Examination of Witnesses

Smart Meters Bill – in a Public Bill Committee at 2:45 pm on 21st November 2017.

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Dr Fitton and Dr Darby gave evidence.

Q We have until 3.45 pm for this session, and it is a hard cut-off, so I have no choice but to bring it to an end at that time. Will the witnesses please introduce themselves?

Dr Sarah Darby:

Good afternoon. I work at the Environmental Change Institute at the University of Oxford, where at the moment I am the acting leader of the energy programme. Our work has, over the past 25 years, centred on energy demand and efficiency and, as time has gone on, it has broadened out into distributed energy generally. All demand is distributed, and increasingly a lot of supply is distributed, so we are getting more and more interested in smart grids. I should also perhaps say that I was lead on the synthesis report that was done for the Department of Energy and Climate Change on the early roll-out of smart metering.

Dr Richard Fitton:

Good afternoon. I am from the University of Salford. I am a building physicist and I work in and run the Energy House test facility, which measures energy efficiency products in the home. I also lead a task group for the International Energy Agency on the use of smart meter data for determining the energy efficiency of properties.

I will start with the Minister.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I am happy to let Mr Morris go first. I know he has been waiting for a long time.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Q Thank you very much for coming, Doctors, as it were. I thank you for the efforts that you have made professionally to get the programme to the stage it is at now. Although difficult, I would like to ask a broad question that will encompass both your areas. In my Government job, I view the smart meter programme as just the very beginning of a future smart grid for people. I have seen prototypes in America and elsewhere, which you will know much better than I do. What change in human behaviour patterns have you seen up to now for people who have what we could call a very prototype smart grid with smart meters? From both the building and the consumer point of view, what is the vision for the future?

Dr Sarah Darby:

I am not sure we can yet say that there is a prototype smart grid. The beginnings of smart energy tend to be different in every country and smart metering in this country is different from smart metering anywhere else. In fact, more attention has been paid to the consumer engagement side of smart metering in this country than anywhere else. This is the only country where a fairly intensive effort is put into customer engagement at the time of roll-out of the smart meter, when everyone is offered an in-home display, and all the installers are trained in communication skills to explain what is going on, what can be done with the display, what the smart meter is about and how customers can use it as a tool, if they wish to. This country is a bit special in that way, and we are seeing, on average, modest positive effects.

In the US, where smart metering is widespread, the emphasis has been very much on using it to try to control peak demand, and as an instrument to introduce time-of-use pricing and whack up the prices at peak times to keep peak demand down. They have special problems there, particularly in the hotter states, with air-conditioning in the summertime and very high peak loads, which is an expensive problem for them to manage. The earliest roll-out of smart meters was mostly, in my understanding, to overcome serious problems with fraud.

Dr Richard Fitton:

I agree with Sarah, the UK is very strong on smart meters. If you speak to anyone in Europe, a lot of them are envious of the technical standards of the smart meters that are being rolled out. As we have heard from all the sessions, it is a very complicated issue and it is not getting any less complicated, certainly for the consumer.

Our research group’s angle is everything from the consumer side of the meter. We are looking at how to diagnose problems with buildings using the data and systems that are available. We are also developing appliances that will work with smart meters. A big piece of the puzzle that is missing from some of the discussions is the fact that the consumer should be able to engage with the smart meters. As it stands now, they cannot engage with the smart meters. We can log on to the energy supplier’s portal and get a half-hourly reading. But a magic black box called the consumer access device is the gateway to the occupiers having access to their real-time data. This is not a box on the wall that tells them how much energy is costing. It is a consumer access device that streams real-time data to things such as smart appliances and smart heating systems for homes.

That is the whole aim, as far as I can see, of the smart and flexible grid that we constantly talk about. To attach one of these devices is exceptionally difficult and I have never had one successfully connected personally, nor have colleagues or associates. So a big piece of the puzzle is missing in using this data for something that is really smart, rather than just for billing. Billing is clearly important, but the use of the best-value data for the consumer appears to be the missing part of the puzzle. I think that would also push some buttons to help develop the interest in smart meters and get them into people’s homes.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change)

We have been talking about the other end of the process—the extent to which it will be possible to use smart meter data in aggregate for all sorts of purposes in smartening the grid; developing different tariffs and different resiliencies in grids with knowledge of real-time flows and so on. What sort of penetration of the system do you think is necessary for that data to be usable? Is it a full roll-out, a partial roll-out, 60%, part of the country covered, not other parts? What would be the optimal patternQ ?

Dr Richard Fitton:

I think it is the same with any technology. The greater the penetration geographically across different types of people and property and heating systems, and the greater the spread the better. It is a very difficult question to answer. My thought has always been, when is the roll-out complete; when do we say it is complete? Is it at 90%, or 80%? It may be that 10% of people—I have just made that figure up—will not let you through the door. When is it complete; when do we rubber stamp it?

