Smart meters

Smart meters are becoming an increasingly relevant technology on the energy market, when it

comes to ensuring an affordable, reliable, and sustainable energy supply 1. They are digital

devices that measure and record electricity, water or gas consumption and make the data avail-

able to utility companies and consumers in real time 2. Data is mainly collected for purposes of

billing, operations and value-added services 3. A smart meter consists of a digital meter with a

smart meter gateway, which is the component making communication possible. Smart electric-

ity meters – the focus of this wiki entry – measure voltage and current through sensors, which

are then multiplied to obtain the energy consumption (in watts). The communication compo-

nent is unique to smart meters and functions through different mechanisms like short-range

infrared, radio frequency signals, broadband connections, power line communication cellular

networks 1. Smart meters are also equipped with additional features compared to mechanical

or electromechanical meters like higher reliability and accuracy, anti-tampering functions, self-

calibration and security. The key differences to traditional analog metering are that the con-

sumption data is directly provided to utilities and data is available in real-time (15-minute in-

tervals) in contrast to monthly or annual meter readings. Smart meters not only measure power

consumption, but also power export, which is especially important for so-called prosumers –

households that do not just consume energy but also produce energy (e.g. through solar pan-

els) 4.

A great advantage brought on by the spread of smart meters is the introduction into smart grids.

Smart grids are focused on energy efficiency and demand-sided management 5. The traditional

power grid was designed to carry power from central generators to the users 6. With an increase

of decentralized generators due to the energy transition, requirements for the energy grid have

changed over time. To combat these challenges, smart grids are supposed to improve power

reliability, integrate renewable energy, enhance grid security and optimize infrastructure use 7.

To achieve this, a two-way energy and information flow is crucial, as users are often not just

users anymore, but can become so-called prosumers. Smart meters are a useful tool to support

a two-way information flow.5

To understand the need for digitalization of the energy system, historical development must be

considered. One of the first practical electricity meters was the Edison electrolytic meter

(1881), which measured consumption via electrolysis 8. In 1888, Oliver B. Shallenberger in-

troduced the induction watt-hour meter, improving accuracy and durability, becoming the

standard in the early 20th century. Throughout the 20th century, electromechanical meters have

dominated electricity measurement. These meters, including the Ferraris-type meter, recorded

energy use on mechanical dials and were widely adopted due to their reliability. With semi-

conductor advancements, electronic meters emerged in the 1980s, offering higher accuracy and

remote readability. By the 1990s and 2000s, digital meters replaced mechanical dials, enabling

automated meter reading (AMR) for efficient data collection.

Since the 2000s and 2010s smart meters have been on the rise. The global smart meter market

has grown significantly, with over 1.06 billion smart meters (electricity, water, gas) installed

by the end of 2023 9. North America leads with a 77 % penetration rate, while Europe and East

Asia also have high adoption. In contrast, Latin America, Africa, and South Asia lag but present

high-growth potential as governments seek to modernize aging infrastructure. By 2030, the

smart meter market is expected to reach 1.75 billion devices, with smart electricity meters lead-

ing adoption. Regulatory policies and financial incentives have driven adoption, particularly in

China, Japan, and the EU. However, cost barriers, regulatory uncertainties, and project com-

plexity have slowed progress in Latin America, Africa, and South Asia. Despite regional dif-

ferences, smart meter deployment is advancing globally, supporting grid modernization, en-

ergy efficiency, and digital transformation in the utility sector.

Compared to conventional analog meters, the purchase, installation and maintenance costs of

smart meters are generally higher. The higher acquisition costs result from the more complex

technology, which integrates digital measurement and communication functions. While analog

meters only record current consumption mechanically, smart meters enable continuous and

remote readout of consumption data, which requires additional electronic components and a

network infrastructure 10. The installation costs are relatively high, as smart meters often re-

quire more complex commissioning and, if necessary, adaptation of the existing infrastructure.

This can result in additional expenses, particularly in older buildings 11. As mentioned, there

6are also differences in terms of maintenance costs: While analog meters usually only rarely

need to be maintained or replaced due to their simple mechanics, smart meters require regular

software updates and are more susceptible to technical faults or network failures 12.

