The Department expects smart meters, which provide consumers with detailed information on their energy use and enable utilities to offer a range of off-peak tariffs, to be an important step towards smart grids that manage energy demand across the system.
NAO’s current assessment of the program determined that while the Department has made progress in developing its approach in the early phase, “it did not demonstrate full value for money, because its early planning and budgeting were insufficient to support clear monitoring and accountability.”
The cost of the smart meter deployment will be paid by energy suppliers, who will then likely pass the costs and efficiency savings on to their customers. The Department’s £11.3 billion cost estimate for the program includes some provision for cost escalation but the Department still has to develop a specification for the central data and communications system.
The Department estimates the economic benefits between 2011 and 2030 will be £18.6 billion, resulting in a £7.3 billion net. However, the NAO’s report expresses doubt about the extent to which smart meters will result in changed energy use by consumers over a sustained period. In addition, the NAO identified other risks such as design approvals, procurement, and testing taking longer than planned; the need of the system to be flexible enough to minimize the risk of future obsolescence; and the amount of work the Department needs to complete before roll-out starts on the security of the system.
National Audit Office head, Amyas Morse, says, “The benefits of proceeding with this major technological and logistical undertaking are still uncertain. There is limited evidence of how much and for how long British consumers’ behavior might change, and costs could escalate. Large-scale projects of this kind can take on a momentum of their own and so, along the way, there should be clear decision points at which the Department will need to review costs to consumers, benefits and risks and judge whether to carry on as originally planned or significantly change direction.”
For more information, visit www.nao.org.uk/.