Spiralling energy prices and Government-imposed initiatives and targets for improving energy efficiency are making both consumers and businesses ever more aware of the amount of energy they are using.
Government initiatives, like the recent announcement to install smart meters in over 26 million UK homes, and Part L of the UK Government’s Building Regulations Act encourages accurate measurement of energy consumption. For businesses and industrial end users in particular, the challenge to date has been to identify the most appropriate way to fulfil this obligation.
The consensus of opinion is that smart meters are increasingly providing the answer. These meters provide users with the technology to gain an immediate and accurate picture of their energy use, which can be employed to encourage a change in energy consumption behaviour.
The underlying rationale behind Government initiatives, like Part L, is that if users are made responsible for monitoring their energy consumption, they will take more action to reduce their usage and employ more energy efficient practices. To date, however, it has not been easy for either consumers or businesses to do this. If the home or building owner wants to get a better idea of their next bill, some complicated maths and knowledge of multiple tariff rates is required.
Energy bills for most buildings are either the result of a meter reading by the supplier, or more commonly, are based on an estimated reading made as the result of the meter reader being unable to gain access to the meter. According to Energywatch, at least 7 million domestic customers receive estimated bills, which can result in inaccurate charges to the customer and affect the ability of energy suppliers to maximise their revenue collection.
Smart metering technology offers a solution. Smart meters, such as ABB’s DELTAsingle electricity meter, are able to show the kWh consumption figure on an LCD screen.
For users, the benefits include being able to monitor consumption levels at different times on a regular basis, helping to identify trends. This particularly benefits SMEs, as they are able to get a more accurate idea of their energy consumption before their bills arrive, and be able to take steps to try to minimise future energy usage.
Another key benefit of smart meters is that there is no need for them to be physically visited by a meter reader. Depending on the meter’s capabilities, data can be collected remotely, using bluetooth, a pulsed output or wi-fi connectivity. This would be particularly beneficial when collecting domestic meter data, as homeowners are often not at home to provide access.
Employing energy tariffs
More sophisticated smart meters can also be connected to the Internet, making it possible to include tariff control functionality. This could potentially enable consumers to switch between tariff rates according to normal or peak periods or to switch between tariffs offered by different suppliers. For businesses in particular, this provides the ability to better manage energy costs by being able to monitor the effect of existing practices at different times of the day.
Furthermore, by connecting smart meters to an Ethernet, business users are able to monitor spending at different office locations, enabling them to identify areas of excess consumption, and encourage best practice schemes across different sites.
Increasing adoption of smart meters
According to Energywatch, the estimated cost of conducting a wholesale installation of smart energy meters into just domestic properties in the UK is approximately £86m. This is on top of the £800million a year already spent on replacing, installing, maintaining and reading existing meters. Energywatch is encouraging the installation of smart meters as part of suppliers’ existing replacement programmes, growing the base of installed meters gradually. However, debate continues as to who should bear the cost of installing smart meters into homes and other buildings and facilities around the UK.
Utilities argue that it would be difficult for them to recoup the costs of installing the meters due to the de-regulated nature of the UK utilities industry, where consumers can move easily between suppliers. This makes it harder for suppliers to pass on the cost of installation to homeowners who can switch to a competitor after having a smart meter installed.
In Europe, the adoption of smart meters is greater as competition is less intense and government measures and intervention have helped encourage installations.
However, it can be argued that having smart meters installed into consumers’ homes may actually increase trust between consumers and their energy supplier, as they would be able to better understand the information displayed by their meter and thus have a more accurate picture of their costs. It is anticipated that consumers would save up to £35 per year due to changes in consumption behaviour as a result of using smart meters, and consumption would be reduced by between 3% and 15%. For utilities, there is also the prospect of maximising their revenue collection through being able to more accurately bill customers based on actual, rather than estimated, energy consumption.
For businesses, the case for installing smart meters is based around cost versus benefits. The benefits, in terms of reduced energy costs, appear to outweigh any short-term costs involved in installation. Smart meters will enable businesses to invest in technology that will help reduce consumption in the long-term, by providing accurate measurements of energy use, enabling businesses to act upon the instant information supplied.
Commercial building owners can also benefit, as they will be able to get separate readings for different occupants, and monitor their consumption levels accordingly.
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