How Do Smart Meters Work?

A Complete Guide

author image-grace
By Grace Hickman
Updated on Friday 4 December 2020

A smart meter with kettle and mug in background

The above picture does not show a smart meter; it is an In-Home Display (IHD) which shows you data from both your electricity and gas smart meters.

Over recent years, smart meters have been introduced to homes in the UK as a way of making energy bills more accurate and helping people gain a better understanding of their energy usage and how much it is costing them.

By being more informed and aware about their energy usage, it is hoped that people will be able to use gas and electricity more efficiently and make savings on their utility bills as a result. 

Smart meters are not compulsory, but the government expects energy suppliers to offer all homes in England, Scotland and Wales a smart meter by June 2025, and if the customer is happy to have one, a smart meter will be installed. 

In this guide, we tell you all you need to know about smart meters, including how they work, the different types available, the pros and cons and how they can help you save money. 

See how much money you could save by switching energy suppliers:

What is a smart meter and how does it work? 

Compared to traditional gas and electricity meters, smart meters provide a new and easier way of keeping tabs on your energy consumption, which can be seen in real-time on the In-Home Display (IHD) provided - this is not your smart meter; it is a separate device to your electric and gas smart meters that allows you to monitor your usage. 

The beauty of smart meters is that everything is automatic; readings of your gas and electricity consumption are sent directly to your energy supplier from your smart meter without you having to do anything. You no longer need to provide meter readings yourself and gone are the days where you need someone to come and read your meter for you. 

A smart meter tells you (and your provider) exactly how much energy you’re using and how much it’s costing you, meaning that the readings are more accurate (not estimates), so you get a more accurate bill. 

How do smart meters communicate? How do smart meters send data? 

In order to send the relevant data to your energy company, smart meters operate on a secure national communication network, known as the Data Communications Company (DCC), which allows your energy readings to be automatically sent to your provider via a secure, wireless network.  

This is ideal because everything is done for you and you don’t need to submit any readings yourself. 

Do smart meters need Wi-Fi?

No. Smart meters have been designed to operate via a separate wireless system that has been created just for smart meters, so you don’t need Wi-Fi to be able to use them, nor will they use the Wi-Fi supplied in your home.

Different types of smart meters - SMETS 1 vs SMETS 2 

Since smart meters were introduced to the UK in 2011, a newer version of the device was introduced in 2018, so there are currently two existing types of smart meters. 

Remember, you will have one meter for your gas supply and a separate meter for your electricity. 

SMETS 1 - First generation smart meter 

If your smart meter was installed in your home before 2018 then you probably have a SMETS1, but bear in mind that energy providers were still supplying these after 2018 to get rid of the stock, so you may still have this type of meter if you moved in after this year. 

Generally, a SMETS 1 meter can only communicate with the energy supplier who installed it and if you want to switch providers to save money on your utility bills, you will need to contact the company to find out if your SMETS1 meter will be set to ‘dumb mode’ (i.e. it will lose its smart functionality) or stay active once you switch to a new supplier. 

It’s worth noting that the industry is currently working on upgrading SMETS1 meters in order to make sure they are still ‘smart’ if the customer decides to switch. When this happens, you will not need to get another smart meter. 

Read more: How Much Money Can I Save by Switching Energy Providers?

SMETS 2 - Second generation smart meter 

The newest version of smart meters, SMETS2 devices use the latest technology and are designed to allow customers to switch energy companies without any problems. 

How to tell the difference between a SMETS1 and a SMETS 2 meter? 

According to OVO Energy, the best way to identify which type of smart meter you have is to check your electricity meter: 

  • If the serial number begins with 19P, you have a SMETS1 meter. 
  • If it begins with 19M then you have a SMETS2 meter. 

If you’re unsure, however, or you want to double-check this, be sure to contact the supplier who installed it.

