Soaring gas prices – can smart meters help?

Steep gas prices are front of mind for many energy managers at the moment. Some housing associations, developers and managing agents operating heat networks have mentioned incoming kWh rate increases of up to 292% in recent months.

This level of increase presents a dilemma for energy managers when it comes to setting end-user heat tariffs: is it better to follow the exact pattern of the market, accepting a short period of steep pricing in the hope that things will improve in 2022, or should they spread the upsurge over a longer period, with a risk that customers will be paying over the market rate come 2023-24?

There is no easy answer to this. Analysts are currently predicting that, while prices should drop back down in 2022, it may be mid-2023 before they return to 2021 levels. Whatever energy managers decide, many residents in heat network properties are still going to see an annual increase of about £240 in their heat bills. While comparable to the price rises consumers running traditional gas boilers will experience, this is nonetheless likely to cause real hardship for some. 

It might seem counterintuitive, then, to think about investing in smart metering technology as we head into what some are calling an energy crisis. Who wants to load yet more costs onto a scheme right now? However, given that the information smart meters provide is known to stimulate positive behaviour changes that significantly reduce personal energy consumption – and therefore costs and emissions – it’s well worth considering. At a time when housing providers need to be seen to be doing something practical to help, this is a very constructive, measurable, and accountable way of demonstrating care for their residents, while also fulfilling corporate sustainability goals.

Moreover, the positive benefits of energy-consumption data can be further multiplied if it’s provided in an accessible and convenient way. The latest data from our own web -based metering and billing solution for heat networks demonstrates this clearly. Such smart metering technology provides residents with a completely paperless experience, enabling them to view, monitor and manage their energy account from any internet-connected device, at any time, and from any location. Its usage figures tell an interesting story about the difference easy access to energy consumption data makes to people’s heating habits.

Firstly, over a third (35%) of page views on the app are from residents reviewing their energy usage. This is substantially more than any other type of activity such as viewing their balance (24%) or paying a bill (6%), indicating the great interest that people have in monitoring how much energy they’re using when they’re given the opportunity to see it. It appears to have the same appeal as counting steps on a smart watch!

In comparison, residents in credit-billed properties have no real-time view of their consumption data; once a bill arrives a month-and-a-half after the fact, it’s very hard to know what behavioural changes could have made a difference, and by how much. This inevitably results in inertia.

Secondly, we can see that access to real-time usage information often has a clear and dramatic impact on levels of consumption. At a development of 50 residential units in North London, monthly energy usage over four months from July to October 2021 was between 21% and 43% lower than that of a comparable 46-unit South-London site that is credit billed. At another 89-unit property in South London, the difference was even more pronounced; usage was 29% to 55% lower each month compared to a similar 84-unit credit-billed property in Wembley. It’s not hard to see how such sizeable differences in consumption levels can make a real impact on people’s bills when gas prices are as high as they are today.

Another benefit of smart metering technology is that it gives energy managers real-time data about occupancy levels and peak-usage times, as well as alerting them to any potential issues within the network. This can help them to quickly identify and rectify any costly inefficiencies – particularly crucial at a time of spiralling energy costs.

Despite all the savings that smart metering can generate, it can still be hard to justify the cost at a time when everyone is feeling the pinch. However, the good news is that using a web-app can slash the upfront CapEx investment by up to 60% compared to installing In-Home Display devices. Furthermore, with less hardware to maintain, operational and replacement costs (OpEx and RepEx) can be cut by around half as well.

It’s interesting to note that virtually all (99.2%) customers using the web-app choose to pay for their energy online, with the vast majority (77.1%) accessing the web-app via their smartphone. This indicates how much people nowadays tend to prefer online methods of engagement, meaning that providing a digital payment option is essential. However, it’s also important to ensure that alternatives are available for people that don’t have internet access. The COVID pandemic has highlighted the fact that not everyone has use of a smart device and/or WiFi. For those that don’t, many of whom may be vulnerable for various reasons, there can be serious knock-on effects for school, work and homelife.