Last week the Department for Business, Energy and Industrial Strategy (BEIS) announced plans to set binding smart meter installation targets out to 2024.
The plans came alongside an admission that around 30mn smart meters are expected to be installed by the current 2020 deadline, out of 53mn meters, equivalent to roughly 57% completion. While the new targets do not mean the 2020 obligation will be relaxed, they give a clearer idea of the timescales expected to fully deliver the rollout.
In this Chart of the Week, we will look at some of the implications of delays to the rollout and highlight four key industry programmes that may be affected. Government has described the smart meter rollout as not only creating potential savings for suppliers and customers but importantly laying the groundwork for significant future changes.
However, as shown in Figure 1, some of these programmes that rely on the wide uptake of smart meters are due sooner than the expected 85% coverage by 2024 can fully support:
- The CMA recommended BEIS that continues price protection for prepayment customers until a smart prepayment solution is available. The current cap is set to be lifted by 2020
- Continuation of the default tariff cap is set for review annually between 2020 and 2023. Uptake of smart meters is one of the measures Ofgem will look at in this process
- Suppliers with over 150,000 customers must offer a Smart Export guarantee (SEG) to replace the Feed-in Tariff (FiT) from 2020 onwards. A smart meter is a pre-requisite for SEG tariffs
- A decision is yet to be made on industry-wide Half Hourly Settlement (HHS), but delays to the smart rollout pushes any start date back to 2025 or later
While BEIS noted that solutions to technical issues hampering the rollout should be in place by 2021, some of the programmes listed above will surely find themselves delayed. Taking a wider view, we may also see impacts on the development and uptake of technologies linked to decarbonisation and flexibility, including smart charging and demand-side response.