The smart energy transition is a shift in the national pattern of electricity use, so that we use most at the times when cheaper, greener renewable electricity is being generated. Smart technology makes this possible by allowing devices like heat pumps, electric vehicles and night storage heaters – which all use a lot of power – to be turned on remotely when the electricity is cheap.

A successful smart energy transition will lower energy bills, reduce fuel poverty and cut carbon. But to happen, it requires widespread public engagement, including from people on low incomes or in otherwise vulnerable circumstances.

But barriers exist which prevent people from engaging with and benefiting from the smart energy transition.

Pulling down these barriers is critical. Without intervention, the smart energy transition risks deepening inequality—benefiting wealthier households while leaving others behind. It can cost less to charge an electric car than to run a night storage heater, for example.

We’ve developed six key recommendations on how enable the benefits of the smart energy transition to be shared more fairly. They are aimed at policymakers, district network operators, suppliers, funders, energy advice organisations, and other stakeholders.

1. Improve the smart meter rollout
2. Smart tariffs should be as inclusive and accessible as possible
3. Long-term funding for local energy advice organisations
4. Training, resources and ongoing support for smart energy advisors
5. A national smart energy advice network
6. Changes to energy efficiency grant schemes  

Improve the smart meter rollout

Fix broken meters promptly

The smart energy transition needs most people to have a smart meter and for those smart meters to work. At present, about 36m homes in GB have a smart meter (66%), but of these around 4m don’t work.

Our advisors find that suppliers are reluctant to resolve smart meter issues that can’t be fixed remotely. We often have to resort to raising customer’s issues with the energy ombudsmen to get them fixed. Currently there’s no alignment of incentives to encourage suppliers to fix smart meters promptly.

Widen the Guaranteed Standards of Performance

CSE supports Ofgem’s proposal that the Guaranteed Standards of Performance are extended to include compensation if:

• A customer requests a smart meter, and it is not installed within six weeks.
• If a smart meter is installed but doesn’t work (and the issue is within the supplier’s control).
• A customer raises an issue about their smart meter and the supplier doesn’t complete an initial assessment, take appropriate action and update the consumer within five days.
• A smart meter is not operating in smart mode for over 90 days due to an issue within the energy supplier’s control to resolve.

We agree with Ofgem that compensation is an “important tool for strengthening consumer confidence in the energy market”. And also that it “plays a key role in driving better outcomes for consumers” by suppliers.

CSE also recommends that Ofgem require suppliers to make the Guaranteed Standards and compensation amounts more transparent to customers. We find that customers are rarely told about them, and they are often difficult to find on supplier’s websites.

Make data communications companies liable for compensation

Many problems with smart meters are the result of the operating of the data flow, not the electricity supply. It is therefore the responsibility of the relevant data communications company (DCC) to resolve, and not the supplier. However, customers cannot contact the DCC directly if they have a problem – the suppliers are responsible for alerting the DCC about any network-related issues. This is frustrating for customers and the organisations supporting them. It leads to in poorer outcomes for customers and a further loss of trust and confidence. We would like to see greater accountability to customers for the DCC, for example through a mechanism whereby the DCC is required to pay compensation, via the supplier, for any delays due to data network issues.

Change smart meter reporting requirements

Two changes to the reporting requirements by suppliers for smart meters could drive improvements in prompt resolution of smart meter issues. Firstly, suppliers should be required to annually report the number of non-communicating smart meters. And secondly, a new smart meter installation should only be added to their tally once it has been confirmed as functioning properly.

Find solutions to signal issues

Some homes cannot connect to the smart meter network. This can be due to signal issues in the area, or becasue the home has thick stone walls or the meter is installed in the basement. New smart meters are being developed which overcome some of these issues, but more innovative thinking is required. Further, new-build homes should have smart meters installed in areas where there are no signal problems. And, building regulations need to be changed to require this.

Improving trust and incentives

The reasons given to energy advisors by people in vulnerable circumstances for why they don’t want a smart meter include:

• Negative stories heard in the media and from friends and family.
• Don’t understand the benefits to them of getting one.
• Are suspicious of being spied on.
• Worry about being moved onto a pre-payment meter.

These are largely issues of trust. Implementing both Ofgem’s proposed changes and our additional recommendations will help rebuild trust in smart meters. To ensure success, these measures should be accompanied by a communications campaign, led by Smart Energy GB. This would highlight the changes and demonstrate how they address the challenges faced during the rollout so far.

