Smart Meters Bill (Second sitting)

Alan Whitehead Excerpts

Committee Debate: 2nd Sitting: House of Commons
Tuesday 21st November 2017 Public Bill Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)]

Q 46 Thank you, Mrs Gillan, and welcome to the Chair. It is very nice to see you. I will ask just a brief question to give plenty of people a chance.

Thank you for coming today, gentlemen, and helping us. As you probably know, the evidence you are giving today is the beginning of the Committee stage of the Bill. May I ask you both to comment on the interop—I cannot pronounce it—on how the Data Communications Company system will help the SMETS 1 meters to be operable throughout the whole system? We keep hearing about it and my shadow and I have discussed it at different times, but I would be very interested in your comments.

Derek Lickorish: I think that interoperability for SMETS 1 meters will come about in two ways. But first, what is interoperability? At the moment, SMETS 1 meters have their own mini data communications company. They have their own communications infrastructure, and it is generally all made by the manufacturer who supplies the meters. There are several of those systems out there. The initial interoperability can come about by making SMETS 1 meters interoperable through their communication systems. That is already available technically, but it requires the participation of the big six to make it happen.

You asked specifically about how the DCC deals with enrolment and adoption—those are the terms used. In the case of Secure Meters, it will take the output from its smart meter service operator system and plug it into the DCC. That, on the current timeline, is due to take place next October. That is based on a whole range of assumptions, and I think it is more likely to come about at some time during 2019, subject to all things here on in going very smoothly for the DCC. So there are two options to make interoperability work.

Richard Wiles: Likewise, at Trilliant, with our meters we offer integration into third-party systems that allow interoperability and for the devices to remain smart. We do that through one of our clients. We also offer a cloud-based smart meter systems operator—SMSO—solution ourselves, and we can provide that interoperability for people who take up our service. That enables them to put meters on the wall pretty quickly, using a similar platform to that of our larger suppliers from the big six energy companies.

We also provide that service through an aggregator that can do secure file transfers that allow even quicker adoptability and the ability to get meters on the wall, but we adhere to the same standards as the DCC for enrolment and adoption as to how we would build that development interface to communicate to our existing infrastructure and make sure that the service requests that come through the DCC path meet the criteria of the DCC, similarly to what happens with SMETS 2.

Derek Lickorish: So SMSO interoperability could be achieved now.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Q The Government have indicated that SMETS 1 meters will no longer be installable after a particular date and have given guidance about what can be installed up to that date. There is a consultation at the moment about whether that date might be changed slightly to arrange for a smoother handover from SMETS 1 meters to SMETS 2 meters. What effect will that arrangement have on the overall passage of the roll-out, and what do you think about the present availability of SMETS 2 meters to ensure that that roll-out proceeds?

Derek Lickorish: We are kidding ourselves if we think that we are about to have a mass roll-out of SMETS 2 meters any time soon. As we heard this morning from the gentleman responsible for DCC, there are 250 SMETS 2 meters connected to DCC, and they are electricity-only; that is 200 more than I thought were connected to DCC. If we were about to have a mass roll-out, we would have at least 200,000 fully interoperable SMETS 2 meters connected to DCC to facilitate end-to-end testing of that system. That is currently not the situation.

The July 2018 date is predicated on the fact that SMETS 2 meters are going to roll out very soon. For that to happen, those meters need to be declared interoperable. Interoperability is essential not only now but in the future. What does that mean for people who do not follow all this stuff at the molecular level? We decided at the outset of the smart meter programme that we would have many world firsts. There are about seven or eight first-in-the-world developments in this programme, one of which is that every meter must be interoperable with other meter manufacturers’ meters so that, should a meter fail, it can be replaced by another meter manufacturer’s meter without the in-home display being replaced. That is a key tenet of the programme.

A process known as smart meter design assurance is supposed to be up and running to prove that SMETS 2 meters are interoperable. That is not up and running, and it has some technical difficulties. Yesterday, a letter arrived to say that one SMETS 2 meter manufacturer has a problem with compatibility of the hub. That is not to say that that will not be solved, but that was only yesterday. Is it just that manufacturer’s SMETS 2 meter or is it all of them? In theory, it should be all of them, because they have all been made to precisely the same specification.

This programme is the first in the world for device-level interoperability, it is the first in the world to separate out the communications system and it is the first in the world to get all the people involved in the SMETS 2 roll-out designing to a 6,000-plus page specification. I hope you can see from that that I do not think we are going to be going very quickly very soon. Having said that, I do not think that the 2020 date should be changed. I believe that the industry should be galvanised into action to solve the problems and then there should be a reflection on what the 2020 date should be. We should not have a date that nobody believes is possible.

