Government will set suppliers annual targets in a bid to stop the smart meter rollout losing steam.
The programme originally targeted a smart meter in every house and most businesses, some 53m meters, by 2020.
But government never wanted to be seen to be forcing people to have one, so the rules only mandate that suppliers must ‘offer’ all of their customers a smart meter – and take ‘all reasonable steps’ to do so.
Suppliers, while achieving about 40 per cent coverage, have struggled to get meters into customers houses for a number of reasons, despite some resorting to aggressive tactics.
The rollout was also hampered by a delay in getting fully functioning ‘Smets 2’ meters to market.
At the end of March 2020, some 21.5m smart meters had been installed, though most of these are early Smets 1 versions without full functionality. Beis said there were 4.3m Smets 2 meters connected to the national network, the DataCommsCo (DCC) run by Capita, as of March.
For some years, much of the energy industry had urged government to rethink the 2020 deadline, arguing that people would suffer higher costs, poor experience and fewer benefits by ploughing ahead.
Government however, did not want to take pressure off suppliers because smart meters and half hourly metering and settlement are seen as key enablers of a smart, renewables-dominated power system, where all energy consumers can be billed according to local and national power market requirements. That is, be incentivised to use power when there is lots on the system, or not when the system is short or grid constrained.
However, last September, government admitted publicly that the rollout would need more time, and consulted on extending it to 2024.
Its new plan involves giving suppliers annual targets to hit, which raises the prospect of annual penalties, in order to hit 85 per cent coverage by 2024. But Beis has stopped short of making smart meters mandatory.
In the meantime, suppliers have a six month extension of the current regime, which mean the new annual targets system will kick in mid 2021.
Suppliers did not want the prospect of annual targets and fines, but the department for business, energy and industrial strategy (Beis) said it will review the targets midway, leaving two years to address outstanding issues.
Government will lay secondary legislation to enable the changes and consult on policy detail in the Autumn.