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‘Major risks’ to £11.3bn smart meter rollout

NAO raises concerns over costs and how much energy usage will change

The national rollout of smart meters, set to cost £11.3 billion, faces "major risks" on value for money according to a tough report by the National Audit Office.

The report questioned how much energy usage will change, and how clearly the government had set a benefits realisation plan or a strategy for engaging consumers.

The rollout is aimed at helping customers to control their usage by providing detailed real time information on what their consumption is costing. It is also seen as an important step towards smart grids, which will target better management of demand.

Smart electricity and gas meters will be installed in all homes and small businesses, during a five year period from 2014.

But the NAO said today that the Department of Energy and Climate Change "must address" a number of risks to the programme if the rollout is to deliver value for money. The government is targeting £18.6 billion benefit to the economy between 2011 and 2030, including from changed energy usage by consumers and improved processes for suppliers.

Principally there was "uncertainty", the NAO said, about "the extent to which smart meters will result in changed energy use by consumers over a sustained period".

The NAO expressed concerns that the department has not yet developed a benefits realisation plan or consumer engagement strategy.

There was also "very little contingency time" to address risks that design approvals, procurement and testing "take longer than planned", the NAO warned.

It also highlighted questions over whether the system was "flexible enough to minimise the risk of future obsolescence", as well as a need for much clearer plans for system security.

The department had improved programme management, the NAO noted, after an early phase demonstrated that planning and budgeting were "insufficient to support clear monitoring and accountability".

Amyas Morse, head of the NAO, said as the report was published: "The benefits of proceeding with this major technological and logistical undertaking are still uncertain. There is limited evidence of how much and for how long British consumers' behaviour might change, and costs could escalate."

Morse called for the department to set "clear decision points" at which it will review costs to consumers, benefits and risks "and judge whether to carry on as originally planned or significantly change direction".


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