The Business Interview: From hippy dropout to electricity boss without batting an eye. The founder of Ecotricity talks to Sarah Arnott
Thursday, 31 March 2011
Dale Vince spent 10 years living in a trailer on a hill outside Stroud. Now he runs an energy company worth an estimated £100m and bats away takeover offers at an average rate of one a month.
It is not as much of a leap as it might appear. Mr Vince's "crazy plan" might be to become the seventh utility – an upstart rival to the so-called Big Six such as EDF and E.ON. But he remains a highly unusual energy boss by any measure. At a superficial level, he is the only one with long hair and jewellery, who dresses in torn jeans and a leather jacket. His views on the UK energy market are equally unorthodox.
"I was a hippy dropout, but I had an epiphany when I saw my first windfarm in 1991," Mr Vince says. "I thought, either I can carry on by myself with the windmill on my van, or I can get into the big stuff."
He chose the big stuff and set up Ecotricity, an electricity company which ploughs its profits into building green infrastructure – 540 wind turbines so far – steadily driving up the proportion of green energy in its fuel mix. "We turn brown to green," Mr Vince explains. "We don't mind harnessing conventional energy sources, so long as we are using the revenues to build an alternative."
The approach is working. Sixteen years after the company started, it has 46,000 customers and is adding around 1,500 each month. The electricity started out 10 per cent green, this year it will hit 55 per cent. And the charges are comparable with the Big Six's standard tariffs.
Now Ecotricity is moving into gas. It already has 8,000 customers on its green gas tariff, and the income is building Britain's first anaerobic digestion plant turning food waste into gas for heating and cooking – a scheme that will be up and running in 12 months. "In our first year, green gas from a sugar beet factory in Holland was 1.4 per cent of our supply," Mr Vince says. "It might not be much but it's still the greenest gas supply in Britain, and next year we expect to double it."
Mr Vince has serious ambitions. "The crazy plan to become the Big Seventh is not just a crazy plan – we're really doing it," he says. "Ten years from now I'd like to see one million customers."
Last October, Ecotricity launched Britain's first "ecobond", marketed directly to its customers, to help fund the expansion. It was an "awesome success" with enough offers to raise nearly double the £10m Mr Vince was looking for and an average investment of £5,500 (although one customer – by far the biggest single investor – put up £500,000).
Part of the philosophy behind the bond was a protest at the big banks "ripping people off" by paying 2 per cent to savers but lending to companies at 6 or 7 per cent. "We wanted to cut out the middle man," Mr Vince says. "When we started, we wanted to cut out the middle man who wouldn't give us a good price for our electricity, and now we're doing the same with the financial sector."
The bond will run for a minimum of four years – with a biannual interest payment of 7.5 per cent – and act as a financial turbo-thruster for Ecotricity's plans. By providing the deposit for the company's wind farm schemes, the bond will cut its reliance on expensive mezzanine debt. And because the money can be leveraged, the original £10m will fund £40m-worth of investments. "It gives us the chance to increase the rate we build," Mr Vince says. "The first ecobond probably puts us five years ahead of where we would be."
That's just the beginning. After such a success, the company is now working on a second, larger ecobond, which it hopes to launch by the end of the summer. "The next one will be huge and I wouldn't be surprised if in years to come we are raising £50m or £100m at a time, once we establish a track record," Mr Vince says.
Britain's green energy market is making slower progress. Ecotricity's bond is helping to fund a 1 megawatt (MW) solar panel facility alongside an existing windfarm in Lincolnshire, creating one of the first hybrid parks in the world. But there is a big, black Government-shaped cloud hanging over the scheme, catapulting the softly spoken Mr Vince to the forefront of the ructions convulsing Britain's fledgling solar power industry.
The initial findings of a shock review of the feed-in tariff scheme for solar power was announced earlier this month, slashing the subsidies paid to schemes of 50 kilowatts and above and, according to Mr Vince, instantly "killing off" any commercial appetite to invest in big solar by slashing revenues by 75 per cent.
