By Philip Waller - Analysis
LONDON (Reuters) - Smart meters are set to make estimated energy bills a thing of the past, but utilities are warning that delays in fitting the technology could hinder the country’s progress in hitting its 2020 climate change targets.
Some industry players claim that unless ministers allow firms to begin work soon, the UK could even miss 2020 by four years.
They also say government funding may be needed to meet the estimated 6-12 billion pounds cost.
“There is a target, but the problem is that the starting gun hasn’t been fired,” the director of smart metering for British Gas, Petter Allison, said.
Smart meters provide data on energy use, allowing utilities to send customers accurate bills without using traditional metre readers.
The government aims to install the meters by 2020, the same year in which ministers are trying to meet a target of generating 15 percent of energy from renewable sources.
Experts say the technology will help Britain achieve its goal by allowing people to cut their energy use, reducing the need for new power stations and wind farms.
Millions of households in other countries already have the meters -- Italy fitted 30 million in four years -- but the UK has yet to decide how best to fit the 47 million needed in homes and businesses.
Ministers approved the principle of the rollout last year, but an announcement about how it would be done is still awaited.
British Gas, owned by Centrica, wants a structure allowing utilities to fit and run them for their existing customers, backed up by a central communications system.
It said an alternative system being considered, under which new regional franchises would do the work, could stall the process and put it back four years.
“If (the government) chooses the regulated way, with bids for regions, then everything would stop because we don’t know who would be doing what,” Allison said. “We can make up delays, but we just need them to make a decision.”
Utility support service group Spice, which fits water meters in homes and businesses, said government support may be needed to offset potential funding difficulties.
Chief Executive Simon Rigby said smaller energy firms may be reluctant to invest in fitting meters for customers, only to see them switch to a rival supplier later.
“The pay-back is sketchy at best,” he said. “Smart meters can’t come soon enough, but I think they’re years away.”
The Energy Retail Association (ERA), a body representing utility firms, said it was keen to see the meters rolled out as soon as possible and was expecting a decision “fairly soon”.
“Timing is of the essence,” a spokeswoman said. “Companies are keen to get this programme off the ground because the 2020 deadline is fast approaching.”
A spokeswoman for the Department for Energy & Climate Change (DECC) said the aim to complete the metre rollout by 2020 was realistic. “That’s what we’re hoping to achieve.”
“We’re confident, which is why we need to make the right decisions so it can be done within the timescale,” she said.
“It (involves) a massive overhaul in every house, so it needs to be done correctly.”
She said ministers hoped to publish a consultation document in the next couple of months.
The document will set out options including whether energy companies should do it in their areas, whether it should be done by third parties on a regional or national basis, and the type of communication system needed.
Ian Parrett, an analyst at energy consultancy Inenco, said ministers needed to encourage industry co-operation in fitting the meters, rather than setting targets and penalising firms if they fail to meet them.
Ensuring homes and businesses used them to control their energy use was as important as fitting them, he added.
“It’s all very well installing the meters, but if you don’t use the information (they provide), it won’t make any difference.”
Editing by Sue Thomas