After just 6 years, the communications technology that was intended to support 60% of the Smart metering population for 20 years is at risk. As the Data & Communications Company (DCC) states in their latest Business and Development Plan ;

“The 2G/3G network will reach obsolescence in around 2030. The existing 2G/3G networks, in use in the South and Central regions, have been superseded by the introduction of 4G networks, with 5G on the horizon. There is a high probability that the older networks will no longer be supported or maintained in the medium term and DCC will need to modernise its communications provisions accordingly.

SMETS1 and SMETS2 assets have a 15-year life, so the earlier an enduring technology can be made available in the ecosystem, the lower the amount of scrappage and the longer the economic life of assets.”[1]

The potential impact to installed Smart Meters

This could mean that all SMETS2 meters currently installed will require a replacement communications hub before the end of their natural life. The same holds for any that are installed going forwards, before an “enduring technology” is available. SMETS1 meters that were installed since 2016 will be also be affected. Impacted households and businesses will see their hardware costs for the Programme increased and overall benefits reduced. If obsolescence occurs earlier – in 2025 for instance, then the affected population grows significantly, as does the loss of benefits.

3.75 million homes could be at risk of being unable to unlock energy saving benefits

Up until now, DCC have not recognised this as a risk, stating that their contract with Telefonica, Communications Service Provider (CSP) for the Central & South regions, affords protection until 2033.[2] Perhaps for this reason, BEIS did not acknowledge it in their latest Cost Benefit Analysis for the Roll-out (September 2019).

We previously calculated and highlighted to BEIS that the “scrappage” from this exact issue could cost the Programme up to £2.2bn, which would erode the cost-benefit ratio significantly.

Moreover, an ongoing “Holistic Problem” reported by the DCC suggests that 1,700 meters are dropping off their Home Area Network (HAN) a day, with 75% failing to reconnect. At this point the meters are effectively dumb, with suppliers unable to connect remotely and consumers billed on estimates. If this issue pervades, then by the end of roll-out up to 3.75 million homes could be affected, equating to potentially 7.5 million early meter replacements and £1.13bn of additional cost. [3]

Costs are out of control

This is just one example of countless “DCC Incidents” that are reported to industry daily. Fixing these problems will be expensive, something that the business case is already extremely sensitive to. Add to all the above, additional development costs for the DCC to support Market-Wide HH Settlement, EV Charging and Faster Switching (to name a few) and it becomes clear that overall costs are completely out of control.

We’ve repeatedly called on BEIS and Ofgem to reduce costs by restricting the DCC’s activity to delivery of their core service and to improve policy by allowing suppliers to offer all their business customers a choice between Smart and AMR. In light of the above, it’s vital that all business consumers, including microbusinesses, are offered an informed choice of metering by their supplier. Costly and unnecessary meter replacements are the last thing a small business needs whilst recovering from the coronavirus lockdown.

You can read our analysis of the smart meter programme which underlined serious flaws in the government’s own analysis including the costs of running the central data and communications hub, the DCC, which have more than doubled to £4.14bn and threaten the viability of the rollout. Click here to find out more

[1] DCC, DCC Business and Development Plan 2020-21 – 2024-25 (draft), 5.2.3, pp24-25, 15 May 2020, https://www.smartdcc.co.uk/media/3874/bdp-2020-draft-for-customer-consultation.pdf

[2] Richard McCarthy, BEIS Committee Inquiry: Rolling out Smart Meters Follow-up, 30 October 2019 10:50:55 – 10:51:15, https://parliamentlive.tv/Event/Index/06508acb-2eeb-4cd4-bad0-6f378bb457a0

[3] Current issue trajectory = ~230,000 households a year based on ~2m total households. The total roll-out will be ~30 million homes, 230,000 x 15 = 3.75m. Each household has two meters, 3.75 x 2 = 7.5 million. Replacement hardware cost assumptions: £345 per household (£345 x 3.5m = £1.13bn)