Work smarter, not harder: The smart meter revolution

27 February 2025

Smart meters will be pivotal in avoiding future water deficits, enhancing customer engagement and affordability – but they’ll only be effective if supported by good governance

Speaking in 2019, Sir James Bevan, then chief executive of the Environment Agency (EA) warned that there was an “existential threat” to the UK’s “economy, environment, security, happiness, [and] way of life” due to a future anticipated water deficit caused by climate change and population growth. If no action were to be taken by 2050, Bevan warned, “the amount of water available could be reduced by 10-15 per cent, with some rivers seeing 50-80 per cent less water during the summer months”. The latest EA projections, updated in December 2024, put a solid figure on this: without intervention, demand for water will exceed supply by 5 billion litres a day in 2050.

That speech, entitled, “Escaping the jaws of death: ensuring enough water in 2050”, is arguably the most important discourse on the UK’s water sector this century, the first time someone in such a position of authority raised the national consciousness about the possibility of running out of water.

By calling for the UK to “reduce demand and increase supply” in the face of water scarcity, Bevan was in effect arguing for greater resilience. The good news is that we know how to achieve this, with tools already at our disposal, including building reservoirs, increasing the number of cross-company connections, and having more customer metering to minimise leakage.

Solutions: reservoirs and cross-company transfers

The six years since Bevan made that speech have seen considerable progress in this area, with reported leakage levels down 11 per cent, according to Ofwat’s 2023-24 Water Company Performance Report.

New reservoirs are being planned and built. The Havant Thicket Reservoir, in Hampshire, is due to come online in 2029 and will be the first new reservoir in England for almost 40 years, supplying water to 160,000 properties. Other reservoirs are due to follow.

Cross-company transfer schemes are also being designed and developed, with maybe the most eye-catching being the Grand Union Canal Transfer Scheme. Still in the consultation stages, when it eventually opens in 2032, it will move water from the midlands to the southeast, fusing infrastructure originally built 200 years ago with modern engineering.

While new reservoirs and cross-company transfers are impressive, necessary and essential, water utilities are not just relying on big supply-side infrastructure to solve the problem. They are also focused on driving down demand, nationally having committed in their draft regional and water resources management plans to halving leakage and reducing per capita consumption to 110 litres by 2050.

To support these ambitions, water utilities in England are turning to smart water meters that can provide companies and their customers – both household and non-household (business and industrial premises) – with real time usage data.

Presently the EA estimates that 13 per cent of households and under 10 per cent of non-households have smart meters. That is about to change: between now and 2030, water utilities in England are planning to install almost 10 million smart meters. About three-quarters of these installs will be an upgrade to an existing meter, with the remainder going to previously unmetered properties.

This will result in 48 per cent of households and non-households having a smart meter by 2030, according to the EA. By 2040 it is expected that 73 per cent of household and 63 per cent of business and industrial premises will have a smart meter.

Combatting water deficit through demand management

Two-thirds of that 5 billion litres by 2050 deficit should be combatted through demand management, according to the EA.

With conventional meters only being read twice a year, leaks are often only identified when there is a high bill. By then, of course, a great deal of water could have been lost over a period of months. This system also fails to identify small leaks that don’t have a significant impact on bills, but do add up to significant loss over time. Smart meters, by contrast, provide frequent, real time data that flags even small leaks almost immediately.

It’s for this reason that the EA has asked water utilities to stop installing conventional meters and prioritise the “rapid and essential transition” to smart meters.

In the eight years since Thames Water installed its first smart meter, the company’s fleet of now more than a million meters have identified more than 80,000 leaks. This has saved 57 million litres of water a day, or enough to supply around 160,000 homes – the number projected to be served by the Havant Thicket Reservoir!

Severn Trent have also seen significant benefit in the three years since it installed the first of its 350,000 smart meters. Savings of more than 4m litres a day are being quoted, equivalent to the volume that some of their groundwater sites produce each day.

