According to a new research report from the analyst firm Berg Insight of Gothenburg, Sweden, the installed base of smart electricity meters in Europe will grow at a compound annual growth rate of 19.4 percent between 2010 and 2016 to reach 130.5 million at the end of the period. Annual investments in smart metering technology are forecasted to exceed $4.2 billion by the mid-2010s.

Smart meters help consumers better manage their energy usage and create financial incentives for energy savings. Moreover they constitute the core building blocks in future smart grids that will support electric vehicle charging, renewable micro-generation and advanced energy conservation.

The company notes that, following major rollouts in Italy and the Nordic region, Smart Meters are now being introduced on a massive scale in Spain, France, and the UK. “Endesa [Empresa Nacional de Electricidad S.A ] has commenced with a rollout to 12.9 million customers in Spain and the second largest electricity network operator Iberdrola, will follow,” said Tobias Ryberg, senior analyst at Berg Insight.

“ERDF[Électricité Réseau Distribution France] is awaiting formal approval from the government for a nationwide rollout to 33 million customers in France; and in the UK, the leading energy suppliers British Gas and E.ON have committed to the deployment of several million smart meters prior to the start of a mass rollout in 2014. By that time there will also be massive installations in additional countries such as the Netherlands, Ireland and Norway.”

For the first time, there are also plans for major smart metering projects in Central Eastern Europe. CEZ in the Czech Republic and Energa in Poland have announced large scale pilots as the first step towards full-scale installations. Energa has the most advanced plan to achieve full coverage for smart meters among its 3 million electricity customers by 2017. The Czech Republic and Poland are part of the EU25—nations that joined later than the original members.

Coincidentally, the Brussels-based Joint Research Centre of the European Commission—the EU’s in-house science service—also released a report on smart grids this week. Based on a review of 219 smart grid projects throughout Europe, the report found that the vast majority of investment to date, amounting to  about $7.7 billion, have been made “ in old Member States”, while “new Member States” have tended to lag behind.

European Commissioner for Research, Innovation and Science, Máire Geoghegan Quinn, stated, “The implementation of smart grids is a significant opportunity for European industry to research, to market and to export new technologies, to create new jobs and maintain global technological leadership. We are only at the beginning of the transition to smart grids, and at this stage, sharing the results of research projects can help increase the stock of knowledge and add impetus to innovation in this field.”

The report shows that Distribution System Operators (DSOs) play a leading role in coordinating smart grid deployment across Europe. DSO-led projects represent about 27 percent of all projects and about 67 percent of investments. However, the study underlines that current regulation in EU Member States tends to promote cost efficiency by reducing operation costs rather than by upgrading to a smarter system.

It warns that the investment potential on smart grids will have difficulty accelerating without revising the current regulatory models. “Regulation should ensure a fair sharing of costs and benefits in the set up of services platforms, as power system owners and operators are expected to sustain the majority of investments whereas several players might get benefits from smart grids,” the report recommended.

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