The pros and cons of smart meters – should you switch?

The cost of living crisis has largely been driven by soaring energy bills. But could smart meters save you money on your gas and electricity?

Energy costs more than doubled at the height of the energy crisis in 2022. They still remain hundreds of pounds higher than they were five years ago in 2019, even with the Ofgem energy price cap falling 7% on 1 July.

Prices look set to soar again this autumn and winter, with energy consultancy Cornwall Insight predicting a 10% rise in the price cap. It means some of the fixed-rate deals currently on offer could be worth considering.

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Smart meters, which send readings at regular intervals to your supplier, can help you to closely track your energy usage and keep your costs down. But, if you currently have a regular meter, should you move across to one?

The pros of smart meters

The first big benefit of a smart meter is that it could help make your bills more accurate. It will send readings to your supplier on a daily or half hourly basis, depending on what sort of deal you opt for.

For example, you will have to have half hourly readings if you wish to sign up for tariffs with off-peak rates - like EV tariffs - or want to take part in energy saving events. These tariffs/events could save you money.

Your smart meter will also save you from having to manually send meter readings to your supplier, as you would with a standard meter. If you don't send readings in on a regular basis (i.e. at least once a month), your supplier will estimate your bills. This could mean you end up paying more than you have to.

Another useful benefit of smart meters is the in-house display you'll get alongside your smart meter. This small monitor will show you your energy use to the penny.

The gadget can help you to figure out how much energy you use when you turn on certain appliances, and which habits and chores are costing you the most. It means you can adjust your usage to cut your bills.

Shifting your energy use may also allow you to be greener. During off-peak hours (typically weekends, working hours and overnight), the national grid tends to rely more on renewable energy production. Meanwhile, peak times usually see a larger reliance on fossil fuels - especially during the winter.

Finally, when it comes to switching, a smart meter can make life easier. It means you won't have to submit a final reading to your old supplier – although, it's always worth making a note in case something goes wrong with the automatic readings.

And, when significant alterations to the Ofgem energy price cap occur, you won't have to send readings in ahead of the changes to unit rates. It is still good practice to do so, as it will ensure you do not pay over the odds for your energy.

The cons of smart meters

The government had been aiming to offer a smart meter to every home by mid-2025. However, figures released by the Department for Energy Security and Net Zero (DESNZ) on 30 May showed 37% of homes were still yet to have one fitted by the end of Q1 2024.

With the rate of domestic installations falling 9% quarter-on-quarter, and 11% year-on-year to 747,000, it suggests it may be difficult to get an installation appointment.

That's not to say all homes want one fitted. Many people have refused over concerns about the amount of insight this gives energy suppliers. There have also been concerns around smart meters being targeted by hackers. But there is no evidence that this has happened.

For households with a smart meter, the biggest issue is when the meter malfunctions. According to the Public Accounts Committee of MPs, three million smart meters weren't working properly as of March 2023. This figure has jumped to 4.3 million, according to government data released in March 2024.

Common issues included suppliers not receiving readings, the meters not displaying information to consumers, or both. Some have not been working because they haven't been commissioned properly at the point of installation.

Many of the other meters had malfunctioned because they were first generation smart meters (known in the industry as SMETS1), and therefore couldn't connect properly to the centralised infrastructure suppliers use to get readings. If you have a first generation meter, you will need to get a new one installed.

The pros of traditional meters

Many people choose to remain on traditional meters. This could be because they want to control the information they hand over to their energy supplier.

It could also be down to the type of meter you have. For example, economy 7 and economy 10 meters have cheaper rates than standard meters, if you live in a single fuel household. Suppliers no longer fit these meters, and only a few offer tariffs for them.

If your meter is accessible and you're willing to submit readings every month, then it there will be no extra expense than if you had a smart meter (although you won't get the same insights into your usage).

The cons of a traditional meter

Of course, the flipside is that if your meter is quite hard to get to, you may not be able to submit readings to your supplier. In this instance, you may end up being charged extra for your usage, as your supplier will have to go off estimates rather than your actual usage data.

You can get your money back if you can show you've overpaid. But it may take weeks or even months for the compensation to come through. Having estimated bills could also lead to you underpaying, which might result in a hefty future bill.

Should I go for a smart meter?

The decision you make will depend entirely on your personal circumstances.

If you want to know exactly how much energy you’re using and where, and think this would help you to keep your bills down, you would benefit from getting a smart meter. They’re also a better option if you think you won’t be able to submit monthly readings to your supplier.

And you could be able to save money, as smart meters allow you to access certain types of tariff that may better suit your energy use.

However, if you think you’d be diligent about submitting monthly readings or have a meter that means you'll pay less, then you should stick with your traditional meter.

Energy market changes mean it may be worth switching to a smart meter in the near future. The government is currently looking at ways in which consumers could access cheaper unit rates when wholesale energy prices drop. Say you wanted to take advantage of this change - some tariffs already offer something similar - you would almost certainly have to have a smart meter. So, it's worth revisiting these pros and cons as the energy market develops.