Tempus Energy, a UK clean technology start-up, has launched a smart meter for commercial and domestic users that it says can cut electricity bills by up to 20% by creating a more competitive market for electricity.
The company acts as a traditional electricity supplier, but buys its power on the wholesale market rather than generating it. It supplies this energy to customers using a smart meter that is connected to its computers.Â
The smart meter is connected to the customer’s building management system, or to individual smart appliances. The meter can turn appliances on at times of low demand when prices are lower.
We’ve been developing the technology for three years. We’ve plugged into lots of existing smart building management systems and smart metering technology and combined it with a trading platform– Sophie Yule, general counsel for Tempus
In homes that could mean storage heaters, refrigerators, air-conditioning, heat pumps and electric vehicle chargers.
Sophie Yule, the general counsel for Tempus, told GCR that the company buys electricity from large generators, but in the future would look to buy energy directly from community energy projects and other independent renewable generators.Â
She said: "We’ve been developing the technology for three years. We’ve plugged into lots of existing smart building management systems and smart metering technology and combined it with a trading platform."Â
In the UK, six large energy firms supply energy to 90% of domestic customers, and generate more than 70% of electricity.
Concerns over rapid rise in energy prices over the past 10 years, together with the high levels of profit and low standards of service offered by energy companies last year triggered a Competition Market Authority (CMA) report into the industry.
The CMA’s provisional findings were published on 7 July. These found that between 2009 and 2013, British Gas, E-On, Npower, EDF Energy, Scottish Power and SSE together charged customer £1.7bn a year more than they would have in a more competitive market. Of this figure, £1.2bn was paid by households and £500m by small businesses.
Sara Bell, the managing director of Tempus (pictured), gave evidence to the report. She said the aim of Tempus was to create a "genuinely competitive" market for energy.
"The big energy suppliers that dominate the market often also own generation assets, so they naturally want power sold at the highest possible price," she said. "Tempus does not own any generation assets, so we have no such conflict of interests."Â
Another factor interfering with the market is "customer inertia": the unwillingness of many to change supplier in response to changes in pricing. The smart meter system is intended to address that problem by, in effect, changing supplier automatically at half-hourly intervals.
So far, few companies have tried to compete with the big six for domestic customers and small businesses.Â
Yule said: "Entering the energy supply market is not for the faint hearted. It takes a lot of technical know-how and the regulatory barriers are significant. Also it’s an industry that has a bad reputation among its customers, so it’s a risk for companies to enter that field."
Tempus began offering its service in March, with the help of a £250,000 loan from the London Enterprise Panel’s Growing Places Fund. It also received money from InnovateUK’s Energy Catalyst Fund and has been crowdfunded from Crowdcube. It presently employs 28 people.