Smart meters | The ultimate guide
Smart meters are devices that allow real-time monitoring of energy consumption. Smart meters empower energy consumers to manage their consumption, save money and reduce carbon emissions. Ofgem, the energy regulator, encourages the installation of smart meters at every business and household across the country.
What is a smart meter?
Smart meters are the latest generation of electricity and gas meters. A smart meter transmits real-time energy consumption measurements to your energy supplier and other energy monitoring devices.
With a smart meter, you’ll no longer have to worry about taking physical meter readings and always receive accurate business energy bills.
How do smart meters work?
Traditional business energy meters are mechanical devices that measure:
- The volume of mains gas entering your commercial property.
- The amount of energy used by your commercial property.
These old-fashioned meters are usually found in a cupboard where the electricity cable and gas pipe enters your property. Each time you use a kWh of energy, the dial on the front of the meter will tick over. Traditional energy meters need someone to take a physical meter reading periodically.
A smart meter is a device that will replace your old-fashioned meter. The essential function is the same except:
- You’ll now have a digital display instead of an analogue dial.
- The meter will transmit its own automatic meter readings.
How to read a smart meter?
Smart meters automatically transmit consumption data to your business energy supplier. You can use your smart meter to measure your own energy consumption in two ways:
i. Using a business energy monitor
An energy monitor is a digital display that connects wirelessly with your smart energy meters. The monitor collates consumption data over time to provide:
- Live energy consumption data in pounds and pence
- Day-by-day energy consumption analysis
- A system to alert you of spikes in consumption
A business energy monitor takes smart meter data and displays this in a usable format in a convenient location rather than in the cupboard where your meter is stored.
ii. Using a traditional meter reading
Like an old-fashioned meter, you can take manual readings from a smart meter. Smart meters display a digital dial which shows energy consumption since the meter installation measured in kWh.
When switching business energy suppliers, telling your supplier what the dial is reading on the switching date may be necessary.
What are the benefits of smart meters?
Smart meters are beneficial for both the energy industry as a whole and for business consumers. Let’s take each in turn:
i. Benefits for business energy consumers:
- No estimated business energy bills.
- Measure business energy usage in real-time.
- See the benefits of energy-saving activities.
- Allows measurement of carbon footprint.
ii. Benefits for the energy industry:
- Faster identification of power cuts
- Allows flexible pricing of energy
- Faster identification of unregistered supply points
What does a smart meter look like?
Smart meters usually come in a bland-looking grey box with a digital display on the front. Here’s a typical example.
The smart meter rollout
Ofgem, the energy regulator, has provided business energy suppliers with binding targets to reach universal smart meter coverage by the end of 2025.
In Q1 2022, business electricity suppliers installed 27,900 new smart meters at commercial properties. Currently, 45% of all non-household energy meters are ‘smart’.
Each business energy supplier must publish the progress of their smart meter rollout.
What are the different types of smart meters?
Smart meter technology is improving all the time. There are two types of smart meters:
i. First-generation smart meters
These are “SMETS 1” or “Smart Metering Equipment Technological Specification 1” in industry jargon. First-generation meters connect to the 3G mobile network. The problem with first-generation meters is they lose functionality when you switch business energy suppliers.
ii. Second-generation smart meters
Second-generation meters, or “SMETS 2”, are the more modern generation meter. They feed their data into a centralised network operated by the Data Communications Company. With a second-generation meter, all suppliers can access the consumption data.
The Data Communications Company is working on a programme of upgrading first-generation smart meters to the second generation.
Will my smart meter still work if I switch business energy supplier?
Only second-generation smart meters are compatible across all business energy suppliers. Second-generation smart meters were installed after 2018 and manufactured by the following companies:
The only full-proof way to know which generation of smart meter you have is to contact the customer services department of your business energy supplier.
If you have a first-generation smart meter, the meter will continue to function, but it will not automatically transmit your readings to your supplier. In this situation, you will need to submit periodic meter readings to your supplier to avoid estimated bills.
Will my business get a smart meter?
How your company will be affected by the smart meter rollout depends on how much energy you use.
Large business energy meters
From 2017, all businesses in classes 5 to 8 received an advanced meter that transmitted half-hourly meter readings. This regulation, called P272, was the energy industry’s first move toward automatic meter readings.
See our guide to large business energy for more information on whether this regulation impacts your business. An advanced meter transmits your meter reading once every half an hour.
The main difference between advanced and smart meters is that smart meters can connect to a local network used by business energy monitoring devices. Smart meters not only tell your business energy supplier your consumption but can also give this information to you.
The smart meter rollout does not affect businesses with advanced meters.
Small business energy meters
Ofgem’s plan for universal smart meter coverage will impact all other commercial properties (classes 1 to 4).
Unlike homes, business energy suppliers do not have to offer energy monitoring devices as part of their smart meter rollout. For more information, check out our guide to small business energy.
Ofgem allows energy suppliers to charge small businesses for installation and access to smart meter data. We recommend using the AquaSwitch business energy comparison service to make sure you understand these potential charges.
Does my business have to have a smart meter?
Smart meters are beneficial for business owners to help understand their energy consumption and avoid nasty surprises on their bills.
In the national rollout, business energy suppliers must offer a smart meter. If you do not want a smart meter, you can decline to have one installed.
There is an exception to this. If your current electricity and gas meter has come to the end of its useful life, a business energy supplier will only replace it with a smart meter.
FAQs – Smart meters
Here are some frequently asked questions regarding smart meters.
Which energy suppliers use smart meters?
All energy suppliers have obligations to roll out smart meters under Ofgem’s plans for universal coverage.
Do smart meters work with solar panels?
Yes, second-generation smart meters are fully compatible with local green energy generation, including solar panels.
Owners of solar panels can export any unused electricity back to the grid under the Smart Export Guarantee scheme. Modern smart meters can measure electricity imported from the mains and exported with the Smart Export Guarantee.
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