British Gas has signed a contract with Landis+Gyr to supply a million smart meters.

British Gas has chosen Landis+Gyr to roll out smart meters across its UK network of customers, much sooner than the government’s target of 2020.

The “dual fuel” electricity and gas smart meters will be deployed across British homes over the coming few years – with a million meter contract signed with the supplier initially.

Landis+Gyr, the world’s largest electricity metering and smart meter solutions company and a pioneer of worldwide smart grid realisation, was chosen by British Gas’ parent company Centrica to support the UK’s first commercial-scale smart meter deployment in an energy efficiency effort that could save consumers more than £200 million in energy bills.

Homes will also receive an innovative touch screen in-home display, which will allow consumers to independently manage their energy consumption, cut their energy bills and protect the environment. Estimated bills will also be a thing of the past, as the meters will monitor energy consumption as it is used and send the information directly to suppliers over wireless networks.

The British Gas initiative follows the UK government ruling for all homes to have smart meters by the year 2020, backed by £9 billion of funding, and aims to reduce household energy bills by at least £1 billion over the next ten years – this equates to a 3% saving per household every year.

A new company within British Gas will be set up later this year, expected to create 2,500 new jobs with a range of skills from meter fitters to home energy advisers; it also intends to develop its meters to an open standard, which it will share with its competitors.

British Gas has decided to start installing the meters immediately – before the end of a government trial – because of compelling calculations that show that the sooner the country’s 26 million households are switched to smart meters, the bigger the benefits in terms of cutting energy consumption and lowering carbon emissions. Other companies are expected to follow suit.

Steve Cunningham, Landis+Gyr CEO for UK & Ireland, said: “The UK can lead the world into second-generation smart metering and energy management and this announcement marks the beginning of that process.”

“British Gas customers will be able to actively manage their energy consumption and drive down their bills whilst a future large-scale smart grid infrastructure will allow British Gas to manage demand, protect the distribution network and optimise energy generation, including intermittent sources of renewable energy.”

“We view this smart metering roll-out as one of our largest and most important projects ever,” said Petter Allison, Director for Smart Metering for British Gas.  “Smart meters have a fundamental role to play as they help customers become far more aware of the amount and cost of energy they use which encourages people to reduce their usage and save money.”

The Department of Energy and Climate Change and the energy regulator Ofgem are due to publish a prospectus on the requirements for smart meters this summer,  but the first installations are not expected until 2012.

British Gas customers who want a smart meter will be able to request one from 2011. Before that, the company plans to install the meters across a broad span of customer types: these will include families with children at home all day, retired people, professional people who are out all day, low-income families and high earners.