The changes certainly "shred" Ecotricity's plans. They also ensure that the British solar power – currently at 100MW compared with Germany's 17,000MW – remains a niche, non-commercial market. "We were going to build lots of big solar parks and that goes out of the window now," Mr Vince says. "While the carbon price floor pumps billions into nuclear and clean coal, solar will remain a side show with just a token subsidy for individual households."
Even the Lincolnshire scheme now faces a tricky future as delays securing a grid connection threaten to push it over the 1 August deadline. "I don't really want to think about what will happen then," acknowledges Mr Vince, who has pumped £2.5m into the scheme and will be lobbying the Government hard that it should be subject to the existing tariffs.
Along with a large swath of the solar industry, Mr Vince takes issue with the Government's reasons for the changes, including both the assumption that large projects are squeezing out domestic plans and the claim that the changes reflect a drop in the price of solar panels.
He also lambasts the Government's "dishonesty" in putting forward arguments with such clear holes in them. "They should just come out and say that they are worried about food supplies or the use of land or whatever it is, but they shouldn't say that big solar kills small, because that's just dishonest."
Even the public cuts agenda argues the other way. "Big solar is 50 per cent cheaper than small," Mr Vince says. "The Government says value for money is important, but when it comes to renewable energy they are opting for something that costs half as much again."
There is some sadness, but little rancour, in his tone. "This is what happens in Britain," he says with a shrug. "Ultimately we don't really care what the Government does, we just get on and do the job."
In doing its job, Ecotricity is attracting increasing attention from potential buyers. And despite making clear that he has no desire to sell, Mr Vince is still continually fending off approaches from buyers, these days mostly from City financiers. But he is uncompromisingly "not interested", whatever the price. "If I had £100m, I'd only go out and start a green electricity company so what would be the point?"
Dale Vince: Power broker
* Dale Vince dropped out of school at 15 and became a traveller.
* He set up Ecotricity in 1997 after an "epiphany" that his single windmill had huge potential.
* Mr Vince is a green petrolhead, launching the Nemesis – an electric Lotus that goes from 0 to 60 mph in four seconds – last year.
* He is putting a wind-powered bike into this year's TT race and also plans a wind-powered supercar to challenge the world land speed record.
* He is a major shareholder of Forest Green Rovers and is learning ballet to improve his own playing skills.
* He lives – in a house – outside Stroud with his wife and children.
Thursday, 31 March 2011
Obama and energy
I filled the gas tank this morning, after letting it get uncharacteristically low, and was a tad surprised to look up and see that it came to $48. That's a helluva lot in the good old US of A. It was $3.99 per gallon and is usually somewhere in the vicinity of $2.79 or so.
Before we go any further, some quick math(s). Your petrol, I gather, is running about £1.40 or so? And that, Americans, is per litre. There are roughly four litres to the gallon, and £1.40 is roughly $2.25, so the way I reckon it you Brits are paying about $10 a gallon, maybe $9.50, or more than twice what we're now paying. And it's Americans who are in deep shock about gas prices.
I thought: good. Let's have it. Let it go up more and more. We have to change our piggy habits, and that's the only thing that'll do it, really.
Today, Obama announced his new energy goals, to make America oil independent by 2020. This makes him the eighth president to make such a declaration, going back to Nixon, and of course it's not going to happen for him any more than it happened for any of the rest of them.
There appear to be some decent things in Obama's plan, including a bigger commitment to renewables. But nothing's free of course. That phrase "commitment to renewables" means, say, tax credits for homeowners and businesses, and those tax credits deplete the general treasury and have to be made up somewhere. I'm all for it.
I was just sitting with our tax guy, and he was explaining the credit systems for solar panels and geothermal heating retrofitted into an older home like ours. They're fairly generous, actually, but a) the credit is not all federal, some of it is from the state of Maryland, which is a pretty liberal state and thus ahead of many other states on things like this, and b) even as decent as the credit is, you have to be upper-middle-class for sure even to consider shelling out the upfront costs. I would love for the credits to be three times the size they are, but Republicans would never go for it, since they think all this is fishy anyway and real Muricans burn as much erl as they damn well please.
