Smart meters are soon to become a major feature of all our lives. The government has announced that smart meters are to be installed in every home across Britain, beginning in 2014 and ending in 2019. 

And yet most consumers remain in the dark about what a smart meter is exactly.

More importantly, yet more British households don't know how they can benefit from smart meters or, indeed, how the country as a whole will benefit.

The smart meter itself

Smart meters will replace everyone's existing 'dumb' meters. We're all familiar with dumb meters - they merely record your household's total electricity consumption. These are read infrequently by meter operators or customers themselves can submit their meter readings to a supplier.

In contrast, smart meters will actually record your energy consumption in real-time, passing back electricity demand data to the government's new Data and Communications company.

As well as providing consumption information to a central database, smart meters will have an 'In Home Display' (IHD) which will enable the public to track their energy consumption and display it to them in pounds and pence.

The benefits of smart meters

The major benefits of smart meters are in demand-side management.

On a micro-scale, British householders will be connected to their energy consumption in a more tangible way. They will be able to see how much energy their house is consuming at any one time and how switching off certain appliances will affect their total demand. They will also be able to have up-to-date information showing how much their energy is costing them.

On a macro-scale, energy suppliers and network operators will have a wealth of information to help them match the supply of energy with the demand for it. This will allow suppliers to produce more electricity when it is need and, of paramount importance, begin to reduce the output of stations which aren't needed.

Smart meters will also see the end of estimated readings. Currently, estimated readings (based on the size of the property you live in and historical data for electricity consumption there) are used to formulate bills when customers are unable to give actual readings to their suppliers.

Furthermore, network operators (those regionally-based countries in charge of maintaining the electricity infrastructure, such as pylons and transformers) will be notified much sooner of power failures then they currently are.

The smart meter rollout

Smart meters will be installed in every British home and most businesses by 2019. Officially, the rollout begins in 2014.

Energy suppliers will arrange for a smart meter to be installed.

The smart meter rollout is expected to cost £11.3 billion but will bring a net gain of £18.6 billion over the next 20 years.

More information on the smart meter rollout can be read on the DECC website.