Richard Wiles: Trilliant’s view is that there needs to be some coexistence between SMETS 1 and SMETS 2 beyond 14 July next year. Our response to the consultation is that we are concerned that smaller suppliers, which may not have done any SMETS 2 installations to date, may be in a position where they are not first in the supply chain for meters, communications hubs or other parts of the end-to-end system testing. We believe there should be coexistence and that SMETS 1 should run with SMETS 2 until SMETS 2 deployment has been proven at scale and can take over the quantity of SMETS 1 meters that will be deployed.

From our supply chain, we are concerned that if we are forced to turn off our supply manufacturing chain and then we get the go-ahead to recommence production, we will then have to ramp up. For the products that we develop, we have specialist components to ensure that the security is maintained. We need to ensure that other key, core aspects of the supply chain are readily available so that, should the call come to bring SMETS 1 up again at a date beyond 14 July, we can serve and make a credible difference to the actual roll-out and then achieve the 2020 planned deadline.

[Dr Whitehead]

If, as we have heard, SMETS 1 can be made fully interoperable with software upgrades, what is the purpose of SMETS 2 meters?

Derek Lickorish: What is the purpose of SMETS 2 meters if we can make SMETS 1 interoperable? To be able to answer that question, you would need to have a review and some evidence on which to base that decision. At the moment, it is beyond my sphere of full knowledge on everything to give a clear-cut answer to that question.

Richard Wiles: SMETS 1 and SMETS 2 need to run in coexistence. I believe that some clients are in prepayments mode, and prepayment is available in SMETS 1 now. I am talking about some specific instances where SMETS 2 is required: for aspects such as high-rise buildings or dual band comms hubs, when that comes into effect, when greater interoperability is required. Certainly from our position, we believe that we can deploy a larger volume of SMETS 1 meters and still help the Government meet the 2020 deadline.

As to SMETS 2, there are specific advantages around interoperability that have been touched on. While each individual SMETS 1 provider creates mini DCCs, as Derek mentioned earlier on, that will be avoided with SMETS 2. However, with enrolment and adoption, we are working with DCC at the moment, and that will allow the interoperability of our estate to be absorbed into the wider continued operation of the smart meter system through DCC.

Derek Lickorish: Can I add to my answer to Alan’s question and build on a point Richard made about interoperability? Although SMETS 2 has some advantages on the one hand, it is not at the data level. If you take mobile phones, they can keep on being produced because they are data interoperable with the network. SMETS 2 meters have to be identical not only for the meter installed today but for those in 15 years’ time as well. This backwards compatibility requirement is built into what we have. SMETS 1 meters are data interoperable, which is why we can make SMETS 1 interoperable relatively easily from the mini DCC position.

I know that all these things are grindingly complicated. We are trying to explain them in a way that I hope is straightforward.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Q After this morning’s witnesses, I was left with the impression that the DCC programme is absolutely fine, on target and all is going well. Has the DCC programme been delayed? If so, what have the problems been?

Richard Wiles: There have been publicised delays within the go-live period. The go-live date of November last year was when we had a release of DCC that allowed devices to be installed and to be made interoperable. A statement was made this morning that there are 215 meters on the system. It was envisaged that there would be a considerably higher volume than that now.

--- Later in debate ---

[Dr Whitehead]

Q Mr Deshmukh, I was very interested to look at your pan-supplier customer funnel, which you set out in your written evidence to the Committee. The November 2018 funnel appears to suggest that getting on for 35 million people will not have a smart meter by that date. Of those, 17 million will be eligible at that point for a smart meter, or will have been persuaded to have a smart meter, but energy suppliers will only plan to book installations for 5 million of them, and 3.8 million will actually get smart meters at that point. I set that against the smart meter roll-out cost-benefit analysis, which came out in August 2016. It shows a concentration of installations at the end of 2018 or 2019 of something like 14 million to 15 million a year at that point. It is not going to happen, is it?

Sacha Deshmukh: The final analysis to which you are referring was conducted by energy suppliers over the summer. I believe that over 90% of the market share of energy suppliers contributed the data to that exercise. One part of the data that they submitted gives you the number of installations at the bottom of the funnel along with their predictions, or their desired number of installs, for next year. I know they have to discuss those plans with the regulator Ofgem, so I cannot take a view as to whether the regulator thinks that those plans are adequate, or on any of those dialogues. As far as I am aware, the data that went into that analysis is the most up-to-date data.

[Dr Whitehead]

Q We have two suggestions here. One is that only 4 million people will go on to have a successful installation of a smart meter by November 2018, and yet it is suggested on the smart meter roll-out cost-benefit analysis that something like 14 million will be required to have smart meters installed at that same point in order for the roll-out to be completed by 2020. So in other words, there is to be a bunching of installations at an incredible level between the end of 2018 and the middle of 2019. Do you think it is possible to achieve that over the period, even with some amendments to your pan-supplier customer funnel arrangement?

