tell you how much energy you are using at any given time, and how much it is costing you - and even how much carbon that equates to.

This display will put you in total control of your energy use - which is vital when more and more of us are becoming more energy efficient on financial and environmental grounds.

Some display devices even incorporate a red, amber and green traffic light system that shows you clearly how your usage changes when you turn various appliances on and off.

You will be able to see how much energy you used the day before, the week before and even the year before, and how your consumption changes in real time.

Smart meters will also make it easier for people who generate their own energy to measure how much they are exporting back to the national grid.

No more estimated bills

This new technology will also spell the end of estimated bills and meter readings.

Garry Felgate
It is possible that smart meters could link up with other household appliances
Garry Felgate, Energy Retail Association

With smart metering, electricity and gas bills will be accurate.

There will not be any need for your energy company to estimate your consumption as the smart meter can tell the supplier how much energy is being used and when.

Smart meters also provide an exchange of information between you and your energy company.

This means the company will be able to communicate directly with you and enable you to receive up-to-date readings from the meter without having to send someone out to your home.

This interactivity also means energy companies can send messages to your smart meter and, where required, instantly update products such as energy tariffs at your request.

Paving the way for innovation

As well as helping all of us save money, smart meters will also pave the way for a number of innovations aimed at saving energy.

For example, using the information from your meter, new tariffs could be offered encouraging off-peak energy use.

The meter would also be capable of providing information on which appliances you use most, allowing companies to subsequently offer energy saving tips via the meter and its display device.

In the future, it is possible that smart meters could link up with other household appliances - for example freezers, washing machines, kettles.

You could time their operation to take advantage of cheaper off-peak tariffs - again saving you money, while simultaneously reducing your carbon footprint.

Energy companies are already legally required to reduce the amount of carbon they produce and smart meters will help their customers contribute to the wider effort.

Maintaining momentum

The potential benefits of smart metering are clear.

Britain is no longer self-sufficient in terms of energy and supplies of North Sea oil and gas are depleting.

Smart meters have to be part of the solution to the problem of drastically reducing our energy consumption.

Momentum is gathering towards making smart meters a reality for all of us by 2020.

It is important that this momentum is not lost, as it is in our power to make a real change in the way we all use our vital resources.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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