* All UK homes, businesses to have smart meters by 2019
* Smart meter roll-out to cost 11.5 billion pounds
* Consumers decide how much data suppliers receive
LONDON, April 5 (Reuters) - Britain's Centrica will have to pay to replace many of the 400,000 smart meters that it installed in UK homes to measure energy consumption, because they do not comply with newly established government criteria, the utility said.
"The earlier phase meters that do not comply with the spec need to be replaced by 21 December 2019," a company spokesman said, adding that meters currently being installed meet the new criteria.
He declined to reveal the exact number of meters to be replaced or how much changing them would cost.
"The potential need to replace earlier smart meters was part of our business case. We wanted to get smart meters to our customers as soon as possible," he added.
The UK government plans to equip all British homes and businesses with smart meters by 2019, requiring energy suppliers to fit 53 million units at a cost of 11.5 billion pounds ($18.3 billion).
The readers help energy consumers become more aware of electricity and gas use, and their use has shown that energy demand drops as a result.
With the help of smart meters, average household dual-fuel bills are estimated to drop by 25 pounds a year by 2020 and by 40 pounds 10 years later, while businesses can save up to 200 pounds a year by 2030, the government said.
"Smart meters will provide accurate consumption information and bring an end to estimated billing - so no more surprises for consumers," said Britain's Energy Minister Charles Hendry.
So far, half a million meters have been installed in Britain, 80 percent of them placed by Centrica's retail arm British Gas.
The government on Thursday published additional guidelines for the roll-out of smart meters, including setting criteria on which technologies can be used.
It is also proposing that consumers decide how much of the data to pass on to suppliers, apart from monthly consumption data required for billing and regulation.
Consumer groups have expressed concerns that data on energy use at different times of the day, unless kept private, would expose users to unwanted marketing or even crime.
"To make this work, people must be aware of their rights and the choices available to them on how much information is passed to suppliers," said Audrey Gallacher, director of energy at lobby group Consumer Focus.