I wish Obama had the cojones (and I don't really blame him because what I want would be political suicide) to make the simple and straightforward proposal of a big gasoline tax. I'm for $6/gallon gas in this country. I know the hardships it would cause. But habits would change in a damn hurry, I can tell you that much. People feel it at the pump for some reason in a way they don't feel it in home heating bills or any other form.
And think of all that tax revenue to play with, to give away to poor people and foreigners!
Before we go any further, some quick math(s). Your petrol, I gather, is running about £1.40 or so? And that, Americans, is per litre. There are roughly four litres to the gallon, and £1.40 is roughly $2.25, so the way I reckon it you Brits are paying about $10 a gallon, maybe $9.50, or more than twice what we're now paying. And it's Americans who are in deep shock about gas prices.
I thought: good. Let's have it. Let it go up more and more. We have to change our piggy habits, and that's the only thing that'll do it, really.
Today, Obama announced his new energy goals, to make America oil independent by 2020. This makes him the eighth president to make such a declaration, going back to Nixon, and of course it's not going to happen for him any more than it happened for any of the rest of them.
There appear to be some decent things in Obama's plan, including a bigger commitment to renewables. But nothing's free of course. That phrase "commitment to renewables" means, say, tax credits for homeowners and businesses, and those tax credits deplete the general treasury and have to be made up somewhere. I'm all for it.
I was just sitting with our tax guy, and he was explaining the credit systems for solar panels and geothermal heating retrofitted into an older home like ours. They're fairly generous, actually, but a) the credit is not all federal, some of it is from the state of Maryland, which is a pretty liberal state and thus ahead of many other states on things like this, and b) even as decent as the credit is, you have to be upper-middle-class for sure even to consider shelling out the upfront costs. I would love for the credits to be three times the size they are, but Republicans would never go for it, since they think all this is fishy anyway and real Muricans burn as much erl as they damn well please.
I wish Obama had the cojones (and I don't really blame him because what I want would be political suicide) to make the simple and straightforward proposal of a big gasoline tax. I'm for $6/gallon gas in this country. I know the hardships it would cause. But habits would change in a damn hurry, I can tell you that much. People feel it at the pump for some reason in a way they don't feel it in home heating bills or any other form.
And think of all that tax revenue to play with, to give away to poor people and foreigners!
Spain's financial crisis claims another victim: the solar power industry
The Spanish government has slashed its solar power subsidies
Tim Webb in Madrid guardian.co.uk, Wednesday 30 March 2011 18.37 BST
Spain had one of the world's most ambitious – and generous – plans to boost the amount of electricity it generates from the sun. That dream, for the solar industry at least, has turned sour. Just days before Christmas, the government slashed the level of subsidies that all new and existing photovoltaic (pv) solar projects will receive. But even the powerful utility companies, who opposed the solar industry, are now warning that the fallout could be long-lasting and reach far beyond the energy sector.
The row has pitted the renewable lobby against Spain's three biggest utilities – Iberdrola, Endesa and Gas Natural – which have been urging the government to take action to stem the wave of subsidised renewable projects being built, particularly solar ones.
Carlos Salle, Iberdrola's director for regulation, told the Guardian that divisions between the renewable lobby and the rest of the energy industry are even deeper in Spain than elsewhere as a result. "We have more controversy here in Spain with renewables against non-renewables … this is an aspect of our system – it provokes problems."
Another Madrid-based businessman, from one of Spain's leading companies, was franker, likening relations, only half-jokingly, as a "war". The Asociación de la Industria Fotovoltaica (Asif), Spain's solar industry body, accuses politicians of telling lies, exaggerating the costs of generating electricity using solar pv to justify the cut in subsidies.
It is more than just bragging rights between rival generators at stake. The solar pv industry alone received subsidies last year of €2.6bn (£2.28bn), a sum neither the country – nor the utilities – can afford. The utilities have paid out €20bn to subsidise solar and wind projects, and are still waiting for the government to pay them back.
Credit rating agencies threatened to downgrade the companies if something was not done to address the "tariff deficit". Salle recalled: "The situation was horrible a year ago – €20bn for three companies was an amount comparable to an entire budget for some countries."
