After years of waiting, the U.K. has awarded its first giant smart metering communications contracts, and it appears that cellular solutions, along with Sensus’ FlexNet communications technology, have beaten out the wireless mesh contenders.
On Wednesday, the U.K. Department of Energy and Climate Change (DECC) announced that U.K. communications company Arqiva has been selected as the preferred bidder for smart metering communications for Northern England and Scotland. Arqiva, along with U.S. smart meter company Sensus, backhaul provider BT and security provider Detica, will be asked to support the rollout and ongoing networking of about 10 million electric and gas meters to be deployed over the coming years, at a value of about £625 million ($969 million) over the next fifteen years.
DECC also announced that Telefónica UK has been selected as the preferred bidder for the central and southern parts of the U.K., with an estimated value over fifteen years of about £1.5 billion ($2.33 billion). All told, the three regional communications networks are being set up to support the U.K.’s plan to deploy about 50 million smart electric and gas meters to all its residents by 2020.
Wednesday’s announcement named these companies as “preferred communications service providers,” and final approval is expected to come in the next three weeks. But the news does appear to put an end to the years-long competition between the above-named companies and a host of competitors seeking a piece of the U.K.’s massive smart meter plans since they were first announced in 2011.
Those competitors include Silver Spring Networks and Vodafone, which announced their intentions earlier this year, as well as Airwave Solutions. Wednesday’s announcement certainly makes it clear that the UK doesn’t want the wireless, unlicensed spectrum mesh technologies that have made up almost all the smart meter deployments in the U.S. and North America to date.
In a Wednesday research note, analysts with research firm Stifel noted that “many including us expected Silver Spring to be a major player” in deployments in the central and southern regions that Telefónica has been awarded.
Even so, Wednesday’s announcement still leaves many questions unanswered, including which smart meter vendors and other technology partners will be chosen to link up to the wide-area network (WAN) providers chosen.
The U.K.’s smart meter plans also include a lot more money to spend than the amounts publicized in Wednesday’s release -- the initial 2011 announcements set a total value of up to £4.59 billion ($7.49 billion) for the overall communications infrastructure. It’s also been subject to changes, including the government’s decision in May to push back the deadlines for the first and second phases of the country’s smart meter rollout.
The U.K. has taken a different approach than most other countries deploying smart meters, by clearly dividing the rollout between smart meters themselves and the providers of the communications networks that will link them all together.
Furthermore, the U.K. has a deregulated and competitive energy market, which allows customers to switch from one retail energy provider to another as often as once a month. That means that individual smart meters, which often sit inside homes and businesses in the U.K., must be designed to be switched between multiple vendors and their underlying technology.
All of these local meters, in turn, will be connected via ZigBee wireless networks to central communications hubs, which then connect to the WANs that will span the country’s three regions. That network topology may well require the kind of long-range, point-to-multipoint communications that unlicensed mesh networks could struggle to provide.
One big question in the U.K. communications rollout was how it would mix up public cellular communications with private, utility-owned forms of communications technology. In the northern part of the country, at least, it appears that DECC decided that Sensus’ approach was a better bet than cellular alone.
Sensus’ FlexNet technology -- a long-range, licensed-spectrum technology that now connects about 16 million meters for about 475 utilities across the United States -- has already been tested in pilots with Scottish Power, Sensus CEO and president Peter Mainz said in a Wednesday interview.
Sensus’ technology also supports services beyond meter reading, including prepay and load control capabilities, as well as support for distribution automation and other utility systems that need fast-reacting, highly reliable communications links, he said.
“Approaching the utility industry as national infrastructure, that’s dedicated and resilient for them, is a differentiator for us in North America, and now in the U.K. as well,” he said.
While Mainz wouldn’t specify the financial value of Sensus’ share of the overall $970 million contract it’s a part of, he did estimate that the tasks Sensus was expected to fulfill for the project could amount to about four-fifths of the capital expenditures associated with the rollout.
Other contracts that were provisionally awarded in Wednesday’s DECC announcement include:
- Capita PLC was selected as the successful applicant for the “DCC License” role of managing the smart metering services of the country’s data and communications service providers. The estimated value of the license over twelve years is approximately $270 million.
- CGI IT UK Limited was selected as the preferred bidder for the Data Service Provider contract to develop and operate the system controlling the movement of messages to and from smart meters. The estimated value of this contract over eight years is approximately $115 million.
- Gemserv Ltd. was selected as the preferred bidder for the Smart Energy Code Administrator and Secretariat contract to maintain and update the industry code governing the use of smart meters across the energy industry. The estimated value of this contract is approximately $15 million over four years.