Technology Services Procurement Vendor Engagement Event 30 th August - PowerPoint PPT Presentation

Technology Services Procurement Vendor Engagement Event 30 th August 2017

Agenda ▪ Introductions from the Chair ▪ Alt HAN Company ▪ Scale of the Alt HAN ‘gap’ ▪ Commercial Strategy ▪ Technology Services Procurement Process ▪ Break (30 min) ▪ Scope and Requirements ▪ Next Steps in Process ▪ Question and Answer Session ▪ Close Alt HAN Co. 2

Introduction ▪ Housekeeping ▪ Introduction of Presenters ▪ Alt HAN Co Overview – Colin Sausman (Alt Han Forum Chair) ▪ Scale of the Alt HAN ‘gap’ – Peter Morgan (BEIS) ▪ Commercial Strategy – Rod Glover (Alt HAN Co) ▪ Procurement Process – Christian Harris (Alt HAN Co) ▪ Scope and requirements – Ysanne Hills (Alt HAN Co) ▪ Objectives for the day Alt HAN Co. 3

Key Objectives for Today ▪ Explain the commercial opportunity. ▪ Explain the proposed commercial approach, in particularly: ▪ Key principles; ▪ Procurement Process and timescales; and ▪ Scope of services. ▪ Encourage vendor participation in the forthcoming competition. ▪ Seek feedback on the approach from potential vendors. ▪ Please complete and submit the feedback form at the end of the day. ▪ Option to request a 1-2-1 for focussed discussion. Alt HAN Co. 4

Alt HAN Company Overview & Context Vendor Engagement Event Alt HAN Co. 5

Policy Context ▪ Smart Metering Implementation Programme. ▪ Transformational: ▪ Energy market operation – wholesale, networks, retail; and ▪ Consumers – products and information. ▪ Design (and benefits case) assumes a HAN for: ▪ Near real-time information in the home, for all, as standard; and ▪ Communications link to gas meters. ▪ Standard equipment has HAN performance limitations. ▪ Government policy - Suppliers to work together to “plug the gap”. ▪ Alt HAN Co is the contractual vehicle for doing this, supported by the Alt HAN Forum. Alt HAN Co. 6

Limitations of Standard HAN Architecture and the Alt HAN ‘gap’ Alt HAN Co. 7

Alternative HAN – Reminder of the Problem IHD IHD IHD ? ? ? EM-CH ? GM ? EM-CH GM ? GM EM-CH • HAN range extension becomes a much more serious issue when Smart Meters are not located in or near the customer’s premise. Alt HAN Co. 8

Alt HAN Contractual Relationships Alt HAN Co Alt HAN Board Business Support Function Energy Contract Management Suppliers Operational Services Service Technology Data Management Management Building Evaluation Services Function Alt HAN Co. 9

Alt HAN Operational Relationships Alt HAN Co. 10

Status of the Alt HAN Forum and Alt HAN Co ▪ Key Drivers: ▪ Government policy and implementation plans; ▪ Supplier obligations; and ▪ Funding model in-place. ▪ Regulatory arrangements to enable the Alt HAN Company, Forum & Board to operate were designated in July 2016, since then the Project has been implementing those arrangements, establishing the processes and procuring Business Support services for the company and increasing the projects capability. ▪ Alt HAN Co is now established and operating independently, with Management provided by Engage Consulting, Business Support provided by Gemserv, Project Support provided by Baringa and Strategic Commercial Oversight by PA Consulting. ▪ Alt HAN Co is funded by energy suppliers via the DCC charging mechanism. Sources: 1. https://www.gov.uk/government/consultations/consultation-on-home-area-network-solutions Alt HAN Co. 11

Scale of the Alt HAN ‘gap’ Vendor Engagement Event Alt HAN Co. 12

Alt HAN ‘gap’ – DBCH Performance Dependency ▪ Overall Alt HAN challenge is to fill the gap left by Standard HAN (i.e. 2.4GHz and Sub GHz). ▪ Standard HAN coverage from Ofcom Study = 96.5% of GB premises. ▪ Recent information from a DCC trial to determine Sub GHz HAN performance of the current prototype designs of dual band communications hubs (DBCH) indicates around 90% coverage of GB premises. ▪ Vendors should not draw any conclusions from this on the basis that: ▪ The DBCH units tested are at the prototype stage; ▪ The process of determining final DBCH propagation performance is not yet complete; ▪ There is a commitment to optimise DBCH propagation performance to nearer the 96.5% estimate within the R2 plan timescales; and ▪ BEIS understands that further work to gain certainty on the dependent Alt HAN market size will move forward in parallel to the procurement process thus supporting commercial certainty. ▪ It should be acknowledged by vendors that on basis of the information noted above that the overall Alt HAN market may increase. Alt HAN Co. 13

