The economic case for smart meters

Britain’s smart meter rollout is the biggest change to our country’s energy infrastructure in a generation. This vital upgrade to an outdated, analogue system is creating a decentralised and decarbonised energy network which can help Britain meet its climate change targets, whilst also ensuring customers receive reliable, sustainable and cost-effective energy now and in the future.

We’re already seeing how smart meters are helping us take control of our energy use at home. But, on a national level, the information provided by smart meters – which give near real-time information on our energy usage – will help drive a deeper transformation of our energy system, and one which could save Britain billions each year.

A smarter economy

One of the problems with our current energy system is that it simply can’t map the demands from homes and businesses accurately, so a lot of energy goes to waste. By contrast, a smart energy system, enabled by smart meters, is fully digital and uses information and communications technology to monitor and actively balance energy supply and demand in near-real time.

This means a much more accurate understanding of where energy is being used and when, so network operators can distribute energy in the most green and cost-effective way. This, in turn, brings significant financial and environmental benefits for consumers, the system and the wider economy.

A study for the Government estimates that, by 2050, the benefits of a smart energy system could be up to £40bn a year.

Some of these savings will come from the money we would have had to spend on maintaining our outdated system to keep up with changes in how we use energy (in particular the extra demand electric vehicles will place on our system). But much of it will come from efficiencies within the system itself – a system that is flexible enough to know where energy is needed and when, and can store or send it to the right places with minimum waste.

The future of the energy system

A smart energy system will also drive waves of disruption and innovation in our energy market. New and established companies are already developing services based on energy usage data from smart meters.

Automated switching will simplify the job of changing tariffs and give households the peace-of-mind that they’re getting the best deal without any hassle. Once smart meters are installed throughout the country, this switching process could happen in as little as 24 hours. This will create a more dynamic and competitive market, shaped by consumer demand. And, as a result, strengthen market incentives for innovation, and pave the way for British businesses to take the lead in meeting global demand for the energy systems of the future.

Meanwhile, a digitised system will make peer-to-peer trading easier, so homes and businesses that generate surplus energy – for example from installing solar panels – will be able to sell this to other users within their community. This could open up a whole wave of green entrepreneurs right on your doorstep, as well as cutting down on the cost and waste involved in transporting energy across the country.

Through bringing down energy waste and costs, while also facilitating greener, more sustainable generation, a smarter energy system, using smart meters, could contribute to raising productivity throughout our economy.

A world leader

As more countries make the transition towards clean and flexible energy systems, Britain has an opportunity to emerge as a world leader in green technologies.

By harnessing the potential of energy storage, demand-side response and smarter business models, we have an opportunity to upgrade to one of the most efficient, productive energy systems in the world.

We can also create new businesses and jobs, empower consumers, and reduce the costs of our energy system by billions of pounds each year.

Make it happen

By upgrading to a smart meter, you’re helping build a smarter Britain – delivering a cleaner, greener and smarter energy system better equipped for the future.

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