Page last updated at 14:53 GMT, Wednesday, 2 December 2009

UK energy smart meter roll-out is outlined

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The next step from smart meters is the 'smart grid'.

Energy suppliers are to be responsible for installing smart meters in all households in the UK by 2020.

Plans for smart meters for millions of homes have been unveiled with trials suggesting the £8bn scheme may help people save £28 a year.

The Department for Energy and Climate Change wants to see 47 million meters in 26 million properties by 2020.

It is hoped the technology will help people cut their energy bills by paying more attention to usage.

Smart meters have a visual display allowing customers to see exactly how much electricity and gas they are using and relay the data to energy firms automatically.

Energy use

Trials of smart meters have resulted in some people moderating their energy use.

ANALYSIS
John Moylan, BBC business reporter

The government had already announced that it wanted all UK homes to have smart meters by 2020.

What is new today is that, following a consultation period, it has now decided how that will happen.

The main energy suppliers will be responsible for the roll-out.

This was the government's preferred option, although there was a debate in the industry over whether it could be done another way, for example by the regional electricity distribution companies.

The government has also outlined its early thinking on the buzzwords in the industry at the moment - smart grids.

Potential savings outlined already by ministers are only a fraction of the current average annual bill of more than £800 for gas and £445 for electricity.

The £28 a year figure for savings has been cited as a conservative estimate for a typical household.

But the DECC says case studies had shown people could reduce their bills by about £100 a year as the meters can encourage changes in behaviour.

"Smart meters will put the power in people's hands, enabling us all to control how much energy we use, cut emissions and cut bills," said Energy and Climate Change Minister Lord Hunt.

Savings

Energy suppliers, rather than distribution networks, will be responsible for the roll-out of the meters at a cost of about £340 per household.

They will be able to recoup the cost from customers through higher bills or upfront fees, but competition between suppliers is expected to ensure only some of the expense is passed on.

The companies stand to make big cost savings themselves, with the need for teams of meter readers becoming a thing of the past.

Martyn Hocking, from the consumers' association Which?, said: "We are concerned that consumers could be saddled with the entire multi-billion pound bill for a project that is going to save the industry hundreds of millions of pounds a year."

ENERGY SAVINGS
UK homes add £33 a year to bills by leaving appliances on standby
Every minute taken off a daily shower can shave between £5 and £10 off an annual energy bill
Lowering the room thermostat by 1% could save a householder around £65 a year
Source: Energy Saving Trust

The plans, which also confirm that each meter will include a standalone display device, were welcomed by the big energy companies.

"We are delighted the government is moving forward with its plans for the roll-out of this technology throughout Britain," said British Gas managing director Phil Bentley.

"This will be the single biggest revolution in energy use since British Gas converted all the nation's homes to natural gas in the 1970s."

Mark Daeche, of energy company First Utility, said the mass roll-out of smart meters would not begin until 2013. But from next summer, all First Utility customers who elected to have a smart meter would be supplied with one.

He welcomed the format of giving suppliers the responsibility for the supply of meters instead of a system of regional franchises.

Smart grid

Plans have also been announced for a smart grid to manage the flows of electricity and to increase the use of renewable energy.

In the past the National Grid has delivered electricity from large power plants to our homes. In the future the grid will need to be much smarter, according to BBC business reporter John Moylan.

"Computers will have to handle more volatile sources of electricity, such as windfarms," he said.

"They will also have to cope with micro-generation - consumers using solar panels or heat pumps to generate their own electricity and sell it back to the grid."



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