If anyone needed convincing about the insecurity of Britain’s energy policy, then the news that some of our biggest wind farms were last week producing just enough power to boil a few hundred kettles should help.
It is the obvious flaw in the system: when the wind does not blow, the turbines either produce no electricity, or even become net consumers to keep themselves going. Supporters of the rush for renewables say that August is typically a month when winds are light – but no more so than June, July or September. They argue that most of the time, wind turbines produce clean energy – but the question for an advanced economy like ours is whether they produce anything like enough, especially in view of the subsidies they receive.
However, help is at hand. We are all going to be equipped with smart meters, so we will know how much energy we are using and can adjust accordingly. Advertisements to this effect from the big power suppliers are appearing everywhere. So, this must be a good idea, mustn’t it? Instead of trying to decipher the numbers on an ancient electricity or gas meter buried deep in the Stygian gloom of a broom cupboard, we will all have state-of-the-art digital display units telling us that someone has left the TV on, or that the daughter of the house is drying her hair upstairs.
The smart meter project will be one of the most extensive infrastructure programmes ever seen in the UK, with the aim (set by the EU) of installing them in 80 per cent of homes and small businesses – some 52 million buildings – by 2020. At one point, it was going to be compulsory to have one, but the Government thought this would be an intrusion too far. Still, with the suppliers pushing them like mad, most of us are going to get a smart meter whether we like it or not.
Earlier this month, the Department for Energy and Climate Change (DECC) announced the preferred bidders for this monumental task, which will involve the removal of millions of existing meters and their replacement with electronic devices able to communicate remotely with suppliers who can take readings at regular intervals. In theory, this should mean no more estimated readings that leave you £300 in credit with your gas company, or alternatively facing a higher-than-expected bill.
I can see the advantages of metering. Yet I have a sneaking suspicion that it is going to cost me more, not less.
True, at the moment, trying to work out the best-value energy suppliers is almost impossible. Our home is supplied by Marks & Spencer, for goodness sake – the result of an encounter in one of their food stores between my wife and a salesman promising all sorts of goodies, including discount vouchers that we only received after chasing them up. Looking at our bill now, it is no cheaper than when we were with British Gas.
So a smart meter seems like a good idea: customers can automatically receive favourable tariffs that reward them for using energy during off-peak periods, though I can’t see many doing the laundry at 3am.
Yet this programme is going to cost some £12 billion – and the bill is to be passed on to the consumer. So if we really are to be up on the deal, we must be about to get some pretty good bargains as a result. Indeed, DECC estimates it will deliver overall benefits of £18.8 billion, giving a net gain of almost £7 billion.
Still, a number of energy experts aren’t convinced. Alex Henney, who worked in the electricity industry for many years, tells me that when a group of consultants carried out a cost-benefit analysis in 2007, they calculated a net cost of more than £4 billion. He also insists that the system being introduced here will be twice as expensive as in Italy and Spain.
“We have devised the most complex roll-out in the world, relying on suppliers to provide the meters rather than the network company,” says Henney. “This increases the cost of capital and requires an additional large database, which will lead to errors and confusion as we switch suppliers.” He adds that people could be given live information on their energy use via the internet or smartphone apps much more cheaply.
Henney told a Commons energy committee inquiry that “the project is likely to be a shambles which will have negligible consumer benefit”. The MPs, however, concluded that we should indeed gain overall, although they conceded there may be resistance. Some people, for instance, object to the idea of having what amounts to a spy in the home, believing it could be used to find out about other activities. This seems excessively paranoid – but after the data-mining scandals of recent months, who knows?
Ostensibly, smart meters’ main purpose is to make us use less energy and contribute towards a low-carbon future, along with wind turbines and other renewables. Perhaps they will – but at a cost. Germany recently decided not to follow the EU’s 80 per cent target for smart meters because it would be too costly for consumers. That is something to bear in mind when you next hear a minister promising to help people who find it hard to pay their fuel bills.
There is one thing to remember, however: when the energy supplier comes knocking on the door to install your new smart meter, you can always say no thanks, and stick with the dumb one under the stairs. Whether anyone will ever come and read it for you is another matter.