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Why are UK energy suppliers still deploying SMETS1 smart meters?

With the latest SMETS2 start date in July 2018, how are smaller tier two and three energy companies meeting their deployment obligations?
Published: Tue 19 Sep 2017

With more than 580,000 smart electricity meters installed in the UK in just Q1 2017, the latest figures available show energy suppliers are making progress on the mandated rollout.

There are now more than 7m first-generation Smart Metering Equipment Technical Specifications (SMETS1) smart gas and electricity meters installed and operating in the UK, of which at least 5.76m were deployed by the 'Big Six' energy companies.

Nonetheless, smaller supply companies are required to offer smart meters to their customers too as outlined under the UK deployment model, the government’s Smart Metering Implementation Programme, which lays the mandated responsibility for installation at the energy supplier’s door.

Smart meter rollouts - energy supplier challenges 

Faced with the need to offer smart meters, smaller supply companies - which may have customers numbering in the tens of thousands and perhaps 20-30 staff - are presented with a number of challenges.

For instance, uptake of smart meters will inevitably vary day-to-day, week-to-week as the rollout continues. With millions of customers able to buffer such effects, a big energy supplier can more effectively forecast a corporation-wide smart meter buying programme and take advantage of large order pricing.

Smaller players – for whom forecasting demand, staffing and equipment requirements are far more problematic - do not have that advantage.

In addition, the scale of the roll-out programme suggests there is likely to be an overall shortage of suitable installers. Smaller players may be potentially squeezed out when major players are also simultaneously rolling out a smart meter installation programme.

Smaller energy suppliers are also faced with a tough technology choice between first-generation (SMETS1) meters and second generation (SMETS2) due to begin roll-out later this year.

While first generation systems do currently face an issue with consumers being able to switch between suppliers without rendering the smart meter dumb, they are proven to be reliable in service. The Data Communications Company's planned enrolment and adoption project will soon provide a solution to interoperability for SMETS1.

Chris Jones of UK data analysis company Stark comments: “The reason why a small supplier may want the first generation [of smart meters] at the moment is that the second generation isn't proven yet; it hasn't been out in the field for five years performing day-to-day.”

Indeed the issue of reliability is of key significance for smaller suppliers where the reputational impact of failure or cost of a major refit are proportionately more challenging.

And, as Jones notes, smaller suppliers typically have a more mobile and energy-engaged consumer base: “Customers who have switched to small suppliers definitely care about their energy, they're engaged with it. If you annoy them, it's not difficult for them to switch again.”

Smart meters as managed service

One potential solution is the deployment of proven cloud-based third-party systems that can deliver SMETS1 system communications and analysis.

In August, Trilliant Networks and Stark finalised a deal using Trilliant’s Smart Metering System Operator (SMSO) platform with Stark providing data analytics services.

A managed service, it consists of an operations centre and software streamlining deployment and management of SMETS1 smart meters for energy retailers in the UK.  Being cloud-based, the Stark solution allows for extremely quick set-up, full end-to-end prepayment capability and a secure supply chain for communications hubs and meters.

As the smart meter roll-out continues to gather pace and SMETS2 systems begin to be installed in wider numbers across the UK, it is almost inevitable that technology issues will emerge.

Jones calls for a transition period as the DCC completes the centralised data management system and communication networks.

“While the second-generation system settles down and the DCC makes sure SMETS1 meters definitely work with it, the largest buyers should be installing second-generation stuff and proving it works and getting the teething problems out of the way. Smaller supplies should be allowed to continue installing the first generation.”

With around one million meter endpoints set to be installed by smaller energy supply companies over the next three years, the decision to choose SMETS1 looks like the smart choice for now.

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