The past 2-3 years have witnessed an increasing interest in smart grids and smart energy. Smart grids are seen as key to addressing the intensifying demand for high-quality power and greater energy efficiency.
Smart meters are considered to be the first step towards smart grid implementation. The smart meter rollout in Europe is well underway, boosted by the European Union legislation to achieve 80 percent coverage by 2020. Sweden and Italy had full-scale penetration in 2010, while Finland, Norway and Denmark are likely to achieve their targets by 2016.
New analysis from Frost & Sullivan, Smart Grids in Europe – Identification of Key Growth Opportunities, identifies five of the fastest-growing sectors within the European smart grid market including advanced metering infrastructure (AMI), integration of distributed generation, sensors and advanced transmission technologies and electric vehicles.
"The success of the smart meter rollout in Europe is largely due to the regulatory push," noted Frost & Sullivan Energy & Power Supplies Research Manager Malavika Tohani. "Smart grids are integral to achieve the EU 20-20-20 targets – 20 percent increase in energy efficiency, 20 percent reduction of carbon dioxide emissions and 20 percent renewables — by 2020."
However, uncertainty regarding financing, lack of incentives for distribution system operators and consumers, issues regarding information security, interoperability and absence of concrete regulations and legislations are some of the restraints hindering smart grid growth.
"Particularly with regards to integration of distributed generation, there is a lack of clarity on who will bear the costs of connection and to which stakeholders the benefits will accrue," remarked Tohani. "In terms of demand response, uptake in Europe is slow due to limited awareness about the level of financial benefit that households will enjoy against the cost that they must bear in terms of expenditure on devices such as energy monitors and smart thermostats."
Clear standards and legislations need to be put in place to tackle issues regarding interoperability and cost sharing. Moreover, consumers need to be educated on the demand response methods as well as given sufficient rewards for saving energy.
"Concerns related to information theft have hampered smart meter rollout in the past in the Netherlands and are currently slowing down the pace of rollout in Germany," concluded Tohani. "Advances in software and technology to protect consumer information, together with proper privacy laws to prevent data theft, will be critical to overcoming this challenge."