Increasing take-up of smart meters for electricity and gas

The challenge

A smarter energy system is a key element of the UK’s pathway to zero-carbon electricity by 2030, and net zero overall by 2050. Demand for electricity is expected to double as usage of other energy sources reduces, so costs and delivery need to be managed as efficiently as possible. Real-time measurement and reporting of gas and electricity consumption enables consumers to understand when and how much energy they are using, and to reduce usage or shift activities to periods of lower demand as appropriate. It also allows energy suppliers to adjust supply to meet demand, reduce wastage, manage renewable energy production more efficiently, and bill customers for the energy they use rather than an estimated amount. A smart energy system therefore offers the potential to save money, reduce carbon emissions and increase energy security as it underpins our renewable electricity supply.

The Smart Metering Implementation Programme aims to ensure smart meters are installed in every home and small business in Great Britain by the end of 2025 – a total of 53 million new gas and electricity meters. Led by Government but delivered by industry, it is the most significant change programme in the energy industry for 40 years. At the end of 2021, there were 27.8 million smart and advanced meters operating in homes and businesses across Great Britain, which while representing substantial progress left a significant task ahead to achieve the 2025 target. Evidence was needed of what more could be done at a local level to generate and fulfil consumer demand for smart meters.

What we did

Energy suppliers were working with Smart Energy GB and Government to pilot a range of coordinated activities which sought to increase awareness of, and demand for, smart meters in Derby. These included regional and localized communications, and direct field-fulfilment approaches such as door-to-door visits.

Verian undertook an evaluation of these pilot activities to provide evidence of impact on the volume of appointments made to discuss installations, and of installations themselves. We used a combination of methods, including secondary analysis of data from participating suppliers, two random probability, address-based online surveys (ABOS); and qualitative research with consumers and stakeholders.

Seven pairs of neighbouring MSOAs within Derby City were each given a different intervention; we interrupted time series (ITT) models to estimate the effects of each of these interventions individually, and difference-in-differences models to compare overall effects in Derby with a chosen comparator area, Stoke.

Finally, to assess the likelihood of spatial spillover effects – where impacts exceed the intervention’s geographically demarcated areas – our analysis covered changes in the installation volume in wider Derby relative to wider Stoke-on-Trent.

What we found

The interventions had a pronounced positive impact. Appointments increased substantially and significantly over the pilot period, resulting in an additional 132 installations per week. This equates to an estimated 1,298 excess installed smart meters in Derby City as a direct result of the interventions.

Moreover, we estimated an additional uplift of 1,250 meters in the remainder of Greater Derby, suggesting that a programme of condensed activity can have a broader positive effect that goes beyond the targeted geographical area. Likewise, impacts were not restricted to the participating suppliers: we also saw increased installations among non-participating suppliers, again suggesting that interventions can generate demand more broadly.

Between the interventions, direct, partner-led communications and support appeared more effective than general marketing, although local and regional interventions worked in combination and the latter are likely to prime customers to respond more positively to the former.

Direct field-fulfilment interventions had the greatest impact on installations, but also the potential for backfire effects such as increased installation failures resulting from low-quality appointment bookings, and negative reactions from some consumers. They may also be harder to scale up, so could be targeted at hyper-local areas where take-up is lowest, and should be supplemented by wider contextualizing marketing activity.

In short, the Pilot showed it is possible to drive substantial increases in smart meter installations by taking a mixed approach, whereby suppliers work with local government and other partners to generate awareness and interest via communications and target areas of lowest take-up with more direct approaches.