Continue to promote smart meters, but for a different reason …

When the smart meter roll-out began, two main benefits were presented. Firstly that it was no longer necessary to take meter readings. And secondly that they would reduce consumers’ usage – and therefore their bills – through better understanding of energy consumption. Neither have proved to be the case. According to Citizens Advice, nearly half of all households with smart meters still need to give readings. And the evidencd suggests that the financial savings of simply being able to monitor your usage are small.

However, there is a third benefit which we believe can be promoted. It is that is that a smart meter is a necessary condition to being on a smart tariff. And smart tariffs can offer consumers significant bill savings.

Smart tariffs should be as inclusive and accessible as possible

Smart tariffs benefit consumers though offering cheaper electricity according to the time of day or other factors. But those currently on the market are predominantly designed for higher earners who can afford expensive technology and have digital skills, and who have patterns of consumption that can be more easily shifted to take advantage of cheaper electricity. They can be seen as the winners in the smart energy transition.

By contrast, those on lower incomes, who pay by prepayment or who lack digital skills or technology are missing out on many of the benefits. The gap between the best electricity unit rate available to these two groups will continue to increase unless changes are made.

Share data to enable easier tariff comparison

Tariff comparison is essential for ensuring that all consumers can access tariffs that are most suitable for their particular circumstances. However, while this is fairly straightforward when it comes to standard tariffs, comparing two different smart tariffs very difficult. This is due to the complexity of matching smart tariff structures to different technologies (e.g. electric cars or heat pumps) and different usage patterns. We know from our advice work that this is a major barrier to consumer confidence and uptake: consumers don’t want to commit to a tariff that they don’t know will work for them.

Improved sharing of tariff data from suppliers could address this challenge. Publication of real user data or calculation algorithms would help consumers or third parties such as comparison websites or organisations like CSE to quickly compare similar tariffs offered by different suppliers and assess their suitability to a client’s own needs. Standardisation of tariff metadata would also enable easier switching between smart tariffs, and prevent consumer ’lock-in’ via specific technology. It also ensures transparency because suppliers can’t change the algorithms their smart tariffs are based on after customers have switched to them.

Require greater visibility of tariff take-up and performance

There is currently very little data available on precisely who is using and benefitting from smart tariffs. This means that although the likely beneficiaries of tariffs are well understood there is little hard evidence to justify market accessibility measures. While the smart energy market is still in its early stages, suppliers should be required to provide extra information on the number and type of consumers using their smart tariffs, as well as their financial impacts. This will enable more accurate monitoring of exactly which consumers are being excluded from the smart energy transition, and progress towards greater inclusivity.

Encourage a wider range of smart tariffs

The collecting of user data as described above can be used to design and offer a wider variety of smart tariffs, so as to enable more consumers to benefit from the smart energy transition.

Examples are more managed tariffs for customers without access to the internet, or more options for households with storage heaters. Suppliers should also be required – as in the standard energy market – to offer smart tariffs suitable for vulnerable consumers. This should start with prepayment customers, who currently can’t use any smart tariffs at all.

Ensure a progressive reform of distribution of energy costs

It is important that the cost of the smart energy transition is paid by those who benefit most from it. Left to itself, it is probable that people who don’t benefit much or at all nevertheless end up paying more than their fair share. This is likely to be in standing charges and unit rate costs for the upgrading of the network. We need to find progressive ways for these costs to be met.

This can partly be done through the tariff innovations mentioned above. But more radical reform may be needed to ensure the costs of the transition are shared fairly. This could be through alterations to the standing charge, or through taxation. Better understanding of who precisely is benefitting from smart tariffs over time will help to focus these initiatives.

Long-term funding for local energy advice organisations

Local energy advice organisations are well-positioned to support individuals to engage in the smart energy transition. Embedded within their communities, they are trusted and impartial sources of guidance on home energy, able to demystify smart meters and find funding for home improvements.

But they are often depend on short-term funding, which limits their ability to plan resources, workforce and training effectively. To play a meaningful role in the transition, they need long-term, stable funding and access to resources, training and support. 

Such funding would in particular allow for the delivery of personalised smart energy advice. Personalised advice, either face-to-face or by phone, builds trust and makes energy solutions simpler and more relevant. Our experience shows that offering a range of personalised advice —such as in people’s homes, at local events, over the phone, and via email—significantly boosts engagement. This is particularly the case when addressing distrust in smart technology.

Training, resources and ongoing support for smart energy advisors

Energy advice organisations need to upskill through training, resources for clients and ongoing peer-to-peer support.

