The UK government has announced the preferred bidders for its smart meter roll-out infrastructure contracts.
Capita, Arqiva, Telefonica, and CGI are in line to receive a total of £2.4bn to roll out 53 million smart meters to every household and business in Britain after the announcement by the Department of Energy and Climate Change (DECC).
A DECC spokesperson said: "In preparing for the roll out of smart meters, we have today informed bidders of the outcome of the competitions to put in place the DCC (data and communications company) which will link smart and electricity meters with energy suppliers and network operators.
"These decisions remain subject to contracts being concluded, which will occur in the next few weeks after which we will make a statement to Parliament."
Capita has been named as the preferred bidder for the DCC contract, worth an estimated £175m over 12 years, which will give it responsibility for creating a secure two-way communications system between smart meters and a central communications hub.
Capita’s chief executive, Paul Pindar, said: “Smart metering will be the biggest step change in the retail energy sector since the industry was privatised, more than 25 years ago. It will provide clear benefits for consumers, allowing them to better manage energy consumption and therefore cost.
“It will make it easier to switch suppliers, benefiting the most competitive energy companies and will support the government’s drive to reduce the UK’s over reliance on expensive, imported and dwindling supplies of fossil fuel.”
CGI, previously known as Logica, is the preferred bidder for the eight-year, £75m data service provider licence, which will manage the transactional data flowing between smart meters and utilities.
Tara McGeehan, head of CGI’s UK Smart Energy sector said “Britain’s Smart Metering Implementation Programme is recognised as the most ambitious of its type globally.
“The success of the programme is crucial if Britain is to keep energy bills affordable, continue to benefit from the levels of reliable supply we do today, meet our carbon reduction targets, continue to be an attractive place to invest and provide consumers with meaningful choices about how they satisfy their energy needs.”
Two companies have been named as preferred bidders for the three regional Communications Service Provider contracts, which will see them provide the communications infrastructure between the DCC and consumer premises.
Contracts for the central and southern regions, worth an estimated £1.5bn over 15 years, will likely go to Telefonica while the contract for the northern region, worth an estimated £625m over 15 years, is expected to go to Arqiva.
David Plumb, digital and new business director at Telefónica UK, said: "It's a huge endorsement of cellular as the right communications technology and of our vision for smart meters to be the foundation of a smarter energy future for the UK."
John Cresswell, CEO of Arqiva, said: "The choice of Arqiva as the preferred bidder to provide the smart metering communications service in the north reflects the proven technical superiority of our solution. We are pleased to be working with the both the industry and government to create a new smart network to meet the needs of today's consumers in the north."
The Institution of Engineering and Technology (IET) has welcomed the reduction in uncertainty that the announcement brings.
Dr Martyn Thomas, chair of the IET IT Policy Panel, said: “This is a major IT project needing professional systems engineering to ensure that the whole end to end system works securely and reliably not just the individual components. There is much work to do between now and the start of mass roll-out to ensure that the system performs as designed.
“It is important that the industry, in conjunction with DECC and Ofgem, now work in a harmonised way to ensure a successful roll-out and a positive consumer experience.
“Smart meters are a vital first step towards creating the low carbon energy infrastructure of the future. The IET emphasises that the real prize is to ensure that the smart metering system is suitable for use as an integral part of a smart grid.
“Consumer participation in time shifting some of their electricity demand away from times of peak demand will be vital to enable the future delivery of affordable, secure and low carbon electricity. It is important that all consumers will be able to take part and be rewarded for their contribution.”