The cost-effectiveness of smart meters compared to conventional analog meters varies interna-

tionally and depends on several factors, including the specific framework conditions of the

respective country, the implementation of dynamic electricity tariffs and the level of electricity

prices 13. For this reason, amortization periods are difficult to compare. An analysis of the

regulation of smart meters in various European countries shows that the cost-benefit analyses

differ depending on national circumstances. In countries with high electricity prices and a

strong focus on renewable energies, the use of smart meters can be more economical 14. Con-

sidering this, in some countries, the use of smart meters can result in long-term savings. For

example, through more efficient grid control, which reduces the financial burden on both grid

operators and consumers.

However, the development of technology prices over time shows that economies of scale, mass

production and technological maturity can lead to a reduction in the cost of smart meters. As

the devices become more widespread and standardized, production costs fall, which has a pos-

itive effect on purchase prices. In addition, ongoing technological development is helping to

make smart meters more efficient and cheaper. These factors could make investing in smart

meters economically viable for a larger number of households in the future 15.

The use of smart meters also opens up considerable economic savings potential for utility com-

panies 12. One of the most important effects is the increase in efficiency in grid control. Smart

meters lead to a better distribution of loads and more efficient use of the electricity grid. By

continuously monitoring energy consumption, bottlenecks can be identified and rectified at an

early stage, thus avoiding costly grid reinforcements or emergency measures. Intelligent load

control offers particularly significant savings potential 16. By precisely analyzing consumption

patterns, grid operators can identify peak loads and reduce them through targeted consumption

control. Intelligent load control through smart meters can not only help to relieve the load on

the grids but also enables flexible pricing that allows consumers to shift their energy consump-

tion to times of low demand. This leads to a more stable grid frequency and better use of exist-

ing infrastructure, which can reduce the cost of providing additional capacity.

An economic indicator for evaluating smart meters systems is the Levelized Cost of Electricity

(LCOE), which indicates the average cost of providing electricity over the entire service life of

a technology 17. While the acquisition costs of smart meters are higher compared to analog

7meters, they enable long-term savings through more accurate consumption recording and in-

telligent load control 12. Studies show that although the LCOE for smart meters systems is

initially higher, it can be offset by efficiency gains and better grid control. Compared to classic

Ferraris meters or non-digitalized load management systems, smart meters offer more precise

consumption measurements, which help to reduce grid losses and operating costs. As a result,

they not only improve economic efficiency for end consumers, but also for energy suppliers,

who can reduce costs through automated processes and optimized grid utilization.

Market research companies forecast that the market for smart meters will grow from USD 22.8

billion in 2023 to USD 50.35 billion in 2032, with a compound annual growth rate (CAGR) of

9.2 % between 2024 and 2032 18. The Asia-Pacific region was particularly dominant, recording

the largest revenue in 2023 with a market share of 47.2 %, while Europe is forecast to see

remarkable growth in the coming years.

The three most important players in the smart meters sector are Landis+Gyr, Itron and Sie-

mens. Landis+Gyr is a leading provider of intelligent metering solutions and smart meters tech-

nologies, operating in many markets worldwide. The company has established itself through

the development of innovative metering technologies and data analysis solutions 19. Itron is

another global provider active in various sectors such as energy, water and gas with its smart

metering systems and data collection solutions. Itron is characterized, among other things, by

the integration of data exchange systems 20. Siemens, with its Smart Infrastructure division,

also offers smart metering systems and plays a central role in the digitalization of energy infra-

structures 21.8

The chart illustrates the different levels of penetration of smart meters in households worldwide

in 2021, with China taking a leading role as almost all households are equipped with smart

meters, indicating extensive government support and advanced digitalization of the energy sec-

tor 23. Japan and the USA are also very advanced in their smart meter rollout, with Japan

achieving coverage of around 80 to 90 %, while the USA is at around 60 to 70 %. These coun-

tries have implemented extensive infrastructure programs and regulatory measures to acceler-

ate the introduction of smart meters.

In the European Union, the rollout advancement is lower at around 50 to 60 %, which can be

explained by different national strategies within the member states. While some countries have

made great strides in the process of implementing smart meters, others are lagging behind.

Smart meters rollout is significantly lower in regions such as the Middle East, Africa, South

and Central America and India. Here, economic and infrastructural challenges are major ob-

stacles to a nationwide rollout.

