Smart meter roll-out vendors selected in contracts totalling £2.38bn

Telefonica, Arqiva, CGI and Capita all selected for UK mass roll-out

The government has stepped up the process of equipping every home in the UK with smart energy meters by selecting the vendors to provide the kit, the data service and wide area communications, in addition to a smart meter governing administrator.

The selected vendors to establish a shared infrastructure will form the Data and Communications Company, which is responsible for linking 53 million smart electricity and gas meters in homes and small businesses with the business systems of energy suppliers, network operators and energy service companies.

Business process management and outsourcing solutions provider Capita has been named as the successful applicant for the DCC licence. The DCC licensee has to manage the smart metering service of its users, and has to be in contact with and manage the data and communications service providers. The estimated value of the licence over 12 years is approximately £175m.

IT solutions and services provider CGI has been selected as the data service provider, which means it will develop and operate the system that controls the movement of messages to and from smart meters. CGI will now have to form a contract with Capita. The estimated value of this contract over eight years is about £75m.

There are two preferred bidders for the three communications service provider contracts, which encompass the provision of wide area communications to and from the smart meters.

Arqiva has won the contract for the north of England and Scotland, and the estimated value of its contract with the DCC licensee over 15 years is £625m.

Meanwhile, Telefonica UK, more well-known as O2, has been selected for the central parts of England (Midlands, East Anglia and Wales) and the south of England. The estimated value of the two contracts over 15 years is approximately £1.5bn.

Finally, energy consultancy firm Gemserv has been selected for the Smart Energy Code Administrator and Secretariat contract, which means it will maintain and update the industry code governing the use of smart meters across the energy industry. Gemserv will now be invited to form a contract with the Smart Energy Code Company. The four-year contract is estimated at about £10m.

The Department of Energy & Climate Change (DECC) said it expects to make a statement to parliament in early September on further developments, once agreements for the contracts have been finalised.

The DECC claims that the mass roll-out of smart meters will start in late 2015 and conclude by the end of 2020.

In April, David Green, business development director of SmartReach, a consortium of companies including BAE Detica, BT, Sensus and Arqiva, dispelled fears of the system being insecure, and claimed that there was no chance they could be hacked.