The utilities also complain that their coal and gas plants, which the government wanted them to build a decade ago after several black-outs, are losing money because they are now only needed for half the time. But the Spanish regulator forces the firms to keep them on standby for times when the wind stops blowing or at night when solar does not generate.
Asif argues that solar projects, which last summer provided a maximum of 4% of the country's electricity, have been sacrificed to keep profits from dirty coal and gas plants high. The solar industry had enjoyed phenomenal growth due to a subsidy regime which, even Asif admits, was too generous. Companies were able to cut costs too quickly – 70% since the original subsidies were introduced in 2004. Investors poured in and about two-thirds of the current capacity was installed in 2008 alone, before a planned tariff cut came into force the following year.
This has left Spain with 10 times the amount of solar pv capacity the government had planned for by 2010 – and a much bigger bill than it had envisioned.
Javier Anta, Asif's president, said that the industry will challenge the cut in the courts, but admitted that this would take years, by which time many solar project owners could have gone to the wall. He added that some investors will not back new projects because they fear the tariff could be cut again retrospectively. "There are some people who say this is not a one-off. They do not trust the government," he said.
This is one point on which both the renewable lobby and the power industry agree: by taking the unprecedented step of retrospectively cutting subsidies promised to projects which have already been built, the government risks scaring off investors of all kinds.
Salle says that "even if we recognise that the situation is better than a month or a year ago, the problem is [a lack of] confidence. The uncertainty and [risk] premium does not apply only to that sector [solar pv] but to the whole industry and the rest of the country in some cases. Everyone appreciates the relevance of having regulation which does not make any retroactive decisions because you will have to attract new people [to invest]. The new people will say 'hey, in the history of this country and this sector these people who have been new in the past and have invested, the government has changed the rules'."
Reflecting change
Abengoa, a Spanish engineering firm celebrating its 70th year, is pushing ahead with solar-thermal projects. Unlike the schemes involving reflectors heating a salt water mixture running through pipes, Abengoa has developed towers of pipes that look like mini skyscrapers. It employs 23,000 workers in its solar unit, which had a turnover of more than €3bn (£2.6bn).
The firm has conducted sustainability audits of its business for several years and says projects that can't meet sustainability criteria are modified or abandoned. Controversially, it has championed the refining of biofuels, something anti-poverty campaigners have cited as denying food sources to poor people in the developing world.
Carlos Bousoño, director of corporate social responsibility, said the debate had moved on after technology allowed for seeds and fruit to be separated from plants before processing. He said only the stalk and waste material was used in second generation biofuels fermentation, allowing corn, soya or other foodstuff to be saved for making food.
Tim Webb in Madrid guardian.co.uk, Wednesday 30 March 2011 18.37 BST
Spain had one of the world's most ambitious – and generous – plans to boost the amount of electricity it generates from the sun. That dream, for the solar industry at least, has turned sour. Just days before Christmas, the government slashed the level of subsidies that all new and existing photovoltaic (pv) solar projects will receive. But even the powerful utility companies, who opposed the solar industry, are now warning that the fallout could be long-lasting and reach far beyond the energy sector.
The row has pitted the renewable lobby against Spain's three biggest utilities – Iberdrola, Endesa and Gas Natural – which have been urging the government to take action to stem the wave of subsidised renewable projects being built, particularly solar ones.
Carlos Salle, Iberdrola's director for regulation, told the Guardian that divisions between the renewable lobby and the rest of the energy industry are even deeper in Spain than elsewhere as a result. "We have more controversy here in Spain with renewables against non-renewables … this is an aspect of our system – it provokes problems."
Another Madrid-based businessman, from one of Spain's leading companies, was franker, likening relations, only half-jokingly, as a "war". The Asociación de la Industria Fotovoltaica (Asif), Spain's solar industry body, accuses politicians of telling lies, exaggerating the costs of generating electricity using solar pv to justify the cut in subsidies.