Overall, the chart shows that economically developed countries with targeted digitalization and

energy efficiency strategies have a significantly higher penetration rate of smart meters than

developing and emerging countries, where financial and technological hurdles are slowing

down progress.

Smart metering enables real-time data exchange between consumers and utility providers, of-

fering detailed insights into both past and present energy consumption patterns 24. Through in-

home displays or mobile applications, users can actively monitor their electricity usage, allow-

ing them to track changes in energy consumption and associated costs as they occur. This en-

hanced visibility helps households identify energy-intensive activities, adjust their daily con-

sumption habits, and make more informed decisions regarding appliance usage. As a result,

smart metering contributes to lower electricity bills and a reduced carbon footprint. Several

studies have attempted to quantify the demand reduction through smart metering 25, 26. Alt-

hough the findings vary, they tend to show demand reductions between three and 13 %. How-

ever, the effectiveness of smart metering in reducing energy demand appears to be highly de-

pendent on how the transition is communicated to consumers. The AECOM Energy Demand

Research Project highlighted that when the installation of smart meters is actively promoted

with clear communication about energy-saving benefits, households tend to engage with the

technology and reduce their consumption 27.

In contrast, when meters are simply replaced as part of routine upgrades without consumer engagement, no significant reduction in demand was observed.

Dynamic pricing, enabled by the widespread adoption of smart meters, encourages consumers

to modify their energy consumption in response to fluctuating electricity prices 28. By providing

real-time data, smart meters facilitate demand response, allowing consumers to make more

informed decisions about their energy usage. However, the effectiveness of dynamic pricing is

influenced not only by technological advancements but also by consumer behavior, which

plays a crucial role in determining engagement with smart energy systems. Time-of-Use tariffs

have been shown to significantly impact electricity demand by promoting peak clipping, load

shifting, and strategic conservation. Among these, load shifting and strategic conservation have

demonstrated the most substantial effects, as they encourage consumers to shift energy-inten-

sive activities to off-peak hours or adopt more energy-efficient habits. However, rebound ef-

fects may arise, where initial reductions in electricity consumption are later counterbalanced

by increased usage at other times, diminishing the long-term benefits of these pricing strategies.

While short-term studies indicate that consumers generally respond to dynamic pricing signals,

further research is necessary to assess whether these behavioral changes persist over time.

10Energy savings strongly suggest carbon savings but data regarding carbon savings remains

limited. The UK’s cost-benefit analysis (CBA) is the only formal CBA estimating emission

reductions, projecting 11.2 million tons of traded carbon savings for smart electricity meter

programs 29.

With a globally increasing energy demand and the changes brought on by the spread of renew-

able energies, the power grid is becoming more complex and less predictable 30. Therefore,

more advanced technologies are required to optimize the grid, as traditional grids are limited

in their ability to support renewables and manage grid stability, causing vulnerabilities to dis-

turbances leading to cascade failures or blackouts 31. Smart grids – including sensing and com-

munication technologies – were developed to address these challenges. A smart grid is an ad-

vanced electrical network that incorporates information technology, two-way secure commu-

nication, and computational intelligence across the entire energy system, from power genera-

tion to consumption points 4. It leverages modern communication tools, multi-tariff meters, and

power distribution equipment to optimize efficiency and reliability in energy generation, trans-

mission, distribution, and consumption. Key features include remote monitoring, coordinated

control, and self-monitoring/self-healing capabilities. The smart grid also facilitates the inte-

gration of renewable energy and distributed energy sources while enabling data exchange with

electric vehicles. Smart meters play a critical role in this system by providing real-time data on

energy usage, enabling demand response programs, and enhancing the flexibility and efficiency

of the grid 32. Therefore, smart meters play an important role in the energy transition, which

positively impacts ecological performance.

Despite the aforementioned ecological benefits, potential challenges also need to be consid-

ered. To do this, it makes sense to examine the life cycle of smart meters. Rizwan et al. pub-

lished a comparative life cycle analysis between conventional (CM) and smart energy meters

(SM) in 2022 33. It examines both systems’ raw material acquisition, manufacturing and as-

sembly processes, as well as their use phases and disposal phases. The assessed impact catego-

ries are climate change potential (CCP), ozone depletion potential (ODP), terrestrial ecotoxi-

city potential (TETP), terrestrial acidification potential (TAP), fossil resource scarcity (FFP)

and water consumption potential (WCP). The findings are summarized in figure 2.