Sacha Deshmukh: Our organisation’s responsibility lies in consumer demand for the product, so it deals with the top of the funnel, as it were. Consumer demand for the product is very strong. In respect of the consumer demand within that funnel, the top is measured by the number of consumers stating that they want to have smart meters within the next six months, so it is a hard measure of demand. There is demand there. I am not able to comment in much detail on the conditions that might improve the lower parts of the funnel. I apologise if it was not as clear as it could have been in the written evidence, but the figure in the evidence to which you refer related to the six-month period before November, rather than the whole of that year. Those are the latest predictions from energy suppliers, which may be different from the ones to which you referred in the most recent cost-benefit analysis of 2016.

[Dr Whitehead]

Q My point is that it is indeed a slice of the period—3.8 over the six months prior to November 2018—and yet in order to reach the roll-out target, the suggestion is that about 14 million to 15 million ought to be installed over that same period. It seems to be rather a large gap.

Sacha Deshmukh: The factors taken into account in that particular analysis, when energy suppliers submitted their data, included their predictions. Some of the issues that I heard the Committee discussing with the witnesses today included their predictions of meter asset availability, and of their ability to actually deliver the installs in question to the expected quality standards. They may have changed their predictions of the number of installs that they would be expecting to deliver from a year ago.

[The Chair]

Ms Vyas, did you want to add anything to that line of questioning?

Dhara Vyas: No.

--- Later in debate ---

[Richard Harrington]

Q Thank you very much for coming, Doctors, as it were. I thank you for the efforts that you have made professionally to get the programme to the stage it is at now. Although difficult, I would like to ask a broad question that will encompass both your areas. In my Government job, I view the smart meter programme as just the very beginning of a future smart grid for people. I have seen prototypes in America and elsewhere, which you will know much better than I do. What change in human behaviour patterns have you seen up to now for people who have what we could call a very prototype smart grid with smart meters? From both the building and the consumer point of view, what is the vision for the future?

Dr Sarah Darby: I am not sure we can yet say that there is a prototype smart grid. The beginnings of smart energy tend to be different in every country and smart metering in this country is different from smart metering anywhere else. In fact, more attention has been paid to the consumer engagement side of smart metering in this country than anywhere else. This is the only country where a fairly intensive effort is put into customer engagement at the time of roll-out of the smart meter, when everyone is offered an in-home display, and all the installers are trained in communication skills to explain what is going on, what can be done with the display, what the smart meter is about and how customers can use it as a tool, if they wish to. This country is a bit special in that way, and we are seeing, on average, modest positive effects.

In the US, where smart metering is widespread, the emphasis has been very much on using it to try to control peak demand, and as an instrument to introduce time-of-use pricing and whack up the prices at peak times to keep peak demand down. They have special problems there, particularly in the hotter states, with air-conditioning in the summertime and very high peak loads, which is an expensive problem for them to manage. The earliest roll-out of smart meters was mostly, in my understanding, to overcome serious problems with fraud.

Dr Richard Fitton: I agree with Sarah, the UK is very strong on smart meters. If you speak to anyone in Europe, a lot of them are envious of the technical standards of the smart meters that are being rolled out. As we have heard from all the sessions, it is a very complicated issue and it is not getting any less complicated, certainly for the consumer.

Our research group’s angle is everything from the consumer side of the meter. We are looking at how to diagnose problems with buildings using the data and systems that are available. We are also developing appliances that will work with smart meters. A big piece of the puzzle that is missing from some of the discussions is the fact that the consumer should be able to engage with the smart meters. As it stands now, they cannot engage with the smart meters. We can log on to the energy supplier’s portal and get a half-hourly reading. But a magic black box called the consumer access device is the gateway to the occupiers having access to their real-time data. This is not a box on the wall that tells them how much energy is costing. It is a consumer access device that streams real-time data to things such as smart appliances and smart heating systems for homes.

That is the whole aim, as far as I can see, of the smart and flexible grid that we constantly talk about. To attach one of these devices is exceptionally difficult and I have never had one successfully connected personally, nor have colleagues or associates. So a big piece of the puzzle is missing in using this data for something that is really smart, rather than just for billing. Billing is clearly important, but the use of the best-value data for the consumer appears to be the missing part of the puzzle. I think that would also push some buttons to help develop the interest in smart meters and get them into people’s homes.

[Dr Whitehead]

Q We have been talking about the other end of the process—the extent to which it will be possible to use smart meter data in aggregate for all sorts of purposes in smartening the grid; developing different tariffs and different resiliencies in grids with knowledge of real-time flows and so on. What sort of penetration of the system do you think is necessary for that data to be usable? Is it a full roll-out, a partial roll-out, 60%, part of the country covered, not other parts? What would be the optimal pattern?

