Proving the Business Case for the Internet of Things

Institute of Directors joins attack on UK smart meter programme

Steve Rogerson
April 1, 2015
 
The UK smart meter programme is a disaster waiting to happen, according to the Institute of Directors (IoD), which is calling for the scheme to be “halted, altered or scrapped” to avoid an “unjustified, over-engineered and expensive mistake”.
 
In a report, the IoD described the plan as “a potentially catastrophic government IT disaster”. The IoD has branded the £11bn scheme, the largest government IT project in history, as “unwanted by consumers, devoid of credibility and mind-blowingly expensive”. The business group calls on an incoming government to review the project and “consider a fresh start”; the UK general election is just over a month away.
 
The smart meter programme, which has the target of installing 100 million new pieces of kit in homes and business by 2020, was initiated in 2008, following an EU Directive, and confirmed by the Coalition Agreement in 2010. The report’s author, Dan Lewis, senior infrastructure advisor at the IoD, calls the political consensus “a conspiracy of silence among politicians in thrall to big ideas and even bigger budgets”.
 
He continued: “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."
 
The IoD points out that, despite the EU Directive, 11 nations have ruled out electricity smart meters and only five are pushing ahead with the 2020 target for gas meters. In contrast, the UK has gold-plated the directive. It also criticised the government for refusing to publish any of the reports on the programme by the Major Projects Authority. And it said the cost-benefit analysis conducted by the Department for Energy & Climate Change is so heavily redacted as to be almost unreadable.
 
The smart meter network, claimed the report, 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.
 
The report places the rollout of smart meters within the context of previous large-scale IT fiascos, including the infamous NHS national programme for IT, the e-borders programme and the BBC’s digital media initiative. Furthermore, a recent survey shows that 80 per cent of IoD members rate the ability of government to manage large IT projects as “poor or very poor”.
 
“This scheme is far from smart,” said Lewis. “The dishonourable roll call of government IT projects that have haemorrhaged vast amounts of tax payers’ 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, he said, did 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,” he said. “This makes for a programme which is devoid of credibility, over-engineered and mind-blowingly expensive. Perhaps the only reason why the cost and ambition of this project has not become a national scandal already is because of a conspiracy of silence among politicians in thrall to big ideas and even bigger budgets."
 
A key area of concern outlined in the report is that the technology behind the scheme is untested and some parts will likely be obsolete by the scheduled switch-on date of 2020. The wireless standard, Zigbee, which is being developed for smart meters, is complex and expensive compared to the better-known Wifi or Bluetooth. Each property will also get an in home display, but there is scant evidence of consumer demand. British Gas found that only 60 per cent of customers looked at their displays even once a month a year after installation.
 
An incoming government, it said, should 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. It said it should remove the requirement for an in home display – expected to cost £800m in total and the displays will be out of date in a few years. Far better to connect smart meters to people’s phones, tablets and PCs.
 
The rollout, it said, should be limited to homes with high energy usage – those who use more than 5100kWh of electricity, and 23,000kWh of gas a year have much more to gain. This would reduce the scale of the rollout by 80 per cent. It should 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.
 
And the programme, it said, should be genuinely voluntary – offered to customers at their own expense, not subsidised by all.
 
Finally, it said the government should consider abandoning the whole programme and developing a smart phone app instead – look into developing a smart app that 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.
 
“We know that an incoming government will be under intense financial pressure, having to find further cuts to public spending,” said Lewis. “This does not fit well with increasing energy bills for a project that has such unrealistic targets, such large costs and such uncertain benefits.”