Dr Sarah Darby:

Yes, I think there will always be a section of the population who do not stand to gain very much from having a smart meter; the demand is perhaps very low and there would not seem to them to be a great deal of point. Their impact on the system would also be very small, so I would say yes, we are probably talking in the region of 80%. You would have garnered pretty much all the benefit by then.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change)

Q Does the viability of the aggregate data degrade just marginally as the percentage point of distribution goes down? Alternatively, is there a point at which you say, “Actually, this information is useless” because the penetration is so patchy or incomplete that you cannot reliably use it for the purposes that we hope it can be used for in the future?

Dr Sarah Darby:

I guess that would depend on what you wanted to use it for.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change)

Q One example would be predicting in real time what flows are going on in various parts of the grid, so you can manage the grid’s capacity versus its possible strength in the future in an optimal way.

Dr Richard Fitton:

I could not give an educated answer to that. I simply do not know the penetration level that would be needed, but I would say 80%.

Dr Sarah Darby:

Who would account for a lot more than 80% of the actual consumption or the actual amount of electricity being fed in?

Photo of Clive Lewis Clive Lewis Labour, Norwich South

Q In terms of the versatility of the smart metering data that you touched on, Richard, it was quite sobering to hear you say that that has never worked for you. We can probably quite accurately talk to suppliers about the build and so on, but I am thinking of all the other things, such as the heating being attached to movement sensors so that it goes off when you leave the house and, by talking to your phone, switches back on when you are due to arrive back in 15 minutes. Google can do that already.

Obviously, the cheapest and greenest energy is the energy that we do not use, so that is fantastic on the demand side, which we do not focus on enough in this country. You are saying that that is not really working. I wonder whether this legislation is the place where this will happen. Is there anything in this legislation that you feel is sufficient to give you encouragement that that will happen in the future, or are there holes in it that mean that those data and that potential will never be realised?

Dr Richard Fitton:

There is nothing in the Bill that would cover that element. There is guidance around the periphery of the Bill and the licensing Acts and things like that, but there is nothing specific.

Dr Richard Fitton:

The consumer needs a route to access their real time data from the home area network. That needs a procedure to be put in place because that is the keystone.

Dr Sarah Darby:

I wonder whether we are a little at cross-purposes here, because I am thinking of the in-home display as the way that the customer accesses that information. But I think you are talking about stuff talking to stuff.

Dr Richard Fitton:

I am talking about stuff talking to stuff. The home area network—I will not do the thing with the cups—is provided in the smart meter itself that things can attach to. The consumer access device talks to that via a Zigbee principle and says, “Here is your data.” You can stream it, save it, and pass it on to other appliances.

Photo of Clive Lewis Clive Lewis Labour, Norwich South

Q When we talk about something that is at the heart of the demand side of the fourth industrial revolution, I guess you would expect us to be planning some years ahead to be able to make use of emerging technologies. What you seem to be saying at the moment is that this Bill does not do that. It is quite limited in its purview.

Dr Richard Fitton:

Technology developers I am working with now are trying to make that work. That is how savings can be brought about. It helps things like grid smoothing and demand-load shift.

Dr Sarah Darby:

I would add that it is important to consider stuff talking to people through the display. When people ask for a smart meter, or when they are getting one, the bit they are really interested in—almost always—is the display. The single most powerful reason people have for wanting or appreciating a smart meter is that they get visibility of their energy use.

The knock-on effect from that is also very important in terms of the future energy outlook. For example, no amount of smart technology will insulate your walls for you. There are still a lot of unsmart things that need to be done to our building stock in this country, for example, that the smart revolution will not actually do.

On the other hand, if smart technology can be used to communicate to people to get them thinking more about what can be done, and if it can be combined with advice and guidance so that they have clearer ideas about what options are open to them—if there is support for the metering in that way—a lot can be done to take us forward. I want to emphasise that aspect of it as well, in terms of communication.

Dr Richard Fitton:

We are carrying out that type of work with the International Energy Agency—taking in this data and processing it in such a way that building physics can be incorporated with the algorithm so that we can then say, “These buildings are likely to need some type of intervention to make them cheaper, more fuel efficient and more comfortable for the occupant.”

Photo of Douglas Ross Douglas Ross Conservative, Moray

Dr Darby, in the information you provided you said that it is important to conduct the remaining smart roll-out well rather than do so at speed, and then you gave three main reasons for that. I am not sure whether you were here for the evidence session this morning, but I raised Q concerns about my own constituency in Moray in the north-east of Scotland, and other more remote and rural areas, where people want smart meters but the installation is not happening particularly quickly.