Dr Richard Fitton: I think it is the same with any technology. The greater the penetration geographically across different types of people and property and heating systems, and the greater the spread the better. It is a very difficult question to answer. My thought has always been, when is the roll-out complete; when do we say it is complete? Is it at 90%, or 80%? It may be that 10% of people—I have just made that figure up—will not let you through the door. When is it complete; when do we rubber stamp it?

Dr Sarah Darby: Yes, I think there will always be a section of the population who do not stand to gain very much from having a smart meter; the demand is perhaps very low and there would not seem to them to be a great deal of point. Their impact on the system would also be very small, so I would say yes, we are probably talking in the region of 80%. You would have garnered pretty much all the benefit by then.

[Dr Whitehead]

Q Does the viability of the aggregate data degrade just marginally as the percentage point of distribution goes down? Alternatively, is there a point at which you say, “Actually, this information is useless” because the penetration is so patchy or incomplete that you cannot reliably use it for the purposes that we hope it can be used for in the future?

Dr Sarah Darby: I guess that would depend on what you wanted to use it for.

[Dr Whitehead]

Q One example would be predicting in real time what flows are going on in various parts of the grid, so you can manage the grid’s capacity versus its possible strength in the future in an optimal way.

Dr Richard Fitton: I could not give an educated answer to that. I simply do not know the penetration level that would be needed, but I would say 80%.

Dr Sarah Darby: Who would account for a lot more than 80% of the actual consumption or the actual amount of electricity being fed in?

[Dr Whitehead]

That is what I do not know. That is why I am asking the question.

[Clive Lewis]

Q In terms of the versatility of the smart metering data that you touched on, Richard, it was quite sobering to hear you say that that has never worked for you. We can probably quite accurately talk to suppliers about the build and so on, but I am thinking of all the other things, such as the heating being attached to movement sensors so that it goes off when you leave the house and, by talking to your phone, switches back on when you are due to arrive back in 15 minutes. Google can do that already.

Obviously, the cheapest and greenest energy is the energy that we do not use, so that is fantastic on the demand side, which we do not focus on enough in this country. You are saying that that is not really working. I wonder whether this legislation is the place where this will happen. Is there anything in this legislation that you feel is sufficient to give you encouragement that that will happen in the future, or are there holes in it that mean that those data and that potential will never be realised?

Dr Richard Fitton: There is nothing in the Bill that would cover that element. There is guidance around the periphery of the Bill and the licensing Acts and things like that, but there is nothing specific.

--- Later in debate ---

[Dr Whitehead]

Q Briefly, on that particular issue, one thing that smart meters may well do—we have heard that they do—is enable you to use energy more effectively. To paraphrase Dr Fitton, although a smart meter might tell you very smartly, “This is exactly how the energy you are using goes out through the roof and windows of your house and through your walls,” and that may well be useful information, it does not actually make your home any more efficient. Is there any evidence that smart meters can lead people to go that step further, or do we still need smarter meters that tell you, “Actually, your house is really inefficient; what you ought to do is make your house more efficient, and then your smart meter will work even better”?

Dr Sarah Darby: If you really want to see how heat is leaking from your home, you want thermography. When people are shown thermal imaging of their homes, it can have quite a dramatic effect, because you can absolutely see where it is leaking out. That is the most powerful way of doing it. A smart meter can just tell you, “This is what you are using now; this is what you used last week.” You remember, “Oh, yes. Last week we had the whole football team round having hot showers,” or something like that. You can link cause and effect to some extent. This is what you used, compared with several months ago. You can see seasonal effects and so on. You can work things out.

Ideally, you need to be able to put all that together with other sources of information. Another thing we find is that when people get their feedback from different sources, that has more effect than if they are getting it from just one. Ideally, you would see the smart meter information as part of a rich mix that people get gradually more familiar with and that they talk about with other people; they can find out what to do with that information and try to find ways of using it.

[Giles Watling (Clacton) (Con)]

Q One concern you mentioned, Dr Darby, was too much of a rush to roll out the smart meters, because installation might be compromised. Secondly, and interestingly, you said that you feel people might be pressured into adopting smart meters and, therefore, not engage in the process; I think I have read that right. Do you have any evidence that that might be being addressed—that people are beginning to understand the benefits and the process involved?

Dr Sarah Darby: I have not heard of any serious push-back on this. I have heard one or two accounts anecdotally that people are feeling under a bit of pressure from their supplier that they really ought to be getting a smart meter now. One woman said to me she was holding out for as long as she could. She was not particularly against a smart meter but she was curious to see how long the supplier was going to keep pushing her.