Smart energy training

Many organisations have told us that smart energy training is critical. Training would need to cover the technology and tariffs available as well as the specialist area of how to engage those in vulnerable circumstances on these topics. CSE has developed its own smart energy advice training through drawing on the knowledge of our smart energy advisors, retrofit experts, training manager, Smart and Fair research team and community engagement teams. Most organisations don’t have the resources to do this, and funding is needed to roll training out to advice organisations across the country.

https://www.youtube.com/watch?v=VtH3K7D8ikY

New technology and tariffs are a lot to take in during a phone call or home visit. Our energy advisors use resources such as webpages, advice leaflets and online videos to support clients to understand their options.

Rather than each organisation developing their own resources, a better approach would be to develop and make available accurate and clear smart energy for energy advice organisations to share with their clients. These resources would show the financial costs and benefits of different options, and would have undergone user testing and content design to ensure maximum effectiveness.

Ongoing support for organisations giving smart energy advice

At CSE, our market-monitoring research tracks new offers and trends, and our retrofit team works closely with installers and manufacturers to stay ahead on smart energy technology, allowing us to keep our advisor guidance up to date. However, many smaller organisations are not in this position.

Establishing a network of resources and peer support that organisations can access after training would sustain their progress. It would enable them to scale up their services effectively, get answers to complex questions and maintain the quality of the advice they provide. This need for ongoing support has been identified by advice organisations during the recent Smart Energy Advice Forum and through our evaluation of the Rural Communities Energy Support Network.

A national smart energy advice network

To ensure that people in vulnerable circumstances can benefit fully from the smart energy transition they need access to free, impartial energy advice from knowledgeable and competent advisors. We recommend the establishment of national energy advice network that builds on the current Find Ways to Save Energy in Your Home government helpline. A single point of contact, it would enable individuals to call one number and be connected to a trusted local organisation. If this is combined with smart energy training, resources, and support for these advice organisations, it would ensure easy access to high-quality, up-to-date smart energy advice.

Funding for such a service should be progressive, for example, sourced through taxation rather than energy bills. This approach would avoid exacerbating existing inequalities, as those on low incomes disproportionately bearing the cost of energy network overheads.

Changes to energy efficiency grant schemes

Grants that enable low-income households to access low carbon technologies, such as solar panels and air source heat pumps, are an important way of enabling fairer participation in the smart energy transition. Without these grants, only those with high incomes and savings would be able to install many of these measures and benefit from the transition. Below we outline three ways that the funding could be better used to ensure a fairer smart energy transition.

1) Include more smart technology in grant funding

Grant funding schemes, like ECO4 and HUGS, should broaden eligible measures to include smart technology that allows low-income households—including those in flats— to take advantage of flexible tariffs. This could include:

• Devices to control existing systems (e.g. night storage heaters or hot water tanks) with energy price signals.
• New types of heating such as batteries that, like storage heaters, store cheap electricity when it’s cheap.

Technologies that automate the process of making the most of cheap rates can be beneficial to people in vulnerable circumstances who may lack the time or capacity to engage.

Where solar photovoltaic panels are installed through a grant, batteries should be installed as standard, and installers should ensure that where possible the home has a smart meter to make the most of flexible tariffs.

2) Measure performance of installations and resolve performance issues

We recommend that for grant funded installations of technologies such as air source heat pumps, that remote or on-site monitoring and follow-up is included as standard. This is crucial for detecting and resolving performance issues, ensuring comfort, cost savings and expected carbon savings. It also helps installers learn how to optimise configurations going forward.

For social housing providers undertaking large-scale installation of heat pumps, monitoring and follow up should be included in the contract specifications. This would require the installer to select equipment that allows remote monitoring, or to fit the right monitoring equipment at the time of installation. And it would also require them to actively monitor performance and make interventions (with customer consent) post-installation. Further, the staff who manage these schemes and contracts, and those who directly liaise with residents, should have training about heat pumps and how common problems with them can be resolved.

3) Require post-installation advice and support

Households who have had kit such as heat pumps and solar panels installed through a grant scheme should also be given actionable advice on how to use it most effectively, otherwise we risk eroding trust in these technologies. This would include:

• Guidance on how to set the heating controls to achieve desired comfort levels without a significant drop in efficiency.
• The steps needed to access the Smart Export Guarantee tariff.
• Other types of tariffs that might be suitable with the new circumstances.

Needless to say this advice needs to be easy to understand and appropriate to the needs of the customer. Installers could offer this advice themselves, or alternatively signpost to other organisations.