Alternatives to In-Home Displays Could Further UK Smart Meter Cause

Energy suppliers, consumers and the government will reap many benefits now that suppliers can trial alternatives to In-Home Displays.
Published: Wed 10 Feb 2016

There’s been a great deal of scepticism around the UK’s smart meter rollout. As Engerati member Nick Hunn recently put it, it’s not about the smart meter itself (as these are of great benefit to a smart grid), it’s  the way in which the rollout is being carried out. He explains that his concern is that the UK programme will fail to deliver most of the potential benefits of smart metering and consumers will be saddled with the cost of a lot of obsolete technology. [UK Parliament Calls for Evidence on Smart Metering Programme]

Calling for IHD alternatives

While it is clear that there is a great deal for the UK Government to do to fix this programme, there may be some light at the end of this dark tunnel. The Government has introduced a derogation mechanism which means that energy suppliers can now introduce trials of alternatives to in-home displays (IHDs) as part of the smart meter rollout to all households in the UK by 2020.

Since 2012, the standard licence conditions for electricity and gas supply have required all domestic consumers to be freely offered an IHD when their smart meter is installed. This policy is based on strong UK and international evidence that consumers on average reduce their energy consumption more when they have an IHD than with a smart meter alone.

In recognising that offering alternative engagement tools can provide greater consumer benefits and cut costs for industry, the derogation will allow for a greater evidence base to be gathered informing Government’s final decision on the appropriate engagement tool to be offered alongside smart meters in late 2017/early 2018.

Under the derogation, suppliers will be able to apply to the Secretary of State to undertake trials of innovative engagement tools in place of the requirement to offer an IHD.

A separate document providing guidance and detailing trial requirements will be published shortly.

It is expected that the trial application window will be open from the end of March 2016, closing on 30 September 2016.

Derogation mechanism - the benefits

Simon Hill, Vice President, Opower, the behavioural energy efficiency experts, told Engerati that this is “fantastic news” for  British consumers, utilities, and the Government as it is providing an opportunity for the UK to deliver energy efficiency in an affordable and measurable way.

He adds that the option for suppliers to trial IHD alternatives when installing smart meters now opens the door for consumers to save money, for utilities to innovate and build better relationships with their customers, and for Government to de-risk the smart meter rollout, which at an estimated cost of between £11 billion and £13 billion, is one of its biggest capital investments to date.

Impact on consumer behaviour – primarily encouraging people to use less energy – is a key success factor in the smart meter roll out.[Customer Behaviour (not incentives) Can Shave Peak Demand.]

With energy companies undertaking massive smart meter deployments, to date the investment planning has primarily been focused on operational benefits, such as using smart meter data to facilitate remote connections, improve meter-to-bill processing, improve outage detection and reduce technical losses. Often, the customer benefits of smart meter deployments are generally absent during the planning stage. Because of this, utilities are missing out on the  enormous benefits that smart meters have to offer. Research has shown that personalized customer engagement is extremely useful in improving smart meter awareness, acceptance and appreciation.

Personalized customer engagement should begin even before a new smart meter is installed. This positions the meter as a useful asset to the consumer, increases smart meter acceptance and begins developing an engaged customer base. [Utilities - Don’t Leave Your Customers Behind.]

Mr Hill concludes: “Opower is already delivering full-scale behaviour-based energy efficiency programmes to 95 utilities and 52 million households in the UK and across the world, with customers given behavioural nudges consistently realising 1.5-3% savings on their energy bills. This IHD derogation means the UK can continue benefitting from such an approach.”

Further reading

DECC-In-Home Display Licence Conditions: Consultation response [PDF][4 February 2016]