Smart meters might not look that exciting, but they can do a lot for your business.
Smart meters are often talked about as the ‘future of energy metering’. The reality is that they’re already well established in the present.
A significant number of businesses have already had smart meters installed by their energy suppliers ahead of the government rollout, which will hit large businesses by the end of 2014 and small businesses by 2019.
In this guide we look at smart meters and what they can do for your business.
What are Smart Meters?
Smart meters are a replacement for your existing gas and electricity meters. Just like a traditional meter, they measure how much energy you’re using. The difference is that they remotely send the data they collect to your energy supplier, cutting out the need for manual meter readings.
They can send the data to your supplier in a variety of different ways – some have a SIM card and send it by mobile networks, while others use WiFi or other mobile internet connections.
How do they differ from Advanced Meters?
The phrase smart meter has changed definition over the years and it is therefore necessary to have another category of meter. This is what is now known as an Advanced Meter.
An Advanced Meter does exactly what a Smart Meter does but does not integrate with ‘smart’ appliances or display units. Instead its role is purely functional in that it is able to provide half-hourly electricity and hourly gas information that is remotely accessible by the supplier and to which the customer can have timely access.
What is the Smart Meter Rollout
At the end of September 2013, 508,500 Advanced Meters were installed in business premises across the UK.
Under the pre Smart Meter Rollout phase, businesses can choose to have an Advanced Meter installed in their premises at any point up to April 2016 without having to opt and wait for the higher specification Smart Meter. This means businesses can benefit from the advantages of the core functionality of a smart meter (automated meter readings) much earlier.
In addition businesses can still choose to opt for an Advanced Meter instead of a Smart Meter at any point up until December 2020 (the planned end of the roll-out) as long as the contracts for doing so are in place before April 2016.
After December 2020 any new installation will need to opt for full Smart Meter specification.
What can smart meters do for your business?
1. Help you cut your energy consumption
A smart meter alone won’t cut your energy usage, but it can provide you with the data that will prompt awareness of your business’s energy usage and in so doing can highlight that you may need to take action.
According to calculations from DECC, businesses with a smart meter should be able to save £190 on their energy bills by 2020, rising to £200 a year by 2030.
In reality, many businesses may be able to save far more than this: according to the Carbon Trust, the average business wastes 20% of the energy it buys.
For ideas on how your business can save energy, see our energy efficiency guide.
2. Provide accurate bills enabling better cashflow
A smart meter means your energy supplier always knows exactly how much energy you’ve used, the basis for accurate bills.
With traditional meters many businesses end up over or under-paying their energy supplier because their bills are based on estimated meter readings rather than the real thing.
The problem with overpaying is obvious – the energy supplier has money that could be put to better use elsewhere. However underpaying can be just as damaging too; the energy supplier will want their money eventually and you could be left with a high bill which you hadn’t budgeted for. Some suppliers reserve the right to recover costs for up to 6 years of inaccurate readings. Visit our guide to back billing to understand your supplier’s policy on this and how exposed you could be to errors in estimated meter reads.
What can smart meters do for the energy industry?
The benefits for the energy industry could mean more benefits for your business.
Smart meters will form part of a whole new ‘smart’ grid.
This is intended to provide energy suppliers with much more data about the whole energy ecosystem, from the point at which the energy is sourced or generated to the point at which it is used.
Energy generators, distributors, transporters, suppliers, meter operators, meter readers…there are a lot of players in the market and the energy we use (and the data about our usage) has to travel a long way.
A joined-up smart grid would mean that energy suppliers could work out how much energy they need and when they’ll need it with a lot more accuracy. This isn’t the case currently, which means unnecessary waste and over supply alongside shortfalls and excessive demand.
With a ‘smart’ grid, energy generators could ensure they’re generating energy at the right times and in the right amounts, which in turn would make the whole system more efficient and ultimately would cut the cost of energy.
