A long-awaited £8bn programme to fit “smart” electricity and gas meters in every home in Britain will be launched by the government tomorrow, starting a revolution in the way that consumers pay for energy.
Ministers will also for the first time set out ideas for a “smart grid”, that will use modern technology to manage flows of electricity, enabling an increase in renewable energy and a reduction in demand.
Energy companies have been frustrated at how long it has taken the government to decide on a plan for rolling out the meters, and warned the target of 47m new meters in 26m homes by 2020 was challenging.
Smart meters, fitted with information and communications technology so they can send data and receive instructions, will transform the way that energy is sold.
Flexible time-of-day pricing will make it possible to charge consumers more at peak times, enabling suppliers to flatten out the peaks in electricity demand and ease the pressure to use the most expensive marginal power stations, which are often the most polluting.
Smart meters will end the need for estimates of energy use and meter readings, providing more reliable bills for customers and cutting costs for suppliers. They could also enable the use of “smart appliances” that will switch themselves off when not needed.
Energy companies have been divided over who should manage the roll-out of the meters. Some argued it should be handled by the distribution companies that own the pipes and wires running into the home, but the government has decided suppliers will do it.
However, the companies now agree the main priority, in the words of Ian Marchant, chief executive of Scottish and Southern Energy, is “just to get on with it”. The roll-out will be supervised by Ofgem, the energy regulator.
Petter Allison, director of smart metering for British Gas, said: “It can be done [by 2020], but only if Ofgem really gears up for it, and encourages the industry to gear up, too.”
A new communications centre will be created to receive and manage the data from the meters, to make it easier for customers to switch suppliers. The contract to run that centre is expected to be attractive for IT and telecoms companies, but will be complex and extremely sensitive.
The Conservatives said it was “absurd” Britain would have to wait until the end of the next decade for a full roll-out of the new meters.
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