Are smart meters providing any benefits to electricity customers?

Analysis: only 4% of customers with smart meters are using them properly so can these devices actually help households save money on energy?

Smart meters offer the promise of better insights into our home energy use, enabling improved efficiency and reduced electricity bills for those willing to be flexible in when they consume electricity. In the context of hugely increased electricity prices and the possibility of electricity shortages, governments around Europe are stressing the importance of electricity demand reduction, especially at peak times.

Around one million Irish households already have an electricity smart meter installed. But according to the ESB, only 4% of these customers are using the key “time-of-use” tariff feature. This has led many to ask if smart meters are providing benefits to electricity customers in a time of need. If not, what do we need to do to realise the benefits of smart meters?

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From RTÉ Radio 1’s Today with Claire Byrne, Adam Maguire from RTÉ Business on how to get the best out of smart meters

It is worth stepping back first to look at the big picture. We have made huge progress in moving towards sustainable electrical energy sources in Ireland, with almost 40% of annual electricity demand now covered by wind energy. The target is to reach 80% renewable electricity by 2030 and net zero emissions by 2050. This transition requires us to rethink our entire energy system. Smart meters are intended to enable customers to participate in this transition, and are seen as an essential part of an intelligent and integrated energy system that runs on weather-dependent renewable energy.

When the wind blows and sun shines, electricity is cheap to generate both economically and environmentally, since these sources have no fuel costs and close to zero emissions. When wind and solar are not available, electricity must be generated from imported fossil fuels with very significant economic and environmental costs. As we move through the energy transition, we need to adjust demand patterns in order to manage a grid running on variable renewables.

What becomes really important is when electricity is used. Charging electricity customers in a way that better reflects the real-time costs of generating and delivering that electricity is nothing new. At peak times (eg 5pm to 7pm during winter months), the wholesale price of electricity can be many multiples of the average price, in accordance with the law of supply and demand.

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From RTÉ Radio 1’s News At One, Dr Paul Deane from UCC on rising wholesale energy prices

For decades, grid operators have provided incentives to large industrial electricity users to shift consumption away from peak demand periods. To reach 80% renewables and ultimately, net zero, these type of incentives will need to be applied much more aggressively across the entire system. Households and small buildings will be asked to play their part, reaping the rewards of being “flexible” in their energy use through electricity bill reductions. All electricity customers will be moved to smart meters, and eventually, all flat tariffs will be replaced with time of use ones.

Smart meters have other practical benefits, removing the need for estimated bills and supplier call-outs for meter reading. They can help when grid outages occur: the grid operator can “poll” smart meters to see who is connected to the network in real-time, providing better targeting of repair crews and faster restoration of power supply.

However, for the typical Irish electricity customer facing massively increased energy bills, the only important question is: can these devices help me save money? So far, there have been complaints from customers struggling to access their smart meter data. Some customers have found that they need to sign up to a variable tariff rate before they can access their smart meter data. Customers feel that they have to “gamble” on signing up to a smart tariff that they can’t get out of, without knowing whether it will actually save them money.

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From RTÉ Radio 1’s Morning Ireland, Aoife MacEvilly from the Commission for Regulation of Utilities on why smart meter users should carefully consider options before accepting an electricity tariff

Smart meter data is sensitive. In the wrong hands, it can be used to detect occupancy and behavioural patterns in your house and to sell your information to advertisers. Privacy and consumer protection requires that customers need to actively opt-in to any service that uses this data. Getting the right balance between encouraging consumers to avail of new smart meter services and protecting privacy is difficult. Things are gradually improving, with energy suppliers offering new “energy insights” services, and a “data hub” will be launched next year by ESB to allow all customers to see their energy usage in near real-time.

But we should manage expectations around what smart meters can do for consumers in the short term. The meter rollout is still a long way from completion (all of Ireland’s 2.4 million electricity customers will have one by the end of 2024), and the introduction of smart meter tariffs and services is still at a very early stage.

In the long term, smart meters will benefit customers who have the technology to manage their demand according to price changes

In the long term, smart meters will benefit customers who have the technology to manage their demand according to price changes. It is unrealistic to expect customers to make major lifestyle changes, such as eating dinner at 9pm instead of 6pm. However, if a customer has an electric vehicle with a smart charger scheduled to charge at off-peak times, the cost savings can be very significant. Customers with solar PV and battery storage can use an energy management system to manipulate their household demand according to time-of-use tariffs, minimising their total energy cost.

We need to be careful that the move to smart tariffs does not exacerbate existing social inequalities. There is a danger that smart tariffs will most benefit high-income customers, those homeowners with the disposable income required to invest in energy technologies such as electric vehicles and solar PV. It is also crucial that energy suppliers communicate clearly with customers during the coming years. There is already a bewildering array of different energy plans available, and choosing a plan is set to become even more complex as consumers need to consider which tariff suits their demand patterns.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