It is more than just bragging rights between rival generators at stake. The solar pv industry alone received subsidies last year of €2.6bn (£2.28bn), a sum neither the country – nor the utilities – can afford. The utilities have paid out €20bn to subsidise solar and wind projects, and are still waiting for the government to pay them back.
Credit rating agencies threatened to downgrade the companies if something was not done to address the "tariff deficit". Salle recalled: "The situation was horrible a year ago – €20bn for three companies was an amount comparable to an entire budget for some countries."
The utilities also complain that their coal and gas plants, which the government wanted them to build a decade ago after several black-outs, are losing money because they are now only needed for half the time. But the Spanish regulator forces the firms to keep them on standby for times when the wind stops blowing or at night when solar does not generate.
Asif argues that solar projects, which last summer provided a maximum of 4% of the country's electricity, have been sacrificed to keep profits from dirty coal and gas plants high. The solar industry had enjoyed phenomenal growth due to a subsidy regime which, even Asif admits, was too generous. Companies were able to cut costs too quickly – 70% since the original subsidies were introduced in 2004. Investors poured in and about two-thirds of the current capacity was installed in 2008 alone, before a planned tariff cut came into force the following year.
This has left Spain with 10 times the amount of solar pv capacity the government had planned for by 2010 – and a much bigger bill than it had envisioned.
Javier Anta, Asif's president, said that the industry will challenge the cut in the courts, but admitted that this would take years, by which time many solar project owners could have gone to the wall. He added that some investors will not back new projects because they fear the tariff could be cut again retrospectively. "There are some people who say this is not a one-off. They do not trust the government," he said.
This is one point on which both the renewable lobby and the power industry agree: by taking the unprecedented step of retrospectively cutting subsidies promised to projects which have already been built, the government risks scaring off investors of all kinds.
Salle says that "even if we recognise that the situation is better than a month or a year ago, the problem is [a lack of] confidence. The uncertainty and [risk] premium does not apply only to that sector [solar pv] but to the whole industry and the rest of the country in some cases. Everyone appreciates the relevance of having regulation which does not make any retroactive decisions because you will have to attract new people [to invest]. The new people will say 'hey, in the history of this country and this sector these people who have been new in the past and have invested, the government has changed the rules'."
Reflecting change
Abengoa, a Spanish engineering firm celebrating its 70th year, is pushing ahead with solar-thermal projects. Unlike the schemes involving reflectors heating a salt water mixture running through pipes, Abengoa has developed towers of pipes that look like mini skyscrapers. It employs 23,000 workers in its solar unit, which had a turnover of more than €3bn (£2.6bn).
The firm has conducted sustainability audits of its business for several years and says projects that can't meet sustainability criteria are modified or abandoned. Controversially, it has championed the refining of biofuels, something anti-poverty campaigners have cited as denying food sources to poor people in the developing world.
Carlos Bousoño, director of corporate social responsibility, said the debate had moved on after technology allowed for seeds and fruit to be separated from plants before processing. He said only the stalk and waste material was used in second generation biofuels fermentation, allowing corn, soya or other foodstuff to be saved for making food.
Tesla sues Top Gear over 'faked' electric car race
Car-maker to sue BBC for libel and malicious falsehood as faked race continues to be shown uncorrected on repeats and DVD
Adam Vaughan guardian.co.uk, Wednesday 30 March 2011 11.43 BST
Electric sports car maker Tesla Motors is sueing the BBC's Top Gear TV programme for allegedly faking a scene showing the company's Roadster car running out of electricity and slowing to a halt in a race.
The legal move is the culmination of a row that has rumbled on between the show and Telsa since the episode was first broadcast in 2008. Specialist libel law firm Carter-Ruck issued the writ on behalf of the firm on Tuesday at the high court because the scene was still being shown onworldwide repeats and was available on DVD, and the BBC had failed to correct it. The firm expects to recover not more than £100,000 in damages.
In the race with a petrol-powered Lotus Elise, the £87,000 electric car was shown having to stop for a recharge. But the car never ran out of electricity.
Tesla said after the race aired that neither of the two Roadsters that it loaned Jeremy Clarkson's team had gone below 20% of charge.
