Energy suppliers are expected to be given strict annual targets for smart meter installations which could result in fines if missed, the government has announced.

It comes after smart meter installations were paused from March due to the coronavirus outbreak and after the original 2020 deadline was extended to 2024.

The Department for Business, Energy & Industrial Strategy (BEIS) said energy suppliers are being granted an extra six months now to ensure they have “taken all reasonable measures to install smart meters in households and small businesses” to make up for the reduced contact during the pandemic.

Just over 21 million smart and advanced meters have been installed in homes and small businesses and they are meant to save people money on their gas and electricity bills by providing suppliers with accurate meter readings, bringing an end to estimates.

BEIS said smart meters could save households up to £250 as well as slashing carbon emissions by 45 million tonnes – the equivalent of taking 26 million cars off the road for a year.

Minister for climate change, Lord Callanan, said: “Smart meters are playing an important role in helping the UK deliver a cleaner and more efficient energy system, with the added benefit of also saving tens of billions of pounds in the process.

“By allowing households to conveniently track their energy use, and prepayment customers to more easily top-up credit, we are working with industry to safely install even more across the country in a way that keeps consumers and suppliers safe.”

The targets for individual suppliers will be agreed later this year following consultation, and will be implemented from July next year, BEIS confirmed.

Only a third of homes have a functioning smart meter

Richard Neudegg, head of regulation at Uswitch.com, said even before lockdown started, it had become clear that the end of 2020 target for smart meters to be installed in all households was not going to be achieved.

“While the speed of installation before lockdown was gathering pace, as it stands today only 31% of homes have a fully functioning smart meter.

“The government has confirmed it will be moving to a new four-year plan to continue roll-out, giving energy suppliers flexibility on the timeframe while still driving to get smart meters into as many homes as possible.

“The rollout has been plagued with problems so far, including earlier devices ‘going dumb’, so much more work needs to be done to rebuild consumer confidence.”

He added that smart meters are an important part of a future greener energy system: “For anyone thinking about getting one, smart meters can also offer real practical value, preventing the need for meter readings and providing far more accurate bills,” he said.