If there is a smart meter slowdown, someone forgot to tell British Gas.
British Gas has announced that Landis+Gyr will supply the majority of its 16 million smart gas and electric meters. The deal is worth £600 million ($956 million).
The size of the contract would be impressive at any time, but is even more so given the pace of the smart meter market recently. The U.K. is going to roll out about 47 million smart meters in coming years, but the timeline has been pushed back because of technical specifications, regulatory issues and a nationwide communications network.
Some of those issues have been worked out, such as awarding the networking contracts, which has given British Gas the confidence to market the two-way digital meters to existing customers. British Gas already has more than 1 million smart meters deployed using Landis+Gyr.
Even though the two companies have been working together for years, it is likely a blow to other metering companies. Just last week, Itron (ITRI) announced plans to cut about 9 percent of its workforce, or about 750 jobs.
"In terms of vendor selection, the European market has historically been more fragmented than the U.S. market,” said Zach Pollock, senior smart grid analyst with GTM Research. “Given the added complexity of the U.K.'s supplier-owned model, the win for Landis+Gyr is even more significant."
As the U.S. market for metering slowed down, meter manufacturers turned their attention to Europe, where the European Union recommended that member countries install smart meters for 80 percent of consumers by 2020. The U.K. will largely meet that goal, but other large markets such as Germany have chosen not to follow those recommendations.
In the U.K., the metering timeline has only been pushed back by about a year. In the deregulated market, British Gas is hoping that it can win and keep customers by being an early mover with smart meters. The utility estimated that customers will be able to save about 5 percent of their bill annually by understanding their usage better. The smart meters will be accompanied by in-home displays in the U.K.
“British Gas is leading the industry in the deployment of smart meters as part of our commitment to reshaping the energy industry for the digital era, making it easier for customers to understand their energy use and keep bills under control,” Chris Weston, Managing Director of British Gas, said in a statement.
To meet the contract, Landis+Gyr, which was bought by Toshiba in 2011, will more than double its 600-person workforce and extend its manufacturing facilities in the U.K. British Gas will have an army of more than 1,000 Smart Energy Experts that will install the meters and provide energy information to households.
Unlike in the U.S., where a digital smart meter is often slapped on the side of the house and a door hanger is left with information about the device, the installation process in the U.K. can take up to two hours per unit, according to Rob Conant, chief marketing officer at Trilliant, which works with British Gas and also comes out as a winner as the meter deployment speeds up.
“It’s all about the customer journey,” Conant told Greentech Media earlier this year. He noted that British Gas makes more than half its revenue on services other than power. When it comes to detailed information from smart meters, “they’re thinking beyond just energy,” in terms of services that they can offer.
Landis+Gyr is also in a strong position to win at least part of Tokyo Electric Power Company’s estimated $2.6 billion metering project, since it already won the contract to supply the technical foundation for the deployment. TEPCO is expected to install about 17 million smart electric meters by 2019.