30 Nov 2013

Power to the people – smart meters, lower energy bills?

Even though the price of your next energy bills may shock you, will you spend any time at all doing something about it?

British Gas Smart Energy Report

Faced with above-inflation hikes in energy costs, the government has advised customers to try switching to save money.

But a recent study by Accenture concluded that the average customer spends only nine minutes year interacting with their energy provider, typically on matters relating to billing, credit or supply issues.

So if high prices don’t prompt us to act, what will? Social scientists believe they know.

In a study in California in San Marcos 10 years ago researchers found that the single most effective way to get people to change their energy use, was to tell them how much more their neighbours were doing to save energy.

So in the spirit of journalistic enquiry (and in some trepidation), I sent nine of my near neighbours – all in similar terraced houses – an email revealing how much my family spends a month on gas and electricity.

Immediately a neighbour who also has teenage children emailed back, wanting to know how I got our bills so much lower than hers. Others replied with tales of how they were changing supplier or replacing their boilers.

Behavioural science

It’s an impulse that the energy suppliers know all about.

On 1 October Eon launched a new facility on their website allowing customers to check out the energy bills of similar properties nearby, and 360,000 customers have already logged on to use it.

As well as graphicising monthly energy use compared to similar homes in their area, Eon’s Saving Energy Toolkit also gives a “what uses most” chart showing how energy is currently being used in a customer’s home, and tailored tips on how to reduce energy use.

British Gas run a similar scheme – they’ve even called it “Keeping up with the neighbours”.

The data generated by Eon’s Toolkit is based on old-fashioned meter readings or estimates. But soon those will be a thing of the past.

By 2020, the government wants all homes and small businesses to have smart meters fitted. That means replacing over 53m gas & electricity meters in 30m properties.

Smart meters will not only send gas and electricity readings back to suppliers automatically – making estimated bills history – but can also be attached to a display unit that lets customers see how much energy they are using on a minute-by-minute basis.

It’s a natural progression Stuart Rolland, Managing Director of British Gas Smart Metering told Channel 4 News.

“Smart metering is bringing energy into the digital era, as banking and retail was nine to ten years ago. The customer gets the benefit of true insight, and with that control and the ability to save money,” he said.

Over 350,000 British Gas customers are already using smart meters and the company hopes to install a further half a million next year.

Customer engagement

Users get a monthly smart energy report online or on paper, detailing where energy is used and where their money goes.

Remember that Accenture statistic about our interaction with our suppliers? (Just nine minutes a year on average)

British Gas says that 30 per cent of smart meter households spend an average of 18 minutes looking at their monthly energy reports – not once, but five times a year.

But that’s not all.

The energy industry hopes that smart meters could be a step on the path to smart houses.

The Customer-Led Network Revolution website

In the North East and Yorkshire a £54m research project called the Customer-led Network Revolution (CLNR) is underway. Engineers and social scientists are working to find out how customers can reduce energy costs and carbon emissions in the years to come.

As part of the scheme they are working on ways to get smart meters to work with smart appliances to use electricity during off-peak hours, helping smooth demand on the grid because, in the words of the project:

“We make best use of power stations and the electricity network – and keep the costs down – by spreading our use of electricity over the day and night.”

Professor Harriet Bulkeley, is leading the CLNR social science research team at Durham University. Giving evidence to the House of Commons Energy and Climate Change Commmittee, she said her preliminary findings were that a sizeable minority of people liked “gaming” a smart meter – trying to beat it and beat themselves.

In such trials, higher savings were typically found in homes with higher incomes and higher education levels, said psychologist Dr Gary Raw. But this new technology revolution is not just for affluent tech-savvy households.

For low-income households, energy use is absolutely paramout as it is one of the major expenditures.

Professor Bulkeley found that people had really appreciated being able to manage their household budgets with the help of smart meters, regardless of whether they had reduced their bills or not. The challenge, she told the committee, was to harness the energy knowledge that people do have – where to stand their clothes airer when the sun is shining – to information that can help them control their bills.

Power to the people?

As many an expert has pointed out, the cheapest energy is energy we don’t use.

And that’s why my neighbour is asking her supplier to send her an energy monitor straight away.

Some in the industry are even hoping that knowing how we use energy might make us feel less hostile to the companies that sell it to us. Stuart Rolland of British Gas puts it like this:

“At a time when energy companies are in the spotlight, and there’s a lack of trust, smart metering is a great antidote to that,as it gives customers control.”