June 22 (Bloomberg) -- General Electric Co. and SAP AG joined an alliance of companies including Landis+Gyr AG to develop common standards for a U.K. smart-meter market that may be worth 3.8 billion pounds ($6.2 billion) this decade.
Fairfield, Connecticut-based GE, Germany’s SAP, Logica Plc, Trilliant Inc., Itron Inc. and Sensus USA Inc. joined the alliance formed a year ago by Elster Group SE, Secure Meters Ltd. and Landis+Gyr, according to an e-mailed statement from the group. Toshiba Corp. of Japan agreed last month to buy Landis+GYR for $2.3 billion.
The companies are developing a set of specifications that will make their products compatible with each other as U.K. companies work to meet a government goal to install 53 million smart meters in homes and businesses by 2020.
“It’s the equivalent of your PC talking to your printer, or several PCs talking back to one server to listen to your iTunes,” Steve Cunningham, chief executive officer of Landis+Gyr’s U.K. and Ireland unit, said in a phone interview. “In the future, all your devices will know how to talk the meter to know when the best tariff is.”
Smart meters are designed to tell consumers how much energy they’re using and what the current tariff is. They can also break down energy usage by appliance, helping customers regulate their electricity and gas use, quantify electricity produced from solar panels and on-house wind turbines, and communicate information back to generators and grid operators.
The U.K. government’s Department of Energy and Climate Change said in March that the country aims to roll out 53 million smart meters in the U.K.’s 30 million homes and businesses by 2020 to cut electricity use and lower greenhouse gas emissions. The government estimated the program will save Britain 7.3 billion pounds over the next 20 years.
“The major vendors are readying themselves to produce products and solutions that are tailored to the U.K. market, the largest deployment of gas and electric meters in the world,” said Albert Cheung, lead analyst for energy smart technologies at Bloomberg New Energy Finance. “GE’s arrival in the U.K. smart metering market is well-timed.”
The alliance started out in July 2010 as three meter-makers. It now includes a “very broad coverage of the whole smart grid environment,” including software developers and companies that develop communications systems, Cunningham said.
“We’re trying to standardize the way the different pieces in the U.K. smart metering environment need to talk to each other,” he said. “Can you take an off-the-shelf SAP system and make it work with a Landis+Gyr electricity meter, an Elster gas meter, maybe an Itron in-home display and all connected with a Trillian or a Sensus communications system? That will be the real proof of what we’re working to deliver.”
New Energy Finance’s Cheung said there’s also a “great deal of interest” in who will provide the centralized communications network that will move the data. “Smart grid specialists such as Trilliant, Sensus and Silver Spring Networks could be in the running, but so are BT, Vodafone, O2 and other telecoms specialists,” he said.
The companies’ products will still be differentiated, providing for consumer choice, according to Cunningham, who estimated the size of the household meter-market alone at 4.8 billion pounds between now and 2020. While countries including Italy, Spain and Nordic nations have moved earlier to introduce smart meters, the U.K. plan is more advanced, he said.
“As far as the next-generation smart metering deployment goes, where you really are able to offer consumers real value and advanced energy-management in the home, the U.K. is well in the lead,” Cunningham said. “The solution we’re creating has the potential to serve a lot of other markets too,” he said, citing Europe, the Middle East, and the U.S.
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