Commercial Strategy Vendor Engagement Event Alt HAN Co. 14

Background: Drivers Of Commercial Strategy ▪ Smart metering obligations that energy suppliers need to meet ▪ Relevant technology market as revealed by previous market engagement ▪ Addressing the uncertainties currently inherent in meeting the requirements ▪ Achieving an appropriate balance of risk and reward These considerations translate into criteria representing Critical Success Factors for Alt HAN Co… Alt HAN Co. 15

Critical Success Factors for Commercial Strategy 1. Maximises coverage 2. Generates an outcome consistent with regulatory framework 3. Delivers in a timely manner 4. Generates consistent and quality consumer experience 5. Is economically efficient 6. Generates acceptable whole-life costs 7. Generates effective competitive pressure in procurement 8. Generates solutions that meet the requirements 9. Permits VFM to be maintained through life of contract / contract operation 10.Delivers a solution that is manageable in operation Alt HAN Co. 16

Scope of Services Covered by the Commercial Strategy ▪ The commercial approach recognises and seeks to balance: ▪ The potential advantages and benefits of having vendor continuity across this scope ▪ The commercial risks of locking in to a particular vendor at this point, with the current uncertainties over technology maturity levels and development effort required, volumes of use cases/units that need to be manufactured, and the details of operational arrangements for service management Alt HAN Co. 17

Illustrative Overview of the Commercial Strategy Process Stages Stage 2 Stage 0: Stage 1: Selection Alt HAN Stage 3: Stage 4: Vendor including Initial Full Roll 2B: Design Assurance & Manufacture Installation & Support 2A: Detailed Design Engagement Design Out Prototype Mix of simpler Funded Funded design 'plug & play' and prototype development more & trials (paid complex shared (paid deliverable) HANs deliverables) Increasing certainty Installation Installation Procurement Selection of 1 proposal Selection of up to complete, ITT and Contract Up to 4 vendors Stages submitted, 2 vendors to vendor to maintenance for full scope of contracted for vendor progress to Stage progress to services services issued Stage 2A Stage 3 progressed to 2B commence Stage 4 NB: The anticipated number of vendors within the competitive process may vary. Alt HAN Co. 18 –

Commercial Principles Underpinning the Commercial Strategy Key theme: partnership working and funding for development Combined with 'typical' aspects: ▪ Appropriate pricing and payment mechanisms at each stage. ▪ Incentives for delivery and for co-operation with Alt HAN Co. ▪ Retaining competitive pressure to ensure ongoing VfM. ▪ Providing for robustness in delivery. ▪ Appropriate treatment of assets and Intellectual Property. Alt HAN Co. 19

Summary of Commercial Opportunity Alt HAN technology services development partnership: ▪ A significant opportunity with scope for funded development. ▪ A collaborative journey as technology brought to maturity. ▪ A step-by-step progression as information becomes more certain. ▪ An element of competitive pressure is retained to test for VfM. ▪ Desired outcome is vendor success in providing full scope. Alt HAN Co. 20

Procurement Process Vendor Engagement Event Alt HAN Co. 21

Procurement Principles ▪ Transparency and Good Practice, but procurement is not subject to OJEU. ▪ Contract award based on Most Economic Advantageous Tender. ▪ Ongoing Value for Money is a critical requirement. ▪ ITT to test competency against the full scope of services. ▪ Selection Questionnaire to assess corporate capability. Alt HAN Co. 22

Procurement Process & Stage Gate Process Process Stages Stage 2 Stage 0: Stage 1: Selection Alt HAN Stage 3: Stage 4: Vendor including Initial Full Roll 2B: Design Assurance & Manufacture Installation & Support 2A: Detailed Design Engagement Design Out Prototype Installation Installation Procurement proposal Selection of up to Selection of 1 complete, ITT and Contract Up to 4 vendors Stages vendor to submitted, 2 vendors to maintenance for full scope of contracted for progress to vendor progress to Stage services services issued Stage 2A progressed to 2B Stage 3 commence Stage 4 NB: The anticipated number of vendors within the competitive process may vary. Alt HAN Co. 23 –

Procurement Process: Selection and Initial Design Alt HAN Co. 24

End-to-End Indicative Timescales Alt HAN Co. 25

Procurement Timescales ▪ Issue of ITT 25 October 2017 ▪ Submission of Proposals 12 December 2017 ▪ Presentations/Site Visits Est. January 2018 ▪ Contract Award Est. April 2018 Alt HAN Co. 26