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What are smart meters?

21st January 2015 Print

The UK government plans to install a smart meter in every home in Britain over the next six years – yet there is still some confusion about what smart meters are, and how they will actually benefit homeowners.  

Smart meters are state-of-the-art technology that allows users to monitor their energy use at a glance. Just like clocking your time or checking your bank balance, smart boxes record the amount of energy you are using in real time and display the cost on the built-in IHD (in-home display). 

The purpose of the smart meter rollout is to improve the infrastructure of Britain’s energy supply. The technology is seen as an integral key in the challenge to reduce the country’s carbon emissions to 1990 levels by the year 2020.

How do smart meters work?

Smart meters use wireless technology to register how much energy you use in real-time, and send the information directly to your energy company via a new in-home communications hub. This provides a number of benefits, including the ability for homeowners to monitor their energy use more easily, and save money on bills.

For many, the biggest advantage is that service providers are able to accurately calculate the cost of your energy bill without the need for estimated bills or sending a meter reader to your home – therefore, no more having to take a day off work to let a stranger into your house.

It is also hoped that new generation of energy meters will raise awareness of how much energy the average household wastes, and encourage people to reduce their carbon emissions and become more environmentally friendly. 

Using Smart Meters to save money?

A study conducted by Oxford Economics in conjunction with British Gas, estimates that the average household could save around £65 a year by having a smart meter installed in the home.

However, the Public Accounts Committee, a European watchdog for the UK, warns that smart meters alone will not save homeowners money. The only way to reduce your gas and electricity bills is to use smart technology to monitor the amount of energy you use, and make lifestyle changes to lower consumption. 

The new smart meters come with a display that shows how much energy you are using, as well as the real-time cost per kilowatt hour (kWh) of that energy. 

British Gas estimates that for every £4 spent on electricity, £1 is wasted. Sacha Deshmukh, the Chief Executive of Smart Energy GB, the company leading the consumer awareness of the nationwide roll-out echoes this conclusion. He said: “We waste money on the current, old-fashioned manual meter system, including fleets of meter readers.”

Reduced energy bills

A government case study shows a government worker in Bristol expects to save £300 a year following home improvements under the Green Deal. Smart meters play an integral part of monitoring the amount of energy you use, because they make it easier to read and understand your own energy consumption patterns.

Furthermore, energy companies will save on reduced production costs and savings they make in the absence of meter readers and a smart grid opens the door for them to give back savings to the customer in the form of variable tariffs and personalised plans. 

Putting the power in the hands of customers

The nationwide rollout is scheduled for autumn 2015. Although homeowners are not obligated to install a smart meter, ministers claim that by revolutionising the power grids and bringing an end to estimated bills, power is switched back to the hands of bill payers.

Having instant access to information about energy usage not only gives consumers the opportunity to manage their monthly budget, but can also be used to shop around for the best deals with competing energy companies. 

Andrew Tessler, a senior economist involved in the Oxford/British Gas survey, said that “time and convenience costs of switching suppliers is greatly reduced” for customers as well. 

By improving the energy infrastructure, the UK has the potential to save billions of pounds and lower our carbon footprint. Smart meters are the tools that enable us to use energy smartly and create a green future with lower bills.