Do "smart meters" bring about any significant savings?

Question

UK television stations are showing multiple commercials such as this one which make claims about making significant savings if you get a smart meter (the linked ad claims fitting a smart meter would save enough money to run a mobility scooter for over 1000 miles). All these ads are made by the Campaign for a Smarter Britain.

Other examples of things that they claim can be powered by getting a smart meter:

• Sewing machine for nearly 200 days of operation
• 265 blow-dryers over the course of a year
• Three major cities over the course of a year (if everybody installed a smart meter)

Honestly though, these claims seem utterly outrageous to me. I fail to see how any change in the way energy is metered could lead to significant energy savings. For example I'm out at work 5 days out of 7 for 11 hours a day and the energy consumption of my home over that period is negligible. It would still be negligible regardless of what kind of meter I had installed. What's more, there's a report circulating that claims any actual savings for a household are tiny.

Meanwhile, I've received several letters from my energy supplier claiming that my meter is unsafe and needs to be replaced, and the letters imply that getting a smart meter is a legal requirement when I know for a fact that it's not. These letters only stopped when I agreed to have the old meter replaced with another non-smart meter.

To me the whole thing smacks of a scam. The group pushing it feels far more like an astro-turf campaign, and the real reasons for pushing smart meters has nothing to do with saving money or energy. The only way I can see them "saving" me money is if they introduce price hikes for people not on smart meters. In spite of all this, smart meter uptake has fallen badly behind the target the government has set.

So my questions are:

1. Does a smart meter actually save energy and if so, how?
2. Does a smart meter actually save me money and if so, how?
3. Are the claims made in the advertising campaign realistic?

Answer 1

Oddthinkings answer is excellent though I'd like to take a slightly different tack to the question.

With some smart meters your bill can change quite dramatically depending on the design of the smart meter.

Research paper: Static Energy Meter Errors Caused by Conducted Electromagnetic Interference

News articles:

Smart energy meters giving readings up to six times too high, study finds

it is unclear whether smart meters will save consumers any money, and could even end up costing them, as they are paying for the roll-out through higher energy bills.

According to a report by First Utility, one of the UK's biggest energy suppliers, UK households face a 42 per cent rise in the amount they pay to support government green energy initiatives, including smart meters.

That being said, depending on the devices most commonly used in your home and the way their current draw interact with the smart meter design it's possible to end up being metered as using up to 30% less than your real usage: a significant saving!

Electronic energy meters’ false readings

In the experiments (which were entirely reproducible), five of the nine meters gave readings that were much higher than the actual amount of power consumed. Indeed, in some setups, these were up to 582 percent higher. Conversely, two of the meters gave readings that were 30 percent lower than the actual amount of power consumed.

The greatest inaccuracies were seen when dimmers combined with energy saving light bulbs and LED bulbs were connected to the system. According to Mr Keyer (lecturer Electrical Engineering at the AUAS and PhD student at the UT) “OK, these were laboratory tests, but we deliberately avoided using exceptional conditions. For example, a dimmer and 50 bulbs, while an average household has 47 bulbs.” switching devices”.

Answer 2

There have been a number of studies that investigate how consumer behaviour changes when feedback from a smart meter allows them to understand their usage habits.

• 2010, The impact of informational feedback on energy consumption—A survey of the experimental evidence

  This paper looked at the effect of In Home Displays (IHD) from a dozen pilot programs in North America.

  Our review indicates that the direct feedback provided by IHDs encourages consumers to make more efficient use of energy. We find that consumers who actively use an IHD can reduce their consumption of electricity on average by about 7 percent when prepayment of electricity is not involved. When consumers both use an IHD and are on an electricity prepayment system, they can reduce their electricity consumption by about twice that amount.

• 2011, The potential of smart meter enabled programs to increase energy and systems efficiency: a mass pilot comparison

  This think tank report looked a 100 different pilot projects, totally 450,000 residential consumers. They found In-Home Displays (IHD) were a key component, but the variability in savings was wide between the pilots:

  The main findings demonstrate that consumers do react to feedback and dynamic pricing mechanisms positively, pilot results maintain over 2-3 years and they can also be effective in consumer groups of over 1,000 households. In addition, post pilot surveys show that on average 75 – 90% of participants were satisfied with the pilot with in which they took part. That said, results vary widely within a given program type; an IHD pilot can attain 3% or 19% reductions.

• 2013, Smart meter devices and the effect of feedback on residential electricity consumption: Evidence from a natural experiment in Northern Ireland

  This study used the "natural experiment" of a utility installing "advanced" meters over prepayment meters.

  Starting in April 2002, the utility replaced prepayment meters with advanced meters that allow the consumer to track usage in real-time. We rely on this event, account for the endogeneity of price and payment plan with consumption through a plan selection correction term, and find that the provision of information is associated with a decline in electricity consumption of 11–17%. We find that the reduction is robust to different specifications, selection-bias correction methods and subsamples of the original data.

  Some care should be taken with "natural expemeriments" to ensure that the result is actually causal, and not due to some confounding factor that determined which houses were changed over.

• 2016 Empowering Consumers Through Data and Smart Technology: Experimental Evidence on the Consequences of Time‐of‐Use Electricity Pricing Policies Pre-print

  This paper found that the cost of electricity may be reduced, by shifting usage to off-peak times, but warned that CO₂ emissions may be increased. (Contradicting some of the other studies.)

• 2017 Unintended outcomes of electricity smart-metering: trading-off consumption and investment behaviour PDF

  This paper acknowledges that:

  Advanced metering initiatives and feedback programmes, such as electronic inhome displays and energy usage statements, allow electricity utilities to provide consumers with better information on their energy usage and to apply time-of-use pricing. These measures have been shown to reduce electricity consumption and induce time-shifting of demand.

  However, it warns that this can have an effect of making consumers behave more poorly in other energy-efficiency investments.

  Relative to the control group, average overall electricity usage across various treatment groups was reduced by 2.5% and peak usage by 8%. However, households across treatment groups were also, on average 23–28%, less likely to adopt any of the listed energy saving measures during the trial than the control group, and the expected number of energy saving features adopted was, on average 15–21%, lower for the treatment groups than for the control group. The results are largely driven by the treatment groups investing less in attic insulation, lagging jackets and double-glazing than the control group.

Some related studies:

• Effectiveness of Smart Meter-Based Consumption Feedback in Curbing Household Water Use: Knowns and Unknowns

  This is a meta-study of other studies on smart-meters, but it is about water usage not power usage, so it it is only partly related to the topic at hand. Nonetheless, its findings are likely to be relevant:

  Findings from the papers covered in this review (N=21) indicate that feedback was associated with decreases in water use of between 2.5 and 28.6%, with an average of 12.15% (SD=8.75). A single paper reported a 16% increase in consumption associated with smart-meter feedback.

• An analysis of smart metering information systems: A psychological model of self-regulated behavioural change

  This is an analysis of the psychology of consumers' behavioural change, and argues the available smart meter systems could be improved to better cater to the consumers to help them modify their behaviour.

Conclusion

• There is clear evidence that introducing smart-metering combined with In-Home Displays can result in savings on energy bills, by giving feedback to consumers about their energy usage, and allowing them to have adopt more cost-efficient behaviours.

• The extent of those savings is quite variable across different studies. [Hence, I did not attempt to calculate whether it was enough to power a mobile scooter.]

• There are caveats about the extent that the savings lead to lower CO₂ production. They may just be moving load to off-peak.

• There are caveats that investment spent of these improvements may be at the cost of other investments.

• I made no attempt to look at the privacy impacts of smart-metering.