It would also mean that energy suppliers could create innovative new tariffs for their customers, for example offering time of use tariffs (where energy is cheaper at specific times) based on your business’s busiest hours or on the times when overall demand for energy is lowest. The current reliance of Load Profiles could therefore become a relic from the past.
Concerns about smart meters
As with any new technology, concerns have raised about smart meters. These focus on three main areas:
1. Privacy and data protection
A smart meter records data about your energy usage. This data, in theory, could be used to estimate things like your business opening times, how many staff you have etc.
Some people have voiced concerns that this could be used for marketing purposes, or at the more dramatic end of the scale, by criminals to work out a good time to burgle premises.
With regards marketing, there is a balance to be struck between protecting your privacy, and making sure that enough data is available so that the industry can reap the benefits of smart metering.
The government has put in place safeguards so you’ll be able to protect your privacy – you’ll have a choice about how your energy consumption data is used and who can see it. So you can, if you so wish, limit the access of your data to your current energy supplier for billing and other regulated purposes.
2. Switching supplier
Another concern is that once you have a smart meter installed by an energy supplier, you won’t be able to switch to a different one, stifling completion and leaving your business stranded on uncompetitive deals.
If you currently have a smart meter installed in your premise and want to switch suppliers, how easy it will be will depend upon which energy supplier you’re switching from and to.
Some suppliers are willing and able to take over your smart meter others are not.
If the new supplier can’t take over your smart meter, it will simply revert to being a ‘dumb’ meter and it will revert to being a manually read meter. In some rare cases you might have to have a new meter installed. But one way or another, you’ll still be able to switch your business energy supplier.
This situation has come about through early adoption of smart metering, with pioneers like BizzEnergy and BGlobal, launching smart meter products in the early 2000s. As these meters have gained acceptance, and garnered the attention of other commercial players and the government, the options and variables around the concepts have grown. This has led to a lack of standardisation amongst the smart meters currently deployed.
This in turn has out-foxed some suppliers’ systems and they some are unable to support all meter types.
As part of the process for the smart meter rollout, intended to be complete by 2019, a fixed, formal specification has been agreed with full ‘interoperability’. In effect this means that smart meters won’t get in the way of businesses switching energy supplier and all suppliers will be able to support all the meters rolled out under the initiative.
The irony is that the early adopters will likely need to have their advanced meters replaced with what in some cases will be meters with lower, but essentially, still smart functionality.
3. Health
Some people are worried that the communication technology used in smart meters could have a negative impact on health.
The core concern is that smart meters utilise mobile phone and WiFi technology that have had the same accusations levelled against them in other uses.
Given that there is no concrete evidence that mobile phone or WiFi technology has a negative impact on human health it is doubtful that a smart meter, which you don’t carry around with you, and certainly don’t put to your ear, will pose any more of a concern.
As a safeguard, any equipment used as part of a smart meter has to comply with all the relevant regulations and guidelines set out by the International Commission on Non-Ionizing Radiation Protection (ICNIRP) in relation to electro-magnetic fields.
If you are concerned about having a smart meter installed for these, it’s worth noting that they aren’t currently compulsory by law. But the evidence suggests that whilst in having a smart meter health risks are low, the risks of not having one to your cash flow are great.
Should you get a smart meter now, or wait for the rollout?
According to analyst firm Berg Insight and Pike Research, at the end of 2008 there were 39 million smart meters installed across Europe, and globally, 17m additional smart meters were shipped for installation in the first quarter of 2011. Clearly their prevalence is increasing.
A number of business energy suppliers including British Gas, Opus Energy and SSE already offer smart meters so if you want a smart meter now you can get one.
Business Juice will be able to help you find a supplier that can give you a smart meter and a competitive tariff.
As an ‘early adopter’ who gets a smart meter ahead of the rollout, you’ll be able to start monitoring your energy usage and becoming more energy-efficient now, rather than waiting and wasting money in the interim. If you do this ahead of other businesses in your sector it could give you a real competitive advantage.
