Smart metering roll-out: Dutch and British experiences
Author: Niall Kerr
Smart meters (for electricity or gas) are able to record the amount of energy consumed and communicate this to the energy supplier (and the energy consumer if an internal home display is included). Smart meters offer benefit, in principle, to energy suppliers, network operators and consumers. Supplier benefits include reduced meter readings and the ability to offer time-of-use tariffs to customers; network operators are able to better understand energy demand patterns and thus improve the efficiency of energy system operation, while consumer benefits mainly arise from the potential to make energy savings (ultimately through behaviour changes). This blog post recounts some important similarities and differences in the Dutch and British experiences of smart-meter roll-out.
As part of the EU’s Third Energy Package in 2009, member states were required to implement smart meters in properties where it was deemed cost-effective. Following cost benefit assessments, many countries implemented a mandatory approach to smart meter implementation – with some notable exceptions, including the UK and the Netherlands.
In the UK, the initial announcement of smart meter roll-out in 2008 referred to a mandatory installation requirement for energy retailers. This was effectively removed in 2012, when the government required energy suppliers to take ‘all reasonable steps’ to install smart meters, with a mandatory approach thought likely to lead to resistance from consumers and so be counter-productive. In the Netherlands, a mandatory programme was also initially planned, but was made optional after public and political opposition, on grounds of privacy and also the distribution of costs and benefits (there were obvious benefits for the suppliers but it was less clear how consumers would benefit). Households and businesses in the Netherlands can refuse a smart meter altogether, or they can install one but opt out of certain functionalities, such as automatically sending readings.
The UK differs from the Netherlands (and every other country in the EU) due to its roll-out plan being the responsibility of energy retailers rather than electricity system operators. Energy retailer responsibility was justified on the grounds that competition would be the best way to ensure efficient implementation, and that the retailers had a closer relationship with customers than energy network operators. Alongside this, UK energy retailers had been made responsible for domestic energy meters in 2003, and it would take time to re-regulate responsibility for the meter to the network operators. As of the end of 2018, the Dutch roll-out programme led by the system operators had achieved 50% smart meter penetration, while only 20% had been achieved in the UK (see Table 17 in this link).
The similarity in the Dutch and British public response to smart meters portrays some possible cultural common-ground in attitudes to perceived civil liberties and privacy. In many other countries in Europe the mandatory implementation of smart meters was largely unopposed. The use of energy retailers in the UK was a marked difference, and is held at least partly responsible for the first generation of smart meters in the UK losing their smart functionality (going ‘dumb’) whenever users switch supplier and are unable to send meter readings to the new supplier. The model of retailer responsibility is also thought problematic as it makes an area based approach more difficult as households in one area may have many different energy retailers. There are also low levels of trust associated with energy retailers in the UK, arguably annulling any benefits there might be from their ‘closer’ relationship with customers.
The British and Dutch experiences highlight the critical importance of how policy is actually delivered, and that careful consideration should be given to the pros and cons of using different delivery bodies. The experiences from the smart-meter roll-out and the public opposition to smart metering (in the UK about 1 in 5 people at the beginning of the programme) should also act as a salutary lesson for the communicators of low carbon transitions. Evidence that households save energy with a smart meter is mixed, but the idea that smart metering would result in an energy bill reduction has been at the forefront of public communications (in the UK at least). This information has been perceived as misleading, with the realisation on the part of households that energy savings are not guaranteed and require a change in behaviour, helping to erode trust in the roll-out. The true reasons for and the impacts of change – in the case of smart meters, wider energy system improvements – shouldn’t be glossed over. When it comes to making changes to people’s homes, clear, upfront and honest communication of the rationale for policy is fundamentally important.
In the Going Dutch(?) project, we aim to further investigate the similarities and differences between Dutch and British (including Scottish and Welsh) approaches to policy and governance. Full heat decarbonisation is undeniably a greater challenge than smart meter roll-out and one in which international lesson drawing could play an important role.
This blog is informed by the ClimateXChange report ‘Energy technology phase-out: Using international analogues to inform ‘net zero’ heat decarbonisation policy’ and the Energy Research and Social Science article ‘Have we been here before? Reviewing evidence of energy technology phase-out to inform home heating transitions’ both co-authored by Dr Niall Kerr and Dr Mark Winskel. It also relates to some of the conclusions in the Book chapter ‘Why rationale matters in energy and climate policy’ authored by Niall Kerr.
