Capita, CGI and Telefonica win UK smart-grid contracts

UK authorities have announced their preferred suppliers for contracts worth some £2.8 billion ($4.39 billion) that form part of the nationwide rollout of a smart grid aimed at reducing energy costs and waste, with Capita, Spanish telecoms operator Telefonica and CGI among the winning bidders.

According to a statement from the Department of Energy and Climate Change, outsourcing specialist Capita (London, UK) will become the Data and Communications Company (DCC) provider in a deal worth some £175 million.

UK authorities have announced their preferred suppliers for contracts worth some £2.8 billion ($4.39 billion) that form part of the nationwide rollout of a smart grid aimed at reducing energy costs and waste, with Capita, Spanish telecoms operator Telefonica and CGI among the winning bidders.

According to a statement from the Department of Energy and Climate Change, outsourcing specialist Capita (London, UK) will become the Data and Communications Company (DCC) provider in a deal worth some £175 million.

The organization’s role will be to manage data gathered by the 53 million smart meters the government wants to see installed in UK homes and businesses by 2020.

Capita’s responsibilities will also include managing other suppliers that have been selected by authorities.

Those include CGI’s (Montreal, Canada) UK business (formerly Logica) – which saw off competition from US IT giants IBM (Armonk, NY, USA) and Hewlett-Packard (Palo Alto, CA, USA) to win the £75 million Data Service Provider (DSP) licence – as well as telecoms operators Arqiva (Winchester, UK) and Telefonica (Madrid, Spain).

Arqiva secured the Communications Service Provider (CSP) covering the north of England and Scotland, while Telefonica is set to become the CSP for the rest of the UK.

Telefonica says the deal to provide services across central and southern regions of the country is worth approximately £1.5 billion over a 15-year period, subject to contracts being agreed, and plans to base a solution on its existing cellular network.

“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,” said David Plumb, the digital and new business director of Telefonica UK. “The decision is subject to contracts and we are working with the DECC on next steps and will be making a further announcement in due course.”

Market-research company Ovum has expressed concern about the choice of CGI as DSP, saying the company’s solutions can be “overly complex” and urging authorities to ensure the DSP platform is “equally accessible to all market participants”.

“CGI’s experience in creating and operating central energy market systems set it apart from its closest rivals IBM and HP,” said Stuart Ravens, a principal analyst at Ovum, in commenting on the CGI win. “CGI also claimed more experience working with British utilities’ smart meter trials: it has eight current smart meter clients, including five of the big six energy suppliers.”

The UK’s smart grid program is expected to cost around £12 billion in total, but the government expects the system to lead to substantial cost savings for utility companies and energy consumers.