The costs of the UK Government’s plans to rollout smart meters to the country’s homes and businesses could escalate while providing little saving, warns the National Audit Office (NAO).
The costs of rolling out a new generation of electricity and gas meters to all homes and smaller businesses have been estimated at £11.3 billion by the Government.
While smart meters should help customers cut consumption by providing more detailed information on their usage and enable suppliers to provide more off-peak tariffs, consumers could bear the brunt of rising costs.
The report warns that the benefits are far from certain and there is limited evidence that consumers’ behaviour would be permanently changed.
The NAO calls into question DECC’s estimated economic benefit of the programme, which it puts at £18.6 billion between 2011 and 2030.
“Large-scale projects of this kind can take on a momentum of their own and so, along the way, there should be clear decision points at which the Department of Energy and Climate Change will need to review costs to consumers, benefits and risks and judge whether to carry on as originally planned or significantly change direction,” says head of the NAO Amyas Morse.
The NAO says that DECC, which is overseeing the rollout, has made progress on the early phase, in which it is investing £11.2 million, although it did not demonstrate full value for money.
“The benefits of proceeding with this major technological and logistical undertaking are still uncertain,” concludes Morse.
Consumer organisation Which? says that smart meter do have clear benefits for consumers, but the Government must ensure that costs do not get out of hand.
“With clear benefits for industry and estimated cost savings to consumers of only £23 per year, the Government must take a hands-on approach to keep costs under control and ensure that consumers see the benefits of this billion-pound initiative,” says executive director Richard Lloyd.
For further information:
Smart meters help UK community cut energy consumption 10% (3-Jun)
UK Government plans to start mass smart meter rollout in 2014 (30-Mar)
Ofgem no longer responsible for smart meter rollout, says UK Government (13-Dec 2010)
30 June 2011