These findings show that smart meters offer significant environmental benefits compared to

conventional meters, primarily through reduced greenhouse gas emissions and improved en-

ergy efficiency. By eliminating the need for manual meter readings and optimizing electricity

distribution, smart meter lower fossil fuel dependence and help mitigate climate change 34.

Their ability to provide real-time energy data also reduces energy losses and prevents electric-

ity theft, contributing to a more sustainable energy system.

However, the environmental advantages of smart meters come with trade-offs. The production

phase has the highest environmental impact, mainly due to the manufacturing of printed circuit

boards (PCBs) and microprocessors 35. These components contribute significantly to ozone

depletion, acidification, and water pollution, as they require energy-intensive processes and

hazardous chemicals. Additionally, smart meter production consumes large amounts of water,

particularly in PCB fabrication, which raises concerns about water scarcity 36. Implementing

sustainable manufacturing practices, such as water-saving technologies and cleaner production

methods, can help mitigate these effects.

At the end of their life cycle, smart meters present both opportunities and challenges. While

they have a greater potential for recycling than conventional, inadequate e-waste management

– especially in developing countries – can offset their ecological benefits 37. Toxic materials

such as heavy metals and flame retardants can pose serious environmental and health risks if

not properly handled 38. Strengthening recycling infrastructure and promoting responsible e-

waste management will be essential to maximizing the sustainability of smart meters.

Overall, smart meters represent a step toward a more sustainable energy system by reducing

emissions and optimizing resource use 33. However, addressing the environmental impact of

their production and disposal is crucial for ensuring their long-term ecological benefits. A life-

cycle approach that emphasizes sustainable manufacturing and efficient recycling will be key

to enhancing their overall environmental performance.

The social acceptance of smart meters varies internationally and is influenced by various fac-

tors such as the level of information, cost perception, data protection concerns and regulatory

requirements 39. Studies show that acceptance is higher in countries with clear economic ben-

efits and transparent communication strategies. Consumers are more likely to accept the tech-

nology if they benefit directly from savings and if the introduction is accompanied by compre-

hensive information campaigns.

Surveys also show that attitudes towards smart meters are strongly dependent on the perceived

control over one’s own energy consumption 40. In countries with dynamic electricity tariffs

supported by smart meters, there is greater acceptance among consumers as they can actively

reduce costs. However, there are still concerns about data protection and security, especially in

regions with less stringent regulatory frameworks.

In order to increase acceptance, experts recommend greater consumer involvement in the in-

troduction process, transparent information on potential savings and clear data protection

guidelines 39, 41. In countries where the introduction of smart meters is accompanied by incen-

tives such as subsidies or benefits for users, approval of the technology is higher 42. This makes

it clear that not only technical, but also social and economic aspects are decisive for the success

of the implementation.

tion of the smart meter infrastructure requires specialized personnel for installation, mainte-

nance and data analysis 12. The ongoing digitalization of the energy market is opening up new

professional fields and thus also providing positive impetus for the labor market in the long

term.

Overall, these positive social effects – from better consumption control and economic savings

to the creation of new jobs – not only support more sustainable energy use but can also

strengthen social commitment and confidence in the energy transition.

Another negative aspect of smart meters is social inequality 47. The transition to smart meters

could disadvantage households without access to and understanding of modern technology,

which can lead to social inequality. This particularly affects low-income households or older

people who have difficulty using digital systems 48. In addition, the switch to smart meters can

lead to higher basic charges, which are particularly burdensome for financially weaker house-

holds. Low-income consumers are not always in a position to benefit from the potential savings

of smart meters, as they often have less scope for flexible electricity tariffs 49.

These negative social aspects highlight the need to consider not only technical and economic

factors when introducing smart meters, but also to take the social implications and concerns of

consumers seriously.

