Logica and SAP have decided to jointly bid to become the provider of the central data management capability in the UK’s Smart Metering Implementation Programme. It’s one part of the role of Data and Communications Company (DCC) as defined by the Department of Energy and Climate Change (DECC) in the UK’s Smart Metering Implementation Programme Prospectus.
The DCC role is central to the use of smart meters. It essentially involves gathering the meter readings and getting the data back to the suppliers. The DCC is responsible for the effective operation of the energy market, as well as minimising barriers to competition and ensuring that consumers can benefit from new services that give them control of their spend on energy.
Logica has been involved in these sorts of roles in energy markets since the National Grid was first privatised. The company set up and ran (for ten years) the UK's New Electricity Trading Agreements (NETA), which replaced the previous wholesale electricity market mechanism. SAP also has in-depth experience and expertise in the sector as a leading supplier of business software solutions to utilities. This is an exclusive partnership for this contract only. Neither party will work with any other bidder.
Last year the Government published its proposals for the delivery of electricity and gas smart metering in Great Britain for consultation and in March published its conclusions. The process has now entered the ‘foundation stage’, during which the Government will work with industry, consumer groups and other stakeholders to ensure all the necessary groundwork is done before the mass rollout. All the systems required to start the rollout will be built and tested and the DCC established during the foundation stage. The DCC needs to be up and running before the mass rollout, due to start in early 2014 and to be completed in 2019.
There are still details to be agreed, so the DCC contract value that Logica and SAP will be bidding for will not be known for some time, but it is expected to include both creating the solution and running the service and will be worth in excess of £100m. Logica/SAP have shown their hand at this stage in order to be involved in the discussions and trials.
The full DCC will cover both communications and data capabilities, but the SAP/Logica agreement is just for the data element – there will be separate procurement for the two aspects. According to Tara McGeehan, Director of Utilities at Logica, the company does not want to take on the communications element itself because of the potential uncertainty and future developments in communications technology. Logica is talking to all the main communications companies, though.
There are already two partnerships/consortiums lined up to bid for the DCC role (both of which I have reported on); IBM/Cable & Wireless, and BT/Arqiva/Detica (through a joint operation called SmartReach).
There may be reservations in some quarters about the UK’s smart grid rollout (see the National Audit Office comments last week) but the plan is pretty much in place and at this stage it looks like only details will change.
There’s going to be fierce competition for the DCC role – it’s as much about the central position in the smart meter rollout and the doors that might open in the future as it is about the specific (and by no means inconsiderable) contract value.