Why we need to be smarter about smart meters
The domestic devices’ true potential may be less in changing individual behaviour than in helping to transform the wider energy system
Jessica Rawnsley
On kitchen walls, in hallways and hidden behind mops and brooms in utility cupboards in homes across the world, an unassuming digital device has quietly taken up residence, bringing with it ambitious visions of revolutionising the energy system.
The successors to analogue gas and electricity meters, smart meters track how much energy a household uses in real time and relay that data back to consumers and energy providers. The continuous flow of data and granular information on how much it costs to run household appliances was designed to slash both bills and emissions.
Backed by billions in private and public investment, millions have been installed since roll-outs began in the early 2000s; smart meters becoming a core component of energy strategies in countries around the globe, from India to Australia, the UK to the US.
But two decades on, are they delivering on their promise – and how has their role within energy systems changed?
Confronting consumers with the cost of leaving the lights on or running the dishwasher was intended to encourage frugality. But evidence of real energy savings remains mixed. “Initial studies indicated smart meters might save between 5-10 per cent of energy use,” says Jeff Hardy, director of Sustainable Energy Futures, a UK-based consultancy specialising in smart zero-carbon energy systems. “That was probably true for the first couple of weeks but most trials show those savings disappear in time.”
Sarah Darby, of Oxford University’s Environmental Change Institute, led energy regulator Ofgem’s early work in gauging how consumers in the UK responded to feedback on their energy use. The broad consensus is that savings for gas and electricity hover around 3 per cent – slightly elevated for suppliers with more “sophisticated engagement approaches”.
“Some people lose interest early on, displays break down and so on, but the balance is definitely towards feedback having a positive effect and those using them seeing reductions,” Darby says. “But as time’s gone on, it’s become more about playing a part in the energy transition and clearing the way for more renewables in the system.”
We have energy grids that are becoming increasingly wind and sun driven, which means you’ll have periods of very cheap electricity and very expensive electricity
Smart meters’ greatest potential lies not in triggering individual behaviour change – as Hardy puts it, “people don’t live their life through the meter” – but in transforming the way the entire energy system operates by enabling optimised energy distribution, grid stability and the integration of more renewable sources.
“We have energy grids that are becoming increasingly wind and sun driven, which means you’ll have periods of very cheap electricity and very expensive electricity as those sources wax and wane,” Hardy explains. “If you can signal to customers to follow the availability of the resource, then by nature it’s becoming a much more flexible and efficient system.”
Some of that potential is already being realised through “demand response” programmes which incentivise consumers to modify their electricity use to match periods of surplus or deficit through dynamic tariffs and bill rebates. Following Russia’s invasion of Ukraine in 2022 and the ensuing turbulence in energy markets, demand-side flexibility (DSF) was implemented – with customers who reduced energy during a “flexibility event” receiving rebates. In the first year, 1.6mn households and businesses in the UK took part. Smart meters paved the way for such initiatives, Darby says.
As homes become increasingly low-carbon – furnished with solar panels, electric vehicle chargers and heat pumps – smart meters are an integral piece of the puzzle. To bypass low consumer engagement, companies are launching decarbonisation packages that offer people assets paired with novel tariffs and automation so certain devices and appliances can be remotely controlled to reduce demand during peak periods. In California, where rolling blackouts accompany each wildfire season, utilities automatically throttle demand during critical periods by sending signals to smart appliances to temporarily reduce consumption.
“That recognises that people are not terribly engaged in the half hour-to-half hour activity of the energy system, and meets them where they are,” Hardy says. “I’ve done research which shows if you want to maximise the benefits of DSF, you’re going to need an awful lot of automation. The downside is it requires ceding control to a third party; if they make a mistake it could mean your electric car isn’t charged in the morning.”
Further down the line, smart meters could allow homes to become active participants in a decarbonised energy ecosystem – selling excess power back to the grid, adjusting demand dynamically and reducing overall emissions. Consumers in some parts of the world can already sell power to the grid, but further advances are needed to facilitate energy storage in homes for later use; sharing and selling between neighbours; and energy trading, which would see the creation of dynamic, localised energy markets.
On the supplier side, the distribution network operators (DNOs) that connect homes and businesses to the local grid will be able to see power flows and where clusters of low carbon technologies are being installed, providing enhanced visibility and enabling smarter decisions about where to invest in the network.
There are still kinks to be smoothed out. Improved regulation and more robust consumer protection and privacy laws will be needed for the new types of proposition, as will consideration of the fairness of the energy transition, Hardy says.
“If you’re well off and can afford to buy low-carbon kits and be an early adopter of flexibility tariffs, you’re going to win. But you’re going to have people who are disengaged, stuck with high bills, and people who can’t be flexible with energy use because they have medical dependencies, or are on low incomes or in rented properties. What happens to their bills and ability to find good tariffs on the market?” he says.
But he remains excited about the trajectory. “It feels like we’re now starting to get in place infrastructure that can really drive some innovation and make customers active participants in the energy system.” Smart meters will play a small but crucial part in a broader shift toward grids that are zero carbon, flexible and digitised – and ultimately smarter.