Earlier in the same episode, Clarkson had praised the Tesla: "I cannot believe this – that's biblically quick. This car is electric, literally. The top speed may only be 125mph but there's so much torque it does 0-60 in 3.9 seconds. Not bad from a motor the size of a watermelon and which has only one moving part."
Tesla is sueing the show for libel and malicious falsehood, and says the show misrepresented the car's true range – claiming 55 miles rather than 211 – and that claims a second Roadster on loan had broken brakes was untrue.
In a statement, the California-based company, whose first cars were based on British-made Lotuses, said: "Tesla simply wants Top Gear to stop rebroadcasting this malicious episode and to correct the record, but they've repeatedly ignored Tesla's requests."
A Top Gear spokeswoman said: "We can confirm that we have received notification that Tesla have issued proceedings against the BBC. The BBC stands by the programme and will be vigorously defending this claim"
On Monday Tesla, which plans to introduce a cheaper "Model S" car next year, said the 1,500 Roadsters it had sold since 2008 had collectively saved over 2,404 tonnes of CO2 emissions. Top Gear magazine, which is separate from the TV show, has also been critical of previous electric cars, and in 2007 released shocking images of a G-Wiz crash-tested at 40mph.
But analysts have predicted 2011 will be a "breakthrough" year for the vehicles, which became eligible a £5,000 government grant in January. Last week, the first few hundred Nissan Leafs, the UK's first mass-produced electric car, were delivered to customers. Unlike the Tesla Roadster, the Leaf is limited to around 110 miles and 90mph. A new generation of around 10 different electric and plug-in hybrid cars are expected in the UK by the end of 2012.
Separately on Wednesday, green group WWF released a report warning that the UK will needs millions of electric vehiclesto meet its carbon targets. Around 1.7m will be needed by 2020 and 6.4m by 2030, it said, in an echo of calls by government watchdog the Committee on Climate Change for a similar number to meet the target of cutting greenhouse gases emissions 80% by 2050.
Adam Vaughan guardian.co.uk, Wednesday 30 March 2011 11.43 BST
Electric sports car maker Tesla Motors is sueing the BBC's Top Gear TV programme for allegedly faking a scene showing the company's Roadster car running out of electricity and slowing to a halt in a race.
The legal move is the culmination of a row that has rumbled on between the show and Telsa since the episode was first broadcast in 2008. Specialist libel law firm Carter-Ruck issued the writ on behalf of the firm on Tuesday at the high court because the scene was still being shown onworldwide repeats and was available on DVD, and the BBC had failed to correct it. The firm expects to recover not more than £100,000 in damages.
In the race with a petrol-powered Lotus Elise, the £87,000 electric car was shown having to stop for a recharge. But the car never ran out of electricity.
Tesla said after the race aired that neither of the two Roadsters that it loaned Jeremy Clarkson's team had gone below 20% of charge.
Earlier in the same episode, Clarkson had praised the Tesla: "I cannot believe this – that's biblically quick. This car is electric, literally. The top speed may only be 125mph but there's so much torque it does 0-60 in 3.9 seconds. Not bad from a motor the size of a watermelon and which has only one moving part."
Tesla is sueing the show for libel and malicious falsehood, and says the show misrepresented the car's true range – claiming 55 miles rather than 211 – and that claims a second Roadster on loan had broken brakes was untrue.
In a statement, the California-based company, whose first cars were based on British-made Lotuses, said: "Tesla simply wants Top Gear to stop rebroadcasting this malicious episode and to correct the record, but they've repeatedly ignored Tesla's requests."
A Top Gear spokeswoman said: "We can confirm that we have received notification that Tesla have issued proceedings against the BBC. The BBC stands by the programme and will be vigorously defending this claim"
On Monday Tesla, which plans to introduce a cheaper "Model S" car next year, said the 1,500 Roadsters it had sold since 2008 had collectively saved over 2,404 tonnes of CO2 emissions. Top Gear magazine, which is separate from the TV show, has also been critical of previous electric cars, and in 2007 released shocking images of a G-Wiz crash-tested at 40mph.
