As we enter 2019, an eventful 12 months for the smart meter regulatory environment comes to an end – a year which has seen, amongst other significant developments, the establishment of the new Data & Communications Company (DCC) network. We look back on 2018’s regulatory changes and what this means for the market in 2019 and beyond.

2018 was the year earmarked for the establishment of a new data and communications infrastructure for smart meters, to be designed, built, tested and integrated by the Data & Communications Company (DCC). This is a process that would see the installation of first-generation smart meters (SMETS1) by energy suppliers phased out, and the beginning of a transition to next-generation smart meters (SMETS2).

SMETS1 installation end date passes after delays

Following industry consultations, the UK government twice delayed the ‘end date’ for the installation of first generation SMETS1 and advanced meters, with the final deadline eventually set for 5 December 2018. This was to ensure a “smooth transition” to next generation SMETS2 smart meters, thereby putting “consumers first” and giving both the DCC and energy suppliers extra time to complete the final testing of the new network and devices.

With the national DCC system now fully up and running (more detail on this below), and the SMETS1 end date having finally come to pass as of 5 December 2018, any new installations of SMETS1 meters will no longer count towards smart meter rollout obligations, encouraging suppliers therefore to transition to the installation of SMETS2 devices as soon as possible. A separate end date for pre-payment meter installations of 15 March 2019 was also announced, while some individual derogations were agreed for some energy suppliers to continue to install SMETS1 credit meters to this date.

DCC gets up and running for SMETS2 meters

As outlined above, during 2018 the DCC system was developed with robust software that is now fully compatible with a uniform class of second generation SMETS2 smart meters. While the official launch was delayed by a period of six months to fully back-test the system, some significant milestones were subsequently reached in the final few weeks of the year.

Firstly, 250,000 SMETS2 smart meters were rolled out by the beginning of January 2019, according to the DCC, with suppliers installing up to up to 4,000 devices per day, compared to just 1,000 in total in June 2018.

SMETS2 meters boast broader interoperability, and like SMETS1 meters, have the potential to facilitate domestic renewables which could lead to the greater adoption of electric vehicles, peer-to-peer energy trading, and other smart energy technologies.

SMETS1 meters ‘proven to be interoperable’ with DCC network

Secondly, at the end of November the ‘adoption and enrolment’ process for SMETS1 meters was officially proven and tested, with the DCC successfully demonstrating that SMETS1 devices will work on its central, secure data network. At a demonstration, officials from BEIS saw a simulation where a household SMETS1 meter was enrolled onto the network under a new energy supplier and tariff – taking only a few minutes to achieve. SMS Plc has played a significant role in achieving this milestone, providing the DCC with a metering test lab during 2018 and supporting it to finalise SMETS1 interoperability testing.

With some first-generation smart meters having temporarily lost smart functionality if consumers switch energy supplier, the DCC’s demonstration is a major step forward in the upgrade of the national smart meter communications network. As a result, customers with “dumb” SMETS1 meters are expected to see their smart capabilities restored once they are connected to the DCC’s network, a process which will happen automatically. The upgrade is expected to be completed by start of 2020.

The government has asked the DCC to prioritise meters that have lost smart services, so that those consumers can benefit first, and set a backstop to ensure that all meters are made interoperable. There are currently around 12.5m SMETS1 meters already installed in the UK, with BEIS & Ofgem estimating that 800,000 out of these meters could be ‘dumb’ (less than 7% of the total installed).

SMETS1 DCC enrolment requirements outlined

Thirdly, in October BEIS outlined the requirements for energy suppliers to enrol SMETS1 meters into the national smart metering network. Suppliers have been ordered to take “all reasonable steps” to enrol first generation meters in the DCC within 12 months of the point they are gained (i.e. from the moment a consumer switches to their services), where after any “dumb” SMETS1 smart meters will automatically regain smart functionality (as described above).

DCC recently consulted an updated plan with the industry to make the initial operating capability live on 26 May 2019 followed by a middle operating capability on 30 August 2019 and a final operating capability on 31 October 2019. BEIS has also launched additional incentives for DCC in case they achieve the adoption sooner.

Non-domestic customers allowed choice between advanced and smart meters

Another important regulatory decision in 2018 saw energy suppliers allowed to offer SMEs and larger business consumers a choice between an advanced meter and a smart meter. The decision forms part of the Government’s response to its August 2017 non-domestic smart metering consultation, which also sees the Data Communications Company (DCC) opt-out policy for energy suppliers removed. You can read more about this story here.

Smart Meter Installation Code of Practice amended to “improve consumer experience”

During 2018, the government continued to take action to “improve consumers’ experience and to help them fully benefit from smart meters”. Notably, in February 2018, the Smart Meter Installation Code of Practice was amended to require that energy efficiency guidance delivered at during the installation process “is tailored to each consumer’s circumstances”. This will further help consumers become aware of the changes they can make to improve the efficiency of their energy use, helping them to save money. The government’s Smart Meter Programme has also continued to work with energy suppliers and consumer organisations in 2018 to refine and improve the consumer journey for smart metering.

Consumer privacy review supports data safeguarding

The Government last year met its commitment to conclude a review of the Smart Meter Data Access and Privacy Framework, which found that consumer privacy is being safeguarded while simultaneously allowing energy consumption data to be used to develop new services that benefit consumers and the energy system more widely.

Research show consumer satisfaction over smart meters

In November 2018, BEIS published the second phase of the Smart Meter Customer Experience Study, which showed that satisfaction with smart metering continues to be high. 74% of consumers reported they were satisfied with their overall smart meter experience a year after installation. Smart Energy GB also published various findings demonstrating consumer satisfaction, with 83% of people with smart meters saying they have a better idea of their energy costs, and 80% of people with smart meters claiming they have taken steps to reduce their energy use and as a result, cut their bills.

Prioritising safety in the smart meter rollout

The government programme continued to work with industry in 2018 to prioritise safety in the smart meter roll-out. This has included driving discussions to ensure parties work together to “not only monitor, but take every opportunity to improve on historical safety performance”. This has seen 550,000 pre-existing unsafe situations being identified that were unrelated to smart metering, helping to protect homes across Great Britain

Smart metering outlook for 2019

For the year ahead, SMS Plc will continue to work closely with the industry so that even more consumers can experience the full benefits of smart meters, and supporting energy suppliers through our MAP, MOP and MAM services to make the full transition to SMETS2 smart meters. During 2019, we expect:

• energy suppliers to ramp up installation of second generation SMETS2 meters, supported by software and hardware developments that unlock the capability to install in more premises. We expect to see the installation of SMETS1 meters phased out accordingly.

• The enrolment of first generation SMETS1 smart meters into the national smart metering communications infrastructure will get underway, with priority given to those meters that have lost smart functionality upon switching suppliers.

In its Smart Meter Progress Report 2018, BEIS outlines it further expectations for the rollout during 2019, including:

• the activation of the New and Replacement Obligation which requires energy suppliers to take all reasonable steps to install a compliant smart meter where a meter is installed for the first time (for example in new build properties) or where a meter is replaced.

• The development and delivery of sector-specific engagement to raise awareness of smart metering amongst microbusinesses and Small and Medium-sized Enterprises.

• A commitment to update the cost-benefit analysis for the Programme and complete a stocktake of consumer benefits in 2019.

Take a look at our infographic overview of the above annual review: smart metering 2018/2019 in numbers.