Smart meters – everything you need to know

The energy meters we currently use have been around for decades, but their days are numbered because, by 2020, nearly every UK home will have its old meters replaced with smart meters.

Close up of a hand adjusting a heating dial

But what exactly is a smart meter? How do they work? And more importantly, what’s the point? Here’s all you need to know…

What is a smart meter?

Your standard energy meter has a counter or digital readout which tallies your energy usage. With this six-digit number, suppliers work out how much energy you’ve used since your last reading and charge you accordingly.

Submitting frequent meter readings yourself is the best way to make sure your bills are accurate.

With a smart meter, however, information about your energy use is sent to your supplier automatically and potentially in real-time – using a SIM card like the one in your mobile phone, or other wireless technology.

Some smart meters also come with energy monitors or In-House Displays (IHDs) which provide real-time data about how much gas and electricity you’re using, and even tell you where in the house you’re using it. Others come with PC software or smartphone apps to help you monitor your usage.

It’s all supposed to make us more aware of how we use energy. British Gas’ smart meter equipment, for example, uses a traffic light system showing a red light when you’re using a lot of energy, amber for moderate use and green for low use.

So the smart meter sends usage data wirelessly and automatically to your energy supplier while the energy monitors (or IHD) shows you information about your gas and electricity use. 

Why is every house getting one?

The government is trying to make energy billing fairer and encourage us all to be more energy efficient. If we all use less energy, the strain on power stations is reduced and they churn out less greenhouse gas.

By installing smart meters and energy monitors or IHDs in every home in the UK, it’s hoped we’ll all start looking at energy differently because we’ll be able to see exactly what we’re using. More to the point, we’ll be able to see where we’re wasting energy, and how much it’s costing us.

Smart meters alone will put an end to estimated bills and overpayment, because you’ll only pay for exactly what you use. It also means your home is a lot smarter, meaning nobody will ever have to come to your home to read the meter again.

What are the benefits?

For us, it should mean fairer billing for our gas and electricity, as well as the chance to keep an eye on how much we’re spending and where we’re wasting money.

For the government, it could mean reducing the country’s carbon footprint as households get savvier with how they use energy.

The government also says smart meters will make it faster and smoother for us to switch between energy providers to save money.

Smart meters will also be available to households which pre-pay for their energy, and it may be possible for those households to top up their credit online or over the phone in future.

Will a smart meter save me money?

If you’re being billed based on your estimated usage then you may find your bills drop when based on your actual usage. Of course the opposite could happen if you’re actually using more than the supplier estimates.

But if you use the information you get from a smart meter and energy monitor, you can start reducing your energy wastage and lower your bills that way.

The government reckons the average household will save £23 a year like this. Eon Energy is more optimistic and claims you could save £42 a year using a smart meter.

When will I get a smart meter?

Energy firms are responsible for upgrading everyone’s meters, and it’s going to be no mean feat. There are more than 53million meters to change in more than 30million homes and small businesses in the UK.

Each of the Big Six energy firms (British Gas, E.ON, EDF Energy, Scottish Power, Npower, SSE) has set out its commitment on installing smart meters.

The government has a roll-out target of 80% by 2020. Your own energy supplier will let you know its upgrade plans.

The bulk of the roll-out will take place between 2015 and 2020, but some suppliers are already making progress. British Gas, for example, recently passed the one million smart meter milestone (of which around 600,000 are in domestic properties).

How much will it cost?

Nobody will be charged for installation of a smart meter upfront, but the cost will be recouped over time through your energy bills – which could mean higher bills for a while.

However, using the information from the smart meter and energy monitor may help you to reduce your energy usage and offset the increase to a certain extent.

What if I don’t want a smart meter?

Some people have raised health and privacy concerns about smart meters, so the government has confirmed that nobody will be forced to have a smart meter installed.

In the United States, some energy firms charge customers for opting out. While it’s unclear if that will be the case here in the UK, you would still be free to switch to another provider which perhaps wouldn’t charge you for opting out of having one installed.

Health and privacy concerns?

Some groups, such as Stop Smart Meters UK, claim a network of smart meters will create potential “health risks” and “unwarranted privacy violations” because of the wireless technology they use and the information they transmit.

Public Health England says the evidence to date “suggests exposures to the radio waves produced by smart meters do not pose a risk to health.” The trace amount of radiation emitted by a smart meter is said to be lower than that from a mobile phone.

As for privacy, the major energy companies have, for now, agreed not to collect real-time information, or information about the types of appliances we use, without our consent.

New consumer protection laws introduced in March say that energy suppliers can:

  • Collect everyone’s smart meter data once a month, without requiring consent
  • Collect smart meter data once a day unless you object
  • Only collect data more than once a day if you opt-in.

The government has given assurances that the network will be secure and private, setting out strict guidelines for suppliers. That said, smart meters in the US have reportedly already been vulnerable to hacking.

In the mean time

Depending on your supplier and where you live, it could be a while before your smart meter is installed - but you don’t have to wait until it arrives to start saving money.

Our energy comparison service will tell you if you could save money by switching to a new supplier in a matter of minutes, and all for free – so why not see what’s on offer? You can get results what’s available in the time it takes to make a cup of tea.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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