One of your main concerns about rolling out quickly is that customers will feel pressured into adopting smart meters; yet I have constituents who want smart meters but cannot get them. For example, a village hall, the Houldsworth Institute in Dallas, has had people out to try to get one installed, but there is no mobile phone reception—it is in a blackspot. How do you think your evidence relates to people who want to see the roll-out far quicker, but are hampered because the technologies do not allow it or we do not have enough installations happening in the more remote and rural areas compared with the more urban areas?

Dr Sarah Darby:

That would be an argument for paying special attention to such areas and thinking how that could be addressed. It does seem to me that the strength of the programme so far is that it is voluntary, and that the early learning is being done by people who are already well-disposed to it and will perhaps put up with any kind of teething glitches that go on. They will adapt and then, if they are satisfied, will pass the word on to others so that others will want a smart meter too.

If we speed up, the amount of attention paid to the installation process will almost inevitably drop off. There will be pressure on installers just to go into a building, put the kit in and get out, and not to spend time doing the things that customers have said they appreciate about the roll-out so far: having someone who will explain stuff to them and show them how to use the equipment, and having that level of support to the installation. If we lose that through speeding up the whole process, the programme will suffer greatly in the long run.

Photo of Douglas Ross Douglas Ross Conservative, Moray

Q The concern I am trying to get at is that constituents such as mine will eventually get frustrated with always being at the end of the queue. If we cannot accelerate the process at all and suppliers continue to go for doing mass numbers in more urban areas, we have a real risk that the communities that would benefit the most from these smart meters will always be at the end of the queue. If it takes so long to get to them, we might actually disenfranchise so many people.

Dr Sarah Darby:

Yes, they might get turned off.

Photo of Douglas Ross Douglas Ross Conservative, Moray

Q So you could accept that as being a reason in some cases to accelerate, if possible, without compromising the other elements?

Dr Sarah Darby:

Yes—without compromising the programme as a whole.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

Q Do you know what happens to all the old meters? How are they disposed of when we put in these new smart meters, and what happens to the smart meters when they come to the end of their life? Has BEIS issued any guidance on how those should be recycled? I guess I am wondering whether there is a landfill somewhere full of old smart meters or old non-smart meters.

Dr Sarah Darby:

You would have to ask BEIS about that.

Dr Richard Fitton:

I remember seeing in the trade press that some consideration is being made of recycling existing meters, but I do not know. Again, it is an excellent sustainability—

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

Q So you do not know what will happen to the old ones, or what will happen to smart meters when they come to the end of their lives?

Dr Richard Fitton:

Or indeed to some of the smart meters being installed today. I have swapped suppliers and they have taken away new smart meters, four or five months after. I do not know; sorry.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

Q I was interested in your comment about consumer access devices, following up on your comment that you have never had one that connected to a smart appliance or device. Is that because the SMETS 1 meter does not have adequate functionality to do so? If so, does that mean that we have an estate of some 7 million SMETS 1 meters in this country that are not future-proofed to allow us to take full advantage of the potential of a smart grid/smart economy?

Dr Richard Fitton:

I believe, as the Minister has mentioned, that SMETS 1 are to be upgraded to SMETS 2 starting at some point next year. There is no particular technological challenge in connecting consumer access devices to SMETS 1 meters, but you can sympathise with some people who might be waiting for the full SMETS 2 systems to be installed. That seems commercially obvious to me.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

Q Are you seeing evidence to suggest that the SMETS 2 meters will be easier?

Dr Richard Fitton:

We have been told.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

Q Then that will be the case.

Dr Richard Fitton:

Absolutely.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

Q To this point, is there any evidence that smart meters change consumer behaviour across the board, other than people looking at the visual display?

Dr Sarah Darby:

There is evidence that people are making alterations in their everyday behaviour and that over time, from how the figures are going, they are thinking more about investing in energy efficiency. I say that because the evidence is that the energy-saving effect, compared with people who do not have smart meters, rises gently over time. You would think that people might be very keen at first to go around switching off all the lights and so on, but would then get a bit bored with it, and the effect would fall off, but that does not seem to happen. If you look at the large numbers of people we have data for over a long period of time—a few years—you see a gradual learning effect.

It is quite a small effect in aggregate. After the first year of roll-out, I think it was 1.5% or 2% for gas and electricity. The last I heard, which was May 2016, British Gas was talking 3% to 4% after a few years, on the basis of several hundred thousand customers. So there is a gradual learning effect. That is, of course, an average, and it will vary a lot between people. For some people, you may get quite a substantial effect; for some people, none at all.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change)

Q Briefly, on that particular issue, one thing that smart meters may well do—we have heard that they do—is enable you to use energy more effectively. To paraphrase Dr Fitton, although a smart meter might tell you very smartly, “This is exactly how the energy you are using goes out through the roof and windows of your house and through your walls,” and that may well be useful information, it does not actually make your home any more efficient. Is there any evidence that smart meters can lead people to go that step further, or do we still need smarter meters that tell you, “Actually, your house is really inefficient; what you ought to do is make your house more efficient, and then your smart meter will work even better”?