While at Anglian Water, water going into supply in their region is now 100m litres a day lower, thanks to smart meters, according to Doug Spencer, the company’s head of smart metering. “Smart meters have a real impact,” he says.

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Over the next five years the 15 English water utilities plan to install almost 10 million smart meters. The number of installations varies from utility to utility due to the water stress of an area, the number of smart meters already installed and the size of the utilities.

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Smarter customer engagement through smart meters

Smart meters are great for the environment, but they are also great for encouraging interaction between water utilities and customers, with customers able to read their own meters from the convenience of a website or app. The ease of accessing meter reads, and the increased frequency of meter reads are two key reasons that the Consumer Council for Water (CCW) is supporting the smart meter roll out, according to its CEO, Mike Keil. While Keil believes that all meters “empower” customers, he feels that this is especially true of smart meters.

Utilities are expecting smart meters to be a catalyst for an enhanced relationship with customers. By proactively alerting customers to leaks, utilities can begin “more and better conversations”, says Spencer. These conversations, along with the analytics made possible by smart meters, can lead to “sustainable reductions”, according to Dene Marshallsay, director at Artesia, a consultancy specialising in understanding water demand.

Artesia is supporting several large utilities with their interpretation of smart meter data. By combining smart meter analytics and social science techniques, a water company can create a so-called ‘demand fingerprint’ for each customer, says Marshallsay, which can then be used to tailor its engagement with that household or business. In this way, messaging around issues like saving water is more likely to land.

Smart meters are also likely to be a spur for more creative interactions between utilities and customers. We are already seeing evidence of this, with Severn Trent leading an Ofwat Innovation Fund project to understand if incentivising customers with Nectar points can lead to consistent water saving behaviour. This could result in water utilities no longer being seen as companies whose only interaction with their customer is to send them an annual bill. Instead, they may be seen as companies that reward customers for sustainable environmental behaviours. Quite a paradigm shift!

Smart meters could also improve affordability. The way water utilities have charged their customers has changed little over the past 30 years, but over the next five years, all water utilities in England will conduct small-scale pilots looking into new ways of charging, with the aim of improving affordability and water efficiency.

The first of the trials is already underway, with Affinity Water having introduced what’s known as a ‘rising block tariff’ for 1,500 customers in the Stevenage region. This means that those using less water pay less per unit, while those using more, pay more per unit. The first 30,000 litres of water a year are free of charge for customers on the pilot, which Affinity is calling its WaterSave Tariff trial. While the trial will not be completed until late 2025, the utility predicts that two thirds of households will save money.

Good governance

But empowering customers to use less water and save money isn’t enough by itself. Smart metering must be underpinned by good governance, including in areas like data protection. While “not a trivial thing” to put in place, says Marshallsay, once set up, it enables water utilities to “get much better value out of the data” from smart meters.

Keil warns that water utilities need to consider how they “roll out their metering in a consumer-friendly way”. He points to the CCW’s Household Customer Complaints Report 2024, which shows that complaints around metering 30 per cent in 2023-24, from 1,539 in 2023-24 to 1,997.

The growth of smart metering is an exciting challenge that the industry is working hard to meet. The ‘final determinations’ of Ofwat’s 2024 price review (PR24), published in December 2024, will provide water companies with £1.7 billion to deliver almost 10 million smart meter installs over the next five years. Earlier adopters have been sharing their learning with others in the industry through sector-wide groups such as the Smart Metering Advisory Group (SMAG) and the Croydon Group (named after the location of its first meeting), both of which meet frequently to focus on improving smart metering policy and practices.

Smart meters are a transformational development in the water sector. Customers, utilities and regulators are all keen to see their expansion and a likely exponential growth in their adoption over the next five years. Together with large infrastructure, they are building greater resilience, one smart meter at a time. By doing so they will help society avoid what Sir James Bevan called “the jaws of death”.

Equally exciting is the fact that smart meters are putting customers at the heart of the solution, enabling us all to save water and help ensure that there is plenty available for future generations. Now that really is smart!

Author: Mikal Willmott, leakage performance and strategy manager at Severn Trent