The UK government's plan to install smart meters in every home by 2020 will not be met because it has underestimated the time it takes to install and the technical standards for the second generation of smart meters, the National Audit office said Friday.
The NAO said the cost increase is a conservative estimate as it does not include the potential cost of replacing less technologically advanced SMETS1 meters. Nor does it factor in costs that will be incurred if energy suppliers do not bring installation costs down from where they were at in 2017, the watchdog said.
Significant technical delays meant the first wave of second-generation smart meters (SMESTS2) only occurred in July 2017, more than three years later than initially planned. In their absence, energy suppliers have installed 12 million first-generation smart meters (SMETS1), more than the 5.4 million planned by the UK Department for Business, Energy and Industrial Strategy (BEIS).
Because the SMETS2 rollout was significantly delayed, sticking to the 2020 deadline is putting increasing pressure on the program's timetable, increasing the risk of cost escalation and/or technology being rolled out before defects have been addressed, NAO said in a report Friday.
"The rollout of this many SMETS1 meters was the unintended consequence of the BEIS aiming to install smart meters quickly," the NAO report said. "The BEIS decided on this strategy without making an economic assessment of its implications. It says rolling out SMETS1 meters has allowed consumers to experience the benefits of smart metering early. However, most of the benefits enabled by smart meters will be realized in the long term, and so did not require an urgent rollout."
In 2016, the BEIS put the cost of the program at GBP11 billion and estimated it would bring economic benefits of GBP16.7 billion. The costs are equivalent to GBP374 per dual fuel household (in total, rather than annually).
"It is currently uncertain whether all of the industry cost savings forecast by the BEIS will materialize," the NAO said, in part because of the extra 7.1 million SMETS1 meters that have been rolled out.