As the introduction of smart metering infrastructures is discussed globally, this section aims to

examine different governmental approaches to this topic. The European Union for example set

a goal that in cases where smart meters are a cost-effective option, at least 80 % of households

should be equipped with smart electricity meters by 2020 50. But within the EU, different ap-

proaches for rollout strategies are taken. An example for a very progressive rollout strategy is

Italy, where deployment of smart meters started in 2008 and was already 95 % complete by the

end of 2011 51. Spain is another example of a rather quick smart meter rollout. Following a

ministerial order in 2007, it aimed to equip all households with smart meters by the end of

2018 52. Spain however has not conducted a cost-benefit analysis on a national scale to deter-

mine economic viability 53. Another approach is the conduction of a cost-benefit analysis prior

to the rollout. This approach was used for example by Germany 54. Germany’s rollout strategy

used to focus on the implementation in new buildings and major consumers when it is techni-

cally and economically feasible 55. Furthermore, economic sustainability was a focus point of

Germany’s strategy rather than a large-scale deployment, as not all smart meters will directly

be fully integrated into smart metering infrastructures 10. With a new law however, Germany

aims to speed up the rollout process and the overall digitalization of the energy transition 56.

From January 2025, there is a mandatory rollout of smart meters for consumers with energy

consumption over 6,000 kilowatt hours (kWh) per year and producers with an installed capacity

over seven kilowatts (kW). Customers below these thresholds have the possibility to voluntar-

ily request a smart meter. These examples show different strategies even just within the Euro-

pean Union, but also globally. Overall, while some countries have rapidly adopted smart me-

ters, others have taken a more cautious approach, balancing economic feasibility, consumer

engagement, and regulatory challenges.

Besides a rollout strategy including mandatory smart meter rollout targets or a partial and con-

ditional smart meter rollout, other policy measures can be installed, including 57:

• Cost recovery for smart meters

• Quality incentives

• Minimum functional requirements

• Privacy and data security policies

• Regulation regarding smart meter ownership and liability

• Policies that maximize consumer benefits from smart meters

With the large amounts of data generated by smart meters, data privacy and cybersecurity con-

cerns are important topics. These privacy concerns have even delayed the smart meter rollout

in some countries 58. The plethora of collected data could be used to gain information about a

household’s occupancy, interests or economic status 59, 60. These threats highlight a need for a

data governance framework.

Privacy can be distinguished into two notions. Firstly, cryptographical privacy which ensures

that an algorithm only reveals as much information as is strictly necessary to produce its re-

sult 61. Secondly, statistical privacy ensures that the results of an algorithm do not reveal sen-

sitive details about specific individuals in a dataset 62. To fully protect private information, both

notions of privacy must be addressed.

There are rather technological approaches to the topic: Smart meters are vulnerable to physical

and software attacks, risking data manipulation, electricity theft, and grid disruptions 3. Since

physical protection is impractical, access control, secure firmware verification, remote attesta-

tion, and secure logging are essential. Encryption methods like PKI secure data transmission,

but certificate revocation and cloud storage security remain challenges. Techniques such as

homomorphic encryption and data obfuscation enhance privacy but often reduce efficiency.

Even encrypted data can be vulnerable to statistical attacks. Consumer consent and access con-

trol are critical, especially for value-added services. Fine-grained access control is complex and

may introduce privacy risks. Verifying whether data is processed according to consent remains

unresolved. Data integrity and auditing are vital for billing and grid management. PKI-based

methods protect data but may expose identities. Anonymous authentication offers an alterna-

tive but has efficiency issues. Public auditing of encrypted data remains an open problem.

These technological approaches could be turned into legal requirements to ensure data security.

Besides these possible technological approaches, there are already policies in place. The Euro-

pean Data Protection Supervisor for example has confirmed that data processing must comply

with EU data protection laws, including Directive 95/46/EC and the e-Privacy Directive 63.

Under EU policy, collecting personal data is prohibited unless explicitly justified by law 64.

Entities must demonstrate that the data is essential for a specific purpose, such as a Distribution

System Operator (DSO) using smart meter data to maintain grid stability. Additionally, data

collected for one purpose (e.g., billing) cannot be repurposed (e.g., consumer profiling) without

separate authorization. In contrast, the U.S. lacks federal regulations on smart meter data pri-

vacy 65. While the NIST issued privacy guidelines in 2010, regulations vary by state, creating

16a fragmented legal landscape 66. Some states, like California, have introduced specific privacy

rules. To address inconsistencies, the U.S. Department of Energy released a voluntary code of

conduct for utilities and third parties, aligning with EU privacy principles 67.

The aforementioned examples show how the regulation of smart meter data privacy differs

across regions. These differences shape how smart meter data is managed, influencing compli-

ance requirements for utilities and third parties.