Around seven million of the 32.4 million smart meters installed in the UK will stop working when the 2G and 3G mobile networks are switched off.

A report by the UK government’s Public Accounts Committee (PAC) says progress on rolling out smart energy meters remains too slow, and the government has not done enough to convince the public of their benefits. The rollout, it says, has failed to meet its original targets and repeatedly shifted its deadlines for completion.

Though the government considers there is demand for smart meters from people that do not yet have one, the PAC’s report found those consumers with traditional meters are less interested in having a smart meter. Reports of bad practice last winter of forced switching of consumers onto smart meters may have put people off from having one installed.

The inquiry also heard energy suppliers under pressure from government-imposed smart meter targets can put pressure on consumers, who can feel threatened by contacts and correspondence from suppliers into having one installed. Given only 57% of all meters in Great Britain were smart at March 2023, over a decade after the rollout began, the PAC is calling for a strategy review to drive demand for the programme.

As well as the fact that around three million (9%) of smart meters were not working properly at March 2023, the report highlights concerns about built-in obsolescence in those smart meters already installed. Components for an estimated seven million smart meters out of around 32.4 million installed at March 2023 will need to be replaced because they will lose functionality when the 2G and 3G mobile communications networks are closed. Bill payers will ultimately bear the likely significant costs of these required upgrades.

The report found consumers who are older, male, on high incomes or homeowners are more likely to have smart meters, raising concerns that certain, often wealthier, consumers are disproportionately benefitted by smart meters. The PAC calls on the government to update its evidence – some of which dates as far back as 2015 – on whether smart meters are actually saving consumers money as it anticipated. The government should also improve its limited understanding of why smart meter coverage is lower in some areas – particularly London, rural and remote areas – compared with others.

“The rollout of smart meters was first conceived in 2008, with a planned completion date of 2019,” said Dame Meg Hillier, chair of the committee. “Some 15 years later and four years after that missed target, and its vision of access and support for every household to control their energy efficiency remains a distant one. There are functionality issues with many, millions will have to be replaced when they become obsolete, and the evidence is unclear whether their benefits are even working as advertised.”

On top of this, she said smart meters had serious reputational obstacles to overcome with the public.

“In particular, our inquiry has found that consumers’ enthusiasm for adopting one has been understandably harmed by recent shocking reports of forced installations,” she said. “The government must now get onto the front foot and explain how it is going to sell this troubled programme to the public, and how it will successfully deliver during a cost-of-living crisis for those it ought to benefit the most.”

The government has adjusted its deadlines three times and reduced its target installation levels for smart meters from all homes and small businesses in 2019, to its current target of 74.5% of homes and nearly 69% of small businesses to have smart meters by the end of 2025.

Suppliers are currently installing 80,000 to 85,000 smart meters each week. They say the remaining consumers with traditional meters are less interested in having a smart meter.

The PAC recommends the government should work with Smart Energy GB to review its public engagement strategy to ensure it drives demand for the rest of the programme, including by clearly setting out how smart meters can benefit consumers.

The most recent estimates of consumer energy savings are based on data from installations that took place between 2015 and 2018 with consumption data up to 2019. These show energy reductions of 3.3 to 3.6% for electricity and 2.9 to 3.1% for gas.

The extent of smart meter installation varies across Great Britain, from 5% in the Isles of Scilly to 69% in Chesterfield as at March 2023. Installation rates in London are 43%, some way below the 57% being achieved across Great Britain. The Department thinks this is due to the challenges of installations in blocks of flats where it is more difficult to place meters and in-home displays in sufficient proximity to each other, and because installers cost more and are less available. Remote areas such as the Highlands and Islands of Scotland also have lower coverage, as do some rural areas such as the Cotswolds.

The Data & Communications Company, which operates the central communications and data platform for smart meters, is looking into options for the 0.75% of homes that sit outside its wide area network coverage for smart metering. There are a few hundred thousand homes in these areas.

Energy suppliers have binding targets to install smart meters, which should be enforced by Ofgem, the energy regulator. However, energy consumers are not required to accept an offer of having smart meters installed and only one large supplier hit both its 2022 gas and electricity smart meter installation targets. Ofgem is in discussions with suppliers that did not meet their targets, and has previously used its enforcement powers to require an energy supplier to contribute more than £1m to a redress fund.

It is now considering more severe financial penalties.

Ofgem may need to adapt its regulatory approach, moving beyond merely considering performance against targets, to take account of suppliers’ investment in the innovation and consumer engagement that encourages consumer behaviour change in line with net zero.

The PAC says Ofgem should consider how its approach to regulating suppliers, on both the rollout and in relation to net zero more widely, takes account of the need for suppliers to engage their customers to promote behaviour change.

The government’s rollout targets mean suppliers have much clearer incentives to prioritise the installation of new meters rather than replacing broken ones. Consumers are only guaranteed for a year the benefits arising from being able to monitor their energy consumption in real time. If their display breaks after that, the supplier has no obligation to replace it.

An estimated seven million communications hubs – part of the electricity smart meters – will also need to be replaced, because they will lose functionality when the 2G and 3G mobile communications networks are closed. The costs of these upgrades could be very significant, and, like other costs of the rollout, are ultimately passed on to bill payers.

The government and Ofgem (www.ofgem.gov.uk), says the PAC (committees.parliament.uk/committee/127/public-accounts-committee), should set out what they will do to ensure suppliers assign more importance than at present to replace those smart meters and their in-home displays. A timetable is needed for replacing the communication hub element of smart meters that will lose functionality when the 2G and 3G mobile networks are switched off. The PAC also wants suppliers to use future-proofed technology – for example, by excluding 2G or 3G connectivity – in all new smart meter installations.