But analysts have predicted 2011 will be a "breakthrough" year for the vehicles, which became eligible a £5,000 government grant in January. Last week, the first few hundred Nissan Leafs, the UK's first mass-produced electric car, were delivered to customers. Unlike the Tesla Roadster, the Leaf is limited to around 110 miles and 90mph. A new generation of around 10 different electric and plug-in hybrid cars are expected in the UK by the end of 2012.
Separately on Wednesday, green group WWF released a report warning that the UK will needs millions of electric vehiclesto meet its carbon targets. Around 1.7m will be needed by 2020 and 6.4m by 2030, it said, in an echo of calls by government watchdog the Committee on Climate Change for a similar number to meet the target of cutting greenhouse gases emissions 80% by 2050.
Smart meters predicted to save UK households £23 a year by 2020
Cost-saving potential set out in government plan for national roll-out of energy-saving technology
Fiona Harvey , environment correspondent guardian.co.uk, Wednesday 30 March 2011 11.28 BST
Smart meters, which monitor energy use in real-time, will save households £7.3bn over the next two decades, the government said on Wednesday as it set out its strategy for the roll-out of the energy-saving technology.
The roll-out – the most comprehensive yet planned in any country – will require 53m smart meters to be installed in 30m homes and businesses, starting in 2014 and finishing in 2019. Households are likely to save £23 on their annual energy bills by 2020, the government has estimated, up from its previous estimate of £14 in savings.
But these figures were disputed by the consumer group Which? and by smart metering industry experts.
Jessica Driscoll, senior advocate at Which?, said: "It's too difficult to say that people will save a certain amount of money. The savings depend on people making changes to the way they use energy, and that is very hard to do. Smart meters are just one way of helping people make those changes."
She said Which? had not yet made an estimates of the cost or savings from the technology because there was not yet enough information to make a reliable estimate.
She said it was more important to reassure consumers that smart meters would bring a variety of benefits, than to try to persuade them of the potential cost savings based on estimates.
Some industry experts privately agreed that it was too soon to make such exact estimates of the cost savings that could be realised by the roll-out.
Smart meters benefit consumers by showing their energy use in real-time. This means people can respond quickly, for instance by turning off unnecessary lights or appliances, to save money.
The technology also benefits energy suppliers, as it eliminates the need for meter readers to visit properties and allow for more accurate billing, and better data on energy demand patterns.
Future generations of smart meters are likely to offer even greater advantages, for instance by allowing utilities better to manage demand within consumers' homes, by switching appliances such as washing machines on when demand is lower, or turning down fridges when demand peaks. This could save billions through more efficient management of the electricity grid, but these capabilities are unlikely to be introduced for several years at the earliest.
But these capabilities also bring potential problems, according to Driscoll, such as what happens to the valuable consumer data that the meters collect how utilities will ensure that people can retain control over their own energy use.
Some companies might try to use the opportunity of installing smart meters to sell souped-up versions with more features, or to sell additional services, such as internet or telephones. "Once they're in your home, they might try to 'upsell', which is something we are worried about," Driscoll warned.
She added: "People do not trust energy companies. They need to work very hard to ensure that this rollout is going to be a big benefit to British people."
Chris Huhne, the secretary of state for energy and climate change, stressed the potential benefits of the plan, which is one of the most visible aspects of the government's low-carbon strategy, as the meters will be in every home. He said: "Smart meters are a key part of giving us all more control over how we use energy at home and at work, helping us to cut out waste and save money. In combination with our plans to reform the electricity market and introduce the green deal [project to insulate homes], the roll-out of smart meters will help us keep the lights on while reducing emissions and getting the best possible deal for the consumer."
From now until 2014, the government plans to work with industry and consumer groups to lay the groundwork for the roll-out, including setting specifications for the kinds of smart meters to be used. Today's announcement is expected to kick off a frenzy of activity among smart meter technology companies, utilities and communications businesses as they jockey for position in pressing for the adoption of their competing ideas on how smart meters should work.
During this phase, companies are expected to build and test trial systems, get customer feedback and demonstrate how they can ensure energy savings. Consumers are likely to be invited to take place in trials. The government will also set up a Data and Communications Company, intended to provide data and communications services for the smart metering system nationwide.
