The UK today took another major step towards the full scale nation-wide rollout of smart meters, as bidders submitted their proposals to provide a communications infrastructure for tens of millions of homes.

Although smart meters are already in operation in the UK - available from the likes of British Gas, npower and E.ON - we are still in what is known as the 'foundation stage', which is intended to enable the industry to build and test the systems, and learn what works best for consumers.

The second stage, the 'mass rollout' will begin in autumn 2015, and by the end of 2020 more than 50 million smart meters will have been installed in properties up an down Britain.

The government expects the total cost of the rollout programme to be around £11.7 billion. However, there will be estimated benefits of over £18.7 billion in the period up to 2030, implying a net benefit of £7.1 billion.

Three contracts are up for grabs. The first is for overall management of the project, currently overseen by the Department of Energy & Climate Change (DECC). This company will be known as the data communications company (DCC), and is a two-horse race between Capita and G4S.

The second contract is for the role of data services provider (DSP). This is the company that will provide the software and the systems to allow the bills to go backwards and forwards between the energy retailers. The three short-listed vendors are HP, IBM and CGI.

The third contract is for a communications service provider (CSP), which will provide communications from the home to the DSP, through the DCC, and ultimately back to the energy retailers. The four shortlisted players are Airwave Communications (which already runs the police radio network), Arqiva, Cable and Wireless and Telefonica.

The DCC will be issued with a fixed-term licence of ten years; in the case of the DSP it is a eight-year contract; DECC has broken the CSP tenders into three regional areas, and the length of each contract is 15 years. Results of the bidding are expected to be announced in August.

Techworld spoke to Trilliant, one of the companies that provides both software solutions and physical communications hubs to many of the companies bidding for contracts. Mike Halley, vice president sales UK and Ireland at Trilliant, described this as "the largest technology project in Europe, bar none".

"Over the next five years, probably every type of IT consultant will touch this project from software and services to security and IT," he said. "Germany, Norway, Sweden are all watching to see what technology choices are made here, because they are late in deploying."

Halley said that the UK energy market is unique in that it is deregulated to the point that other countries don't recognise, and the retailers of the energy are separated from the companies that distribute it and generate it. This makes it harder to operate full grid and smart metering.

However, he pointed to a project in Ontario, Canada, where the local government succeeded in reducing greenhouse gases by 11 megatonnes and preventing two new coal-fired power stations from coming online, by encouraging consumers to use smart meters and introducing tariffs that offered off-peak rates.

"A key part of this is, if you're a company that trades in Europe today, you actually do have a carbon emissions target, and that is actually a traded element, so it will help UK companies be cost competitive," said Halley, referring to the CRC Energy Efficiency Scheme.

"It's almost been forgotten but, by 2020, if you want to win a big contract in Germany and you're a UK company, you'll be either benefitted or harnessed by what the UK government is able to claim is actually our CO2 emissions."

Commenting on the various concerns raised around data privacy and security in connection with smart grid infrastructures, Halley said that a minimum of 128-bit encryption will be deployed throughout the network.

"If you are confident using a shopping basket with Amazon, you should be extremely confident with what the data is doing over the air," he said.

"Every single smart meter installation guy is CRB checked. If you want to opt out you can, and there are no small print tick boxes that say, because you didn't tick this box I'm sharing this data. There is none of that."

He admitted that a smart grid made up of network components that are controlled by foreign governments is potentially susceptible to cyber attack, but added that the UK smart grid will be made up of equipment from British or American suppliers that have met MoD or CIA standards.

"The security in the supply chain is more important than worrying about something that will probably not happen," he said.

"The reality is, could a smart meter be used as a slave? No. It isn't a client-server environment, so a number of smart meters connected together could not be a kind of problem that people are talking about, and certainly denial-of-service attack is too far down the chain."