The UK’s smart meter rollout is a government “IT disaster waiting to happen”

SUMMARY:

The Institute of Directors has released a report that calls into question the benefits of a national rollout of smart meters and urges the government to reconsider.

 

smart meterThe government’s national smart meter rollout has been slammed by the Institute of Directors (IoD), which has released a report that calls for the scheme to be “halted, altered or scrapped” to avoid yet another costly public sector IT disaster.

The smart meter rollout is set to cost the government £10.9 billion and aims to get around 50 million smart meters fitted in over 26 million households across England, Scotland and Wales by 2020. It has been estimated that the meters could bring energy savings of £17 billion.

However, the IoD has called the benefits into question and has said that the system itself is vulnerable to hacking and cyber attacks, which could put huge pressures on the national grid.

The IoD’s warning comes shortly after a report released by the UK’s Energy and Climate Change parliamentary committee, which also raised concerns about the project and claimed that it could be headed for “costly failure”.

I asked at the time of the parliamentary report release, whether or not the national rollout was going to take too long and that the government was going to be outpaced by innovation in the private sector, which is targeting homeowners with internet enabled energy meters.

There were some counter-claims that the private sector wasn’t allowing for energy companies to aggregate demand in the back-end, which are valid arguments, but I still question whether a national infrastructure rollout is the right approach.

But the IoD’s report highlights a number of concerns, which include:

  • Despite an EU Directive (which urged member states to provide consumers with better billing), 11 nations have ruled out electricity smart meters and only 5 are pushing ahead with the 2020 target for gas meters. In contrast the UK has “gold-plated the Directive”, according to the IoD.
  • The government refuses to publish any of the reports on the programme by the Major Projects Authority.
  • The cost-benefit analysis conducted by the Department for Energy and Climate Change is “so heavily redacted as to be almost unreadable.”
  • The Smart Meter network would be vulnerable to cyber-attack and disruption.
  • Introducing time-of-day pricing to shift consumer demand will only work with price increases that are not politically realistic. Retail consumers really can’t change their energy consumption that much.

iod logoDan Lewis, senior infrastructure advisor at the IoD, labelled the cross-political backing for the project in Whitehall, which he believes should be a national scandal, a “conspiracy of silence” among politicians in thrall to “big ideas and even bigger budgets”. Lewis said:

The professed aims of the Smart Meter programme are laudable, and we all recognise the benefits of reducing consumption and increasing energy awareness. But there is little credible evidence to suggest that a scheme of this size and complexity will achieve those goals.

This scheme is far from smart. The dishonourable roll call of government IT projects that have haemorrhaged vast amounts of taxpayers’ money to no discernible effect needs no further additions. Consumers will not forgive the already unpopular energy companies for a costly programme which fails to deliver and ends up making them poorer. Without a change of direction, whoever wins the general election is at risk of overseeing a spectacular failure in the next parliament. They would be well-advised to consider a fresh start.

Consumers do not want the meters, they have proved a costly mistake in countries where they have been rolled out, and the Government is withholding key details about their costs and benefits. This makes for a programme which is devoid of credibility, over-engineered and mind-blowingly expensive.

The IoD is calling for the next incoming government – which will be decided sometime after the 7th May election, if the predictions are right and we are heading for another hung parliament – to consider the following changes:

  • Stop the smart gas meter deployment– only a handful of EU nations are planning to deploy gas smart meters by 2020. This would save billions of pounds.
  • Remove the requirement for an in home display – expected to cost £800m in total, the displays will be out of date in a few years. Far better to connect smart meters to people’s phones, tablets and PCs
  • Limit the rollout to homes with high energy usage – those who use more than 5,100 kWh of electricity, and 23,000 kWh of gas a year have much more to gain. This would reduce the scale of the rollout by 80%.
  • Abandon attempts to stretch the rollout to tower blocks – the most technically challenging aspect of the project with the lowest potential returns. This would remove seven million homes from the scheme.
  • Make the programme genuinely voluntary – offered to customers at their own expense, not subsidised by all.
  • Abandon the whole programme and develop a smart phone app instead – look into developing a smart app which would convert a photo of their current mechanical meter into a meaningful number for the suppliers. This would cost tens of thousands of pounds rather than billions.

Smart Energy GB, the independent body set up to publicise smart meters, has unsurprisingly hit out at the IoDEnergy saving and said that its proposals would reverse the modernisation of Britain’s energy system and take it back to an “analogue dark age”. Sacha Deshmukh, chief executive of Smart Energy GB, said:

It is extraordinary that the IoD wants only one in five of the country to use modern technology to buy their gas and electricity, and that they think that this one in five should only be those who are rich and live in large houses. They are happy for the rest of the country to be left behind.

The IoD does not understand what’s needed to secure Britain’s energy infrastructure for the future. They are suggesting that the future of our energy supply should rely on an amateur solution, with old and new technology muddled up and people texting in photos of old meters to fill in the gaps.

The smart meter roll-out must be for everybody. It will only deliver the national transformation Britain needs if every home is part of this national upgrade.

Smart Energy has said that Britain shouldn’t just focus on larger homes, with multiple tenants for the rollout, as suggested by the IoD, as this ignores millions of people in smaller homes. It also claims that the economies of scale can’t be gained without the inclusion of all properties. Equally, it doesn’t believe that people should be left alone to make use of the internet and their smartphones to collect and deliver data, as there are millions of people in the UK that don’t use either.

Valid points – although I’d question whether a national infrastructure rollout for 60 million plus is right, to just support 13 million people who don’t have smartphones or access the internet. That’s not to say that they shouldn’t be supported, but perhaps an alternative hasn’t been considered.

Equally, the IoD’s idea of developing a smartphone app that allows consumers to take a photo of their current mechanical readers, which converts the image into meaningful numbers, which are then matched to the supplies’ servers who match it with precise bill readings, which are fed back to the phone/tablet/cloud/PC, was scoffed at by Smart Energy GB. It said:

We are genuinely baffled by this proposal. Smart phone apps cannot work without data – and energy data can only be collected by a smart meter. The IoD seems to be proposing an alternative national roll-out of webcams pointed at meters, which simply would not work.

It seems to me from that response that Smart Energy GB didn’t understand IoD’s alternative proposal at all, which is slightly worrying. But anyway….

My take

moneydownthedrainThe UK doesn’t need a national IT project failure under its belt, given that we are still reeling from (and paying for) the effects of the NHS’s National Programme for IT. Unfortunately, my experience tells me, that usually with these things, there is no smoke without fire.

It has all the elements of those projects that have failed in the past – multi-year contracts, multi-billion pound deals, huge scale, large suppliers, secrecy around details, benefits expected over long periods.

Almost everywhere else in government, technology projects are now working in the exact opposite way to this approach. For good reason.

However, it doesn’t seem like the appetite for this project is dissipating from the political parties, so it looks like we are just going to have to plough ahead and hope for the best.

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    1. says:

      Interesting you compare this to the NHS approach, since I actually looked at that architecture years ago and pointed out that the architecture was not actually aligned to the desired outcomes. This is a deployment that is taking place in an area undergoing dynamic change. Flexibility needs to be at the core of any of the solutions deployed, since the devices, analytics and even ‘business’ drivers are changing continuously. I have no doubt about the need for multi-year contracts and scale… but there are new approaches available to address that, so you have rigor without the rigidity. New ideas and approaches will be require in both the services, contracting and governance that can both internalize and embrace the constant change that will be taking place.