Advantages and disadvantages of smart meters 


Some of the most common benefits of getting smart meters installed in your home include: 

  • You can see how much gas and electricity you’ve used over the last month, week or even by the hour. 
  • You can see how much money you’ve spent, and this is updated every 30 minutes. 
  • Some may allow you to set goals to help you reduce your energy usage
  • You don’t need to submit meter readings yourself - your supplier will automatically get updates. 
  • Your energy company can bill you more accurately as the usage is monitored in real-time, which is better than being charged for your usage based on estimates. 
  • Your provider won’t need to send anyone to your home
  • The In-Home Display screen lets you see how much energy you’re using at any given time, which also helps you identify any potential issues that you may have with any of your appliances - such as a sudden jump in energy usage with a particular device. 
  • As you learn more about your energy usage and become more efficient with your energy consumption, this will have a positive impact on the environment
  • You’ll get access to better deals with a smart meter if you decide to switch, as their exclusive tariffs offer some of the cheapest prices in the market. This way, you  have more choice when comparing deals and selecting your next supplier. 
  • Having a smart meter also means less blackouts and electricity faults


Here are some of the potential problems or drawbacks you could experience with a smart meter: 

  • If you try switching providers with an older SMETS 1, it will become ‘dumb’, meaning that it will no longer be a smart meter and your new supplier won’t be able to take automatic readings from it. This also means that there may be some inaccuracies displayed on your IHD due to the inability to communicate with the smart meter. 
  • Rather than communicating through the Data Communications Company (DCC), SMETS1s communicate via mobile networks, so if your mobile phone signal is weak in your area, your supplier may not receive usage readings. 
  • In order to save money on your utility bills, you can’t solely rely on the smart meter to do this for you; as you become more aware of your energy usage and how much you’re spending, it is up to you to take the necessary steps in your home to reduce consumption. If you don’t really look at your smart meter much, however, then you’re unlikely to make changes and save money. 
  • Some energy suppliers are not yet offering smart meters and/or do not support the use of them, but an increasing number of companies are starting to get on board. If you wish, you can request a smart meter from your existing company. 

Overall, there are more pros than cons when it comes to getting a smart meter, but we always recommend doing your research before agreeing to anything 

Learn more: Why Switch Energy Suppliers? 

Smart prepayment meter and credit plans 

If you currently have a prepayment meter or you are a pay-as-you-go customer, it is possible to get a smart meter which allows you to easily keep an eye on the amount of credit you have remaining, it notifies you when you’re running low and you can top up your credit online.  

Not all energy suppliers offer smart meters on a prepayment deal however, so be sure to check this with your provider. 

If you’re able to switch to a credit tariff then you can still do so with a smart meter, as the prepayment setting can be switched to credit mode easily, and you won’t need to get a new smart meter installed. 

Smart meter reviews

It seems that the majority of people are satisfied after having a smart meter installed in their home. According to MoneySuperMarket: 

  • 74% of people with smart meters were satisfied after one year of having it installed. 
  • 70% of people continued to use their In-Home Display a year after installation. 
  • 62% noticed a difference in energy consumption in their home.
  • 53% felt that they had a better understanding of how they used energy in their home after one year. 

Additionally, Smart Energy GB also found out that: 

  • 80% of smart meter users feel they have a better understanding of their energy consumption. 
  • 68% are more conscious about how they are using gas and electricity at home. 
  • 49% of people say that their smart meter has saved them money on utility bills. 
  • 47% have more peace of mind and aren’t as worried about their bills as they were before. 

As you can see from the above statistics, most people are finding that smart meters are worth it as it’s helped educate them on their energy usage and has given them more control over their bills. 

Save money on energy bills today

By being more aware and having a better understanding of how you use gas and electricity within your home, it can help you shave money off your bills, and a smart meter is one of the best ways to help do this. 

Another way of saving even more money on your utility bills - even as much as £300 - is by switching energy providers

Most customers end up staying with the same provider for years and are on the highest tariff without realising, but by switching to a new supplier, you will get offered great deals simply for being a new customer. 

The only way to know how much you could save by switching is to compare quotes, which you can do right here today, obligation-free. Simply tap the button below to get started. 

For further information, be sure to check out our guides below! 

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