BSC Insight: Impact of COVID-19 on smart meter installations
The restrictions introduced in 2020 to curb the spread of COVID-19 have provided unprecedented challenges for Suppliers as they continue to install smart meters. In this Insight article, our Analysis and Insight Analyst Hussein Osman, reviews the installation rates of Smart Metering Equipment Technical Specifications SMETS2 meters before, during, and after the March to June and November to December 2020 lockdowns.
He also considers why legacy meters and SMETS1 meters continue to be installed, despite the New and Replacement Obligation (NRO).
How is Elexon involved with the smart meter rollout?
Elexon monitors the smart meter rollout through its monthly Smart Meter Technical Detail report. The report is used to monitor compliance with BSC obligations for the timely sending of correct Meter Technical Details over the foundation and mass roll-out phases. Meter Technical Details (MTD) are the details required to interpret data from a meter correctly.
What are the differences between smart and legacy meters?
The two main types of meters discussed within this article are legacy meters and smart meters. Legacy meters are the traditional meters, which Suppliers cannot communicate with or access remotely. Smart meters have the ability to send and receive data remotely. The smart meters installed must meet the Smart Metering Equipment Technical Specifications. There are two of these specifications, SMETS1 and SMETS2.
The domestic roll out of SMETS1 meters began in 2013. SMETS1 meters do not retain their ‘smart’ abilities if a customer changes Supplier. When a customer with a SMETS1 meter switches Supplier, if the new Supplier cannot receive the data for that meter, the meter goes into ‘dumb’ mode and loses its smart functionality. This prevents the Supplier from receiving the reads, giving the smart meter no more capabilities than a traditional Legacy meter.
SMETS2 meters address the issues of SMETS1 meters. They are cross-compatible with other Suppliers which have SMETS2 infrastructure ready. The SMETS2 domestic roll out began in 2018.
Data Communications Company (DCC) secure network migration
The DCC has built the telecoms infrastructure which supports smart meters. Since 2019, SMETS1 meters have begun migration onto the DCC secure network. This will allow customers who have lost smart functionality due to changing Supplier to regain smart functionality at no additional cost. This also comes as a benefit to industry as it will save industry millions of pounds a year as they will not have to replace SMETS1 meters if a customer changes Supplier.
Why are smart meters important?
Smart metering information will allow more accurate settlement, which will give a greater incentive for Suppliers to offer time of use tariffs, which should be able to be used to drive customers to be more efficient in their use of energy. Therefore, Suppliers will be able to incentivise customer demand when losses are lower. A smart meter comes with an ‘in home’ display, which allows the customer to track and monitor their energy usage in real time. This allows customers to be more conscious of their energy usage and the opportunity to make more energy conscious decisions in order to reduce their bills. as a result. A more energy conscious and efficient household or business can help reduce carbon emissions and help the UK achieve its net zero targets by 2050.
Smart meters reduce the need for a Supplier to send a meter reader to a site as they remotely communicate reads. The 2020 lockdowns have highlighted the importance of remote communication to obtain accurate meter reads, as meter readers have not been able to visit properties, if the meters are inside. We have written about this in a previous BSC Insight: How Covid-19 has affected estimated data in Settlement.
Installations the first UK lockdown
Our latest data for December 2020 shows that overall, around 13 million (43%) of all legacy meters in homes and businesses across Britain have been replaced by smart meters. More than 1.5 million SMETS2 meters were installed in 2020. The graph below shows the number of meter exchanges for SMETS1, SMETS2 and legacy meters since November 2018.
Early strict measures see installs fall
The first national lockdown, which began on 23 March 2020, affected SMETS1, SMETS2 and legacy meter installations significantly. To protect the smart meter engineers and homes and businesses meter installations were limited to emergency meter exchanges only. This contributed significantly to the drop in meter installations during the first national lockdown.
As the graph above illustrates, there was a sharp drop in the number of SMETS2 installations during April and May. In February, 193,251 SMETS2 meters were installed; however, in April only 6,769 were installed (a 96.50% drop). SMETS1 and legacy meter installations also dropped in April by 59.49% and 82.74% respectively.
