UK Edition
The smart meter rollout is facing a fresh crisis as a shortage of microchips leaves energy companies unable to meet their installation targets and facing multi-million pound fines.
Global shipping chaos and fierce competition from other electronics companies has led to a severe lack of critical parts for the devices, which track households' energy usage in real time and send this data to suppliers.
Every home is meant to have a smart meter by 2025 as part of the Government's net zero plans, but the rollout is far behind schedule because Covid disrupted appointments and millions of consumers are reluctant to have the devices installed.
Energy UK, the industry's trade body, has warned MPs investigating the chip shortage that many suppliers are already suffering from problems, which could leave them unable to meet their targets.
Companies that fall behind are at risk of being fined by Ofgem, the energy regulator.
In evidence submitted to MPs on the Business, Energy and Industrial Strategy (Beis) Committee, Energy UK said: “As an industry, we are already experiencing the effects of the global [semiconductor] shortage.
"Many energy suppliers have suffered shortfalls in the deliveries of smart metering equipment as a result of smart metering device manufacturers being unable to secure sufficient volumes of semiconductor materials to meet demand.
“The medium-term outlook for an improvement in the availability of semiconductor materials is highly uncertain, which could (if the current situation continues) result in some energy suppliers having to reduce the number of smart meter installations available to consumers as early as quarter 4 2022 / quarter 1 2023.”
Ministers say the meters are central to ambitions to decarbonise energy networks because they will be able to smooth out peaks of supply and demand, allowing “surge pricing” when there is most strain on the grid and encouraging consumers to charge electric vehicles during quieter periods.
Ofgem said it is working with suppliers to try to manage shortages.
A spokesman said: “We are helping to create the right infrastructure for net zero to thrive, and part of this is access to the up-to-date real time information that smart meters can provide for customers.
“As the evidence submitted to the Beis Committee says, we are aware of supply chain issues affecting certain meter asset providers and some suppliers and we are working with suppliers and Government to understand the impact of this issue."
Manufacturers have been suffering from microchip shortages since 2020 when production was hit by coronavirus lockdowns.
Inflation, the war in Ukraine and supply chain blockages have exacerbated the situation since then with semiconductor companies now warning the shortage could last into 2024.
Just 28.8m households - slightly more than half - had a smart or advanced meter at the end of March, and installations have been trending downward since 2017.
Suppliers must source their own smart meters, meaning that shortages are likely to be felt unevenly.
A spokesman for Octopus Energy said: “Octopus has no plans to reduce its smart meter installation targets. We’ve been working tirelessly with our meter manufacturer and financing partners to ensure we have enough meters to meet the needs of our customers.”
Scottish Power said: “We have got enough smart meters for the period.”
British Gas said it was monitoring the situation. Ovo did not comment.
A government spokesman said: “There are existing stocks of devices across industry which enable energy suppliers to continue to install smart meters at a normal rate.”