The government's plans oblige the country's 26 million homes and millions of businesses in the country to have high technology meters installed by 2020. The technology enables remote meter readings and comes with display devices that give customers accurate, real-time information on their energy consumption.
"Smart meters will empower all consumers to monitor their own energy use and make reductions in energy consumption and carbon emissions as a result. Smart meters will also mean the end of inaccurate bills and estimated meter readings," said Ed Miliband, the UK's energy and climate change secretary.
The government estimates that the economic savings of the scheme will be between £2.5 billion and £3.6 billion over the next twenty years.
The plans are part of a revamp of Britain's climate strategy. Last month, the country became the first to commit to a binding framework for greenhouse gas emission reductions, committing to cut their CO2 emissions by 34% by 2020.
"The meters most of us have in our homes were designed for a different age, before climate change. Now we need to get smarter with our energy," said Miliband.
Yesterday's announcement included the launch of a public consultation on how to install and manage the meters. The government would prefer energy suppliers to install and operate the devices and a third party to coordinate all communications to and from them, it said.
Two other models under discussion would either trust all aspects of smart metering to suppliers, or set up regional franchises to manage installation and operation, with communications managed on a national level.
The European Parliament last month called for smart meters to be installed by default in all new buildings, as well as when renovating older ones (EurActiv 24/04/09).
The new metering devices are a prerequisite for so-called 'smart grids', which not only supply buildings with energy, but also enable them to sell back to the grid electricity generated on-site through solar panels, for example.
This technical capacity will be crucial to integrating all the renewable energy to the grids that the bloc will have to produce to meet its target for increasing the share of renewable energies to 20% by 2020.
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