Guidance

Energy Security Bill factsheet: Smart metering

Updated 1 September 2023

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Smart metering will generate total bill savings to households of £5.6 billion over the course of the rollout, giving consumers the information they need to save energy while underpinning a flexible energy system that enables us to use more home-grown renewables, increasing our energy security.

Why are we legislating?

This measure will allow the Government to continue to drive industry progress on the smart meter rollout, ensure energy suppliers’ smart meter installation targets remain robust and effective throughout the four-year Targets Framework, and ensure we maximise the enduring benefits to Great Britain of having a market-wide smart metering system after 2025.

The smart meter rollout is a national infrastructure upgrade that is enabling the cost-effective delivery of net zero greenhouse gas emissions and increasing our energy security by reducing the need for imported fossil fuels to meet peak demand.

Smart meters are modernising the energy system by bringing an end to manual meter reads and estimated bills, enabling prepayment customers to top-up remotely without leaving home, and providing consumers with near-real time information which they can use to manage their energy use and cut their bills to help with the cost of living.

With over half of all gas and electricity meters in homes and small businesses now smart, they are the norm in Great Britain. The Government has introduced a new four-year policy Framework that sets energy suppliers minimum annual installation targets to further drive rollout investment and momentum.

How the Bill will achieve this

Under section 88 of the Energy Act 2008, and associated sections of the Electricity and Gas Acts, the Secretary of State has powers to modify energy licence conditions and industry codes for the purposes of the rollout of smart meters. These powers are currently due to expire on 1 November 2023. This measure provides for these powers to continue to be available to the Secretary of State for a further five years until 1 November 2028.

FAQ

When will the rollout be finished?

The Government wants as many households and small businesses across Great Britain as possible to benefit from smart metering. Therefore, minimum annual installation targets for energy suppliers were introduced at the beginning of 2022 to drive rollout momentum.

This Targets Framework will be in place until the end of 2025, with installation targets for the final two years of the policy to be set during 2023.

Is an extension of delegated powers until 2028 necessary?

Yes. This measure will ensure that Government can continue to drive the rollout of smart meters across Great Britain by enabling us to effectively deliver the current Targets Framework and ensure we maximise the long-term benefits of a market-wide smart metering system following a post-implementation review of the rollout after 2025.

What does the rollout cost consumers?

There is no upfront charge to domestic consumers for having a smart meter installed. Energy suppliers recover their costs from their entire customer base, just as they do with traditional metering. Metering costs represent a small proportion of customers’ energy bills.

Smart meters are bringing an end to manual meter reads and estimated bills, enabling prepayment customers to top-up remotely without leaving home, and providing consumers with near-real time information which they can use to save energy and cut their bills. There is robust evidence from the rollout to date that consumers are achieving sustained savings using their smart meters and In-Home Displays of 3% for electricity and 2.2% for gas credit. This is particularly beneficial at a time of rising global gas prices.

Smart meters also reduce ongoing costs to energy suppliers and the wider energy system and are set to deliver an overall net benefit of £6 billion to the country

Background

The smart meter rollout is a major delivery programme spanning Government and industry, replacing traditional analogue gas and electricity meters with smart meters in homes and small businesses across Great Britain. Unlike traditional meters, which simply register a running total of energy used, smart meters can record half-hourly price and consumption data and provide automatic meter readings to a consumer’s energy supplier.

Domestic consumers are also offered an In-Home Display (sometimes referred to as an IHD), which shows energy usage information in near-real time, expressed in pounds and pence. An installation also includes a communications hub, which allows the smart meters and IHD to communicate with each other and links the smart metering devices to the secure national smart meter network.

Smart meters enable technologies such as solar PV, heat pumps and EVs to be efficiently integrated into homes and the energy system as they provide access to innovative smart tariffs, allowing consumers to save money by using energy away from peak times or when there is excess clean electricity available.

Further information

The following documents are relevant to the measures and can be read at the stated locations:

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