In the following stage, from 2014 to 2019, the mass roll-out will take place.
Charles Hendry, energy minister, said: "Smart meters will enable us to modernise the electricity system over the coming years and create the smart grids we will need to bring new low carbon energy sources online, and handle much higher demand for electricity as we progressively electrify transport and heating."
Fiona Harvey , environment correspondent guardian.co.uk, Wednesday 30 March 2011 11.28 BST
Smart meters, which monitor energy use in real-time, will save households £7.3bn over the next two decades, the government said on Wednesday as it set out its strategy for the roll-out of the energy-saving technology.
The roll-out – the most comprehensive yet planned in any country – will require 53m smart meters to be installed in 30m homes and businesses, starting in 2014 and finishing in 2019. Households are likely to save £23 on their annual energy bills by 2020, the government has estimated, up from its previous estimate of £14 in savings.
But these figures were disputed by the consumer group Which? and by smart metering industry experts.
Jessica Driscoll, senior advocate at Which?, said: "It's too difficult to say that people will save a certain amount of money. The savings depend on people making changes to the way they use energy, and that is very hard to do. Smart meters are just one way of helping people make those changes."
She said Which? had not yet made an estimates of the cost or savings from the technology because there was not yet enough information to make a reliable estimate.
She said it was more important to reassure consumers that smart meters would bring a variety of benefits, than to try to persuade them of the potential cost savings based on estimates.
Some industry experts privately agreed that it was too soon to make such exact estimates of the cost savings that could be realised by the roll-out.
Smart meters benefit consumers by showing their energy use in real-time. This means people can respond quickly, for instance by turning off unnecessary lights or appliances, to save money.
The technology also benefits energy suppliers, as it eliminates the need for meter readers to visit properties and allow for more accurate billing, and better data on energy demand patterns.
Future generations of smart meters are likely to offer even greater advantages, for instance by allowing utilities better to manage demand within consumers' homes, by switching appliances such as washing machines on when demand is lower, or turning down fridges when demand peaks. This could save billions through more efficient management of the electricity grid, but these capabilities are unlikely to be introduced for several years at the earliest.
But these capabilities also bring potential problems, according to Driscoll, such as what happens to the valuable consumer data that the meters collect how utilities will ensure that people can retain control over their own energy use.
Some companies might try to use the opportunity of installing smart meters to sell souped-up versions with more features, or to sell additional services, such as internet or telephones. "Once they're in your home, they might try to 'upsell', which is something we are worried about," Driscoll warned.
She added: "People do not trust energy companies. They need to work very hard to ensure that this rollout is going to be a big benefit to British people."
Chris Huhne, the secretary of state for energy and climate change, stressed the potential benefits of the plan, which is one of the most visible aspects of the government's low-carbon strategy, as the meters will be in every home. He said: "Smart meters are a key part of giving us all more control over how we use energy at home and at work, helping us to cut out waste and save money. In combination with our plans to reform the electricity market and introduce the green deal [project to insulate homes], the roll-out of smart meters will help us keep the lights on while reducing emissions and getting the best possible deal for the consumer."
From now until 2014, the government plans to work with industry and consumer groups to lay the groundwork for the roll-out, including setting specifications for the kinds of smart meters to be used. Today's announcement is expected to kick off a frenzy of activity among smart meter technology companies, utilities and communications businesses as they jockey for position in pressing for the adoption of their competing ideas on how smart meters should work.
During this phase, companies are expected to build and test trial systems, get customer feedback and demonstrate how they can ensure energy savings. Consumers are likely to be invited to take place in trials. The government will also set up a Data and Communications Company, intended to provide data and communications services for the smart metering system nationwide.
In the following stage, from 2014 to 2019, the mass roll-out will take place.
Charles Hendry, energy minister, said: "Smart meters will enable us to modernise the electricity system over the coming years and create the smart grids we will need to bring new low carbon energy sources online, and handle much higher demand for electricity as we progressively electrify transport and heating."
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