The easing of measures
As the lockdown measures eased in June, there was a dramatic increase in SMETS2 installations. Despite the setbacks caused by the national lockdown, the industry recovered quickly and in October 2020 SMETS2 installations exceeded pre-lockdown levels with 205,920 installations occurring. The monthly installation rate in October 2020 was also the highest ever, surpassing the previous SMETS2 record set in November 2019 at 201,378.
Installations during England’s second lockdown
The second lockdown took place between 5 November and 2 December 2020 in England. At the time, Scotland and Wales had their own measures in place. Despite differing levels of measures across GB, there were still 187,553 SMETS2 installs in November 2020. This represented 87.85% of total Meter installs for the month of November, the rest were SMETS1 and legacy meter installs.
In November 2020, SMETS2 meter installs fell by just 8.74% compared to October 2020. November 2020 SMETS2 installs were also still 4.4% higher than in September 2020. In comparison to October 2020, the number of SMETS1 and legacy meter installations in November 2020 dropped by 41.08% and 5% respectively. The graph above shows the upward trend in the number of daily SMETS2 installations since the first lockdown. Despite the COVID-19 restrictions in place, there was no significant drop in the number of daily SMETS2 installations in November. The average daily meter installations in November 2020 was at similar rates compared to January 2020 (6,252 in November compared to 6,262 in January). The drop towards the end of 2020 can be attributed to the Christmas period.
Why was the drop in installations not as significant in the second lockdown?
Following the Government guidance on safe working in other people’s homes, in line with it engineers and meter operators have adapted to their working environment between the first and second lockdowns. This has ensured that the drop in meter installations during the second lockdown in England was not as significant compared with the first national lockdown, as non-essential meter installations continued. This will continue to be reviewed in line with Government guidance.
What is the New and Replacement Obligation (NRO)?
The Government’s NRO, which came into effect on 30 of June 2019, requires Suppliers to take all reasonable steps to install SMETS2 meters whenever installing or replacing a meter. Although legacy and SMETS1 meter installations continue, the figures are still declining. In comparison to December 2019, SMETS1 and legacy meter installations in December 2020 dropped by 72.10% and 36.12% respectively.
Installation of SMETS1 and legacy Meters under the NRO
Legacy meters or other suitable meters are installed, if a smart meter cannot be installed. These circumstances include poor telecoms network coverage in the area, a lack of physical space to install a smart meter, or customer preference, as they are not compulsory.
From 16 March 2019, only SMETS2 installations counted towards Supplier smart meter installation targets. Suppliers that fail to take reasonable steps to install SMETS2 meters face action by Ofgem, which monitors Supplier smart meter roll out performance closely.
Decreases in SMETS1 installations
The number of SMETS1 meter installations continues to decrease. In comparison to 2019, SMETS1 installs in 2020 have dropped by 80%. We could attribute this drop to numerous reasons such as NRO Obligation and COVID-19. The graph below compares the SMETS1 and SMETS2 current year installs to last year’s installs.
COVID-19 impact on SMETS2 installations
Despite the impact of the COVID-19 restrictions this year, the total number of SMETS2 installs in 2020 was only 51,000 less than in 2019 (1.55m in 2020 compared with 1.6m in 2019). The graph shows that the SMETS2 installation rates were also higher between Sept and Oct 2020 compared with the previous year.
There is no doubt that smart metering will play an integral part in the shaping of our future energy system. The majority of homes and small business are yet to have a smart meter fitted; however, this article has highlighted the major efforts Suppliers have made to progress the roll out during a year where the entire economy has faced an unprecedented challenge in managing the impact of COVID-19.
Suppliers have worked hard to bounce back from the first lockdown with numbers of SMETS2 installations back at pre-COVID-19 levels. However, to meet the June 2025 target, SMETS2 installs will have to rise and hit new highs in 2021 while maintaining the safety of their staff and consumers. 2021 began with a new national lockdown, and restrictions may continue later into the year. As they have done over 2020, we have no doubt that Suppliers will continue to respond and adapt to meet the target for the rollout.