However, one thing to be aware of if you go went down the early adopter route is that you may have to have it replaced later on if it doesn’t meet the industry standards set as part of the smart meter rollout. This should not be an issue for those who are opting for an Advanced Meter in the pre Rollout phase.
The market for financing metering systems is mature and is now simply an inclusive charge on your energy bill. Having a new meter installed almost always does not require any upfront payment from the customer and should be recovered by the supplier via the energy bill in the same way a business currently invisibly pays for the wages of the meter reader. Whilst any new technology will come with a price, it is confidently expected that the accurate data such systems provide will more than outweigh in efficiency improvements any increase in metering costs to your business.
Installing the meter itself, on a normal site, isn’t too time consuming or disruptive, and can even be facilitated around working hours to suit your business. So going through the process twice shouldn’t be that painful, especially as any necessary secondary installation will be a case of retro fitting.
Smart meter case studies
Equipe Tyre & Autocare
Equipe Tyre & Autocare is a family-run business with over 30 years’ experience in the automobile industry and with ten premises in various locations across the UK.
As a business with multiple sites, keeping on top of energy bills for all its sites was a problem and so were the regular inaccurate bills.
Equipe wanted to be able to monitor energy usage, reduce the amount of energy being wasted and make sure it got accurate bills for all of its premises, so it worked with First Utility to install smart meters in nine of its premises.
In addition, Equipe switched to getting one monthly bill for all its premises. The bill was broken down by site, so there’s full visibility on consumption and costs for each branch.
Graeme Hepburn, Director at Equipe, said: ‘The data we can now see through the online portal enables each site to monitor and manage its own energy consumption.
“Each site sets a target and aims to consume less power; their efforts are forcing down our operating costs. The data provided by the smart meter is invaluable, without it we could not manage our energy consumption to this level.
“We now receive 100% accurate bills via the smart meter, allowing us to budget more accurately. We pay for what we use and there are no more estimates. Now we also have data to hand and can ensure that each site is on the correct tariff.
“The installation of smart meters has saved us on average 30% per annum, on a £2000+ per month spend. First Utility and its services have been excellent, until they came along everything was guesswork when it came to our electricity bills; now we are in control”
Llwchwr Working Men’s Club
Llwchwr Working Men’s Club is based on the outskirts of Swansea, and their premise is a two-storey building with capacity for 400 people.
The club had been getting quarterly bills for years, but their monthly Direct Debit was set too low and didn’t cover the level of energy being used, so it built up a £4,500 debt.
The Direct Debit was put up and the debt was cleared, but next the club ended up £3,000 in credit.
Llwchwr Working Men’s Club wanted more control; flexibility and visibility over what they were spending on energy, so they decided to have smart meters installed by First Utility.
Steve Hill, secretary of the club since 2005, said: “I considered a range of options, and although First Utility was one of the cheapest, the real deciding factor was that First Utility offered to install a smart meter.
“I could see that in the longer term, a smart meter would help us to save more money than only chasing the best deals year on year.
“Every month, we get a 100% accurate bill detailing the energy that we have used. Our monthly Direct Debit then pays off exactly what we owe, meaning there is no huge debt or credit on our account.
“What’s more, I was able to go online and look at a graph showing the club’s energy consumption month-on-month, day-by-day and even down to each half-hour through the day.
“As a result of having more data about their energy usage, the club looked at how it could cut back on its consumption. It installed energy-saving lighting throughout the building and turned off fridges during the week when they weren’t being used and replaced their inefficient air conditioning units.
“Our bills over the last six months since the lower energy-consumption air conditioning units were installed have dropped significantly.
“Overall, I can clearly see the impact that our changes have made. In general, I’ve become much more aware of where we spend money on energy and how we can make reductions.’
“When we switched providers, we were paying around £1,200 per month on our energy bills. Nowadays it’s around £1,000 and I would attribute that to the impact the smart meter has made on our approach to energy and saving energy.”
To find out more about smart meters and how your business can benefit call us on 0800 051 5770, we’d love to hear from you.