Dr Sarah Darby:

If you really want to see how heat is leaking from your home, you want thermography. When people are shown thermal imaging of their homes, it can have quite a dramatic effect, because you can absolutely see where it is leaking out. That is the most powerful way of doing it. A smart meter can just tell you, “This is what you are using now; this is what you used last week.” You remember, “Oh, yes. Last week we had the whole football team round having hot showers,” or something like that. You can link cause and effect to some extent. This is what you used, compared with several months ago. You can see seasonal effects and so on. You can work things out.

Ideally, you need to be able to put all that together with other sources of information. Another thing we find is that when people get their feedback from different sources, that has more effect than if they are getting it from just one. Ideally, you would see the smart meter information as part of a rich mix that people get gradually more familiar with and that they talk about with other people; they can find out what to do with that information and try to find ways of using it.

Photo of Giles Watling Giles Watling Conservative, Clacton

One concern you mentioned, Dr Darby, was too much of a rush to roll out the smart meters, because installation might be compromised. Secondly, and interestingly, you said that you feel people might be pressured into adopting smart meters and, therefore, not engage in the process; I think I have read that right. Do you have any evidence that that might be being addressed—that people are beginning to understand the benefits and the process involvedQ ?

Dr Sarah Darby:

I have not heard of any serious push-back on this. I have heard one or two accounts anecdotally that people are feeling under a bit of pressure from their supplier that they really ought to be getting a smart meter now. One woman said to me she was holding out for as long as she could. She was not particularly against a smart meter but she was curious to see how long the supplier was going to keep pushing her.

Photo of Giles Watling Giles Watling Conservative, Clacton

Q There seems to be some confusion out there, inasmuch as people are getting SMETS 1 and then they want SMETS 2, and they are not sure whether one will do the other. Are we getting that information out there to the people, who are the customers after all? Are we being effective enough?

Dr Sarah Darby:

The picture is rather mixed. This is, after all, mostly in the hands of the energy retailers and they have different ways of going about it.

Photo of Giles Watling Giles Watling Conservative, Clacton

Q So that is something we need to address, in your view.

Dr Sarah Darby:

Yes, I would think so.

Time is against us, so Mr Grant’s will have to be the last question.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock

I will take a quick virtual imaginary journey to November 2022 when we have maxed out on the installation of smart meters, everybody is happy and they are working. Notwithstanding the consumer benefits, what would be the benefits to the wider environmental community? What would be the environmental benefits in relation to carbon reduction from the installation of a full roll-out of these meters? Or is there no benefit whatever to the environmentQ ?

Dr Sarah Darby:

Potentially, this is part of a very big transformation of our energy system. If we are relying heavily on renewable supply, particularly for electricity, we have to be able to match demand with supply in real time very effectively. The smart meters are part of making that possible. That means effectively that they are part of the transition to a renewables-based energy system with very carefully managed demand and supply together. The environmental benefits of that would be very considerable.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock

Q So there will be a considerable environmental effect.

Dr Sarah Darby:

Yes.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock

Q We are all fond of our environment and the planet, and we need to keep them for generations to come, so that is a stepping stone on a very positive journey.

Dr Sarah Darby:

Yes, I would think so.

Dr Richard Fitton:

I would add one point. The smart meter is a tool as well and from that tool we can hang things. With it comes this whole idea of being able to attach more efficient things for your home, such as appliances and heating systems. Once it gets in the house, people can then start to do smart things with it. You have got to consider those savings as well as the generic smart meter savings.

Mr Western: 20 seconds.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

The confluence of “prosumer”—producer and consumer: do you think the Bill addresses that, or is there an opportunity to have gone a bit further with it, to change behaviourQ ?

Dr Sarah Darby:

The specification is already there to allow for prosumption, for people who are generating—

Order. I am afraid I have no choice. That brings us to the end of the time allotted for the Committee to ask questions. I am sorry to cut you off in your prime. Perhaps, as the question has been brought in, you will see each other after the Committee. I thank you both for being our witnesses this afternoon and, on behalf of the Committee, for giving us the benefit of your wisdom. Line-by-line consideration of the Bill will begin at 11.30 am on Thursday in Committee Room 12.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till Thursday 23 November at half-past Eleven o’clock.

Written evidence reported to the House

SMB 01 Anonymous

SMB 02 Mr J R Harwood

SMB 03 Smart Energy GB

SMB 04 Energy Networks Association

SMB 05 Energy UK