The government of the United Kingdom is putting its money where its mouth is, announcing up to £4.59 ($7.49) billion in contracts to build a wide area network and data services to support smart meters.
Smart meters are mandated to be in place in the U.K. by 2020, which will result in the installation of a total of about 47 million devices. In many parts of Europe and the U.S., the question of managing the data coming from meters is still up for debate. Not so in the U.K., which has established a central data and communications company (DCC) to oversee access to the data. Instead of utilities ensuring the security of that information, the government will take care of it. And instead of utilities individually building out their own wide area networks, the government will foot the bill for the WAN. The announcement this week from the U.K. government is not surprising, but it adds weight to the trend of smart grid technologies proliferating quickly throughout Europe.
So far, the U.K. has been a proponent of GSM/GPRS due to cost and ease of use, so the contracts could be a boon for telecoms, which are eager to get into the smart grid space. “It’ll be interesting to see how cellular takes root, seeing that the U.K. is the first proponent of it, while other European countries have adopted the prime PLC standard,” said David Leeds, Senior Manager of Smart Grid for GTM Research.
According to the U.K.’s Department of Energy and Climate Change, which filed the contract notice to the Office Journal of the European Union, WAN services will include: telephone and data transmission services, IT services, consulting, software development, internet and support. Although the data services contract is a separate filing, one company could potentially apply for and win both bids.
The U.K. government has split the contracts into three geographical areas: northern Great Britain, including Scotland; central Great Britain, including Wales; and southern Great Britain. Applicants can bid for one or all lots. However, within regions, the U.K. government isn’t looking for piecemeal solutions. “The Authority does not expect to tender separate contracts to companies providing a particular solution within a lot, but will tender communications services contract(s) on a prime contractor basis for each lot,” the notice reads. Each of three contracts, which will last for nine to 15 years, will be worth £330 ($538) million to £1.53 ($2.5) billion.
If telecoms want to get into the game, they will need 100 percent coverage, as the scope of the project calls for full coverage in the geographic region and the supply of the communications module and connection back to a central data center specified by the DCC.
The IT services contract has some overlaps with the WAN contract, calling for “consulting, software development, internet and support, software package and information systems, custom software development services and data-processing services.” Taking the data out of the utility’s hands is a first in Europe, according to GTM Research analyst Geert-Jan van der Zanden, and should help to instill consumer confidence in data privacy, whereas it is lacking in other countries, such as Germany and the Netherlands. The contract term is seven to nine years and worth £60 ($97.9) million to £240 ($391.6) million.
Applications are due by October 14, 2011.
For more information about the European smart grid market, check out GTM’s latest report, Smart Grid in Europe, 2012-2016.