Smart Grid in America and Europe (Part II)


Past accomplishments and future plans.

Fortnightly Magazine - February 2011

In general, the E.U. and the U.S. are concerned with similar smart grid issues. While both governments view the deployment of smart meters to be of the utmost importance, they differ in prioritization on other issues. Challenges to smart grid deployment include unexpectedly high consumer bills—instead of consumer savings—and privacy concerns. In other topics, the E.U. has expended more resources on R&D of distributed generation and microgrids. Although the U.S. engages in less research on distributed generation and microgrids, it focuses on drafting interoperability and security standards, including evaluating privacy issues. Only recently did the E.U. order standardization of smart meters and interoperability standards.

Smart Meter Deployment

Installing smart meters is the first step to realizing the benefits of demand side management and improved two way communication and two way power flow for distributed generation. Despite the fact that the E.U. has installed more smart meters than the U.S., both have faced issues with consumer dissatisfaction, cost recovery, and privacy.

Since early 2000, more than 30 million smart meters have been installed in Italy, resulting in a penetration of almost 100 percent.1 In Denmark, an advanced metering infrastructure project involving 390,000 meters will be completed by 2011.2 Like Denmark, where penetration is more than 50 percent, Norway, Sweden, and Finland have achieved similar levels of penetration. France, Spain, and the United Kingdom (U.K.) have less penetration, but are committed to the smart grid with full deployment timelines. France plans to achieve full deployment in 2016, Spain following with 2018, and the U.K. in 2020. Other countries not on course with the E.U. directive of 80 percent smart grid meter penetration by 2020 have pilot projects.3 Since 2010, Germany has required all new buildings to be equipped with smart meters.4 It is anticipated that over 111 million European households will have smart meters by 2015.5

In the U.S. only 4.6 percent of all electric meters were of the advanced metering infrastructure variety in the summer of 2009.6 Since then, many states have received ARRA funding for smart meter deployment. Oklahoma Gas & Electric Company (OG&E) plans on full deployment within three years.7 Duncan, Oklahoma plans to network the entire city with upgraded grid technology.8 In Illinois, 141,000 smart meters are planned for the city of Chicago and 11 suburban communities.9 Another rollout is in Vermont, where 85 percent of residents will receive smart meters.10 In Maryland, smart meter rollout was just approved after an initial denial of the request to include part of the smart meter costs in the rate base and a mandatory pricing scheme.11 At least 50 million smart meters will be installed by 2015.12 By late summer of 2009, reports predicted that 8 million smart meters had already been deployed.13 

Today, based on the numbers, the United States is lagging behind the E.U. in smart meter installation. Where Italy is close to 100 percent deployment, there are no U.S. states close to this level of penetration. In 2010, Italy alone had at least double, or perhaps even three times, the number of smart meter installations compared to the entire U.S.14 In five years it is predicted that the U.S. will install 50 million meters in addition to the 6.7 million existing meters, bringing the total to close to 60 million. In the E.U. however, there will be 111 million households with smart meters.15 Despite the numerical differences, common problems have emerged in the E.U. and the United States. 

Smart meter deployment has not been smooth and consumers complain they have not experienced the often heralded electric bill savings, but instead have received higher bills. In Texas, one consumer complained that her bill doubled to $745, which was more than her rent.16 Installed smart meters might not be used for demand response by consumers if new rate structures are not offered to reflect the differences in electricity prices at different times.17 Automated energy saving appliances might not be connected to the meter, and information evaluation software might not be installed along with the meter. Changing consumers’ behavior requires more than just the meter. It requires price signals, information, and communication platforms that easily allow consumers to control their energy consumption. In order for consumers to respond to price signals, new price structures are necessary. For example, time-of-use-pricing, also known as dynamic pricing, charges less at non-peak times of the day. There is no evaluation yet of the extent of services offered by the meters already installed. In Europe there has been a disappointing amount of interest in energy saving technology on the consumer end.18 

Another issue is who will pay for the new meters. Meters systems can cost from €95 to €340 in the E.U., or $200 to $400 per meter in the U.S.19 Only 80 to 85 percent of American consumers are willing to pay up to $100 for a meter, and that is if they are guaranteed to save between 10 and 30 percent in electricity bills every month.20 The E.U. Directive requiring 80 percent of homes to have smart meters by 2020 does not identify funding mechanisms. Because cost recovery is an important driver to implementation, in Eastern European countries the lack of funding prevents smart meter deployment. Different approaches have been taken. Some costs have been covered entirely by consumers, as in Germany. In the U.S., federal stimulus grants have been used to implement smart meters, but consumers are often expected to cover the costs partially. In Maryland, Baltimore Gas & Electric initially proposed a $835 million smart grid rollout, to be recovered over 15 years, of which only $200 million was covered by federal grants.21 Similarly in Oklahoma, the Oklahoma Corporation Commission preapproved OG&E’s smart grid system plan, which will be funded by $130 million in federal grants and $236 million in ratepayer contributions.22

Consumer dissatisfaction with smart meters and cost recovery of smart meters are examples of the larger issues of consumer education and paying for the smart grid. Successful smart grid implementation requires that these issues be dealt with seriously. 

Consumer Privacy

Another smart meter challenge is protecting the privacy of consumer information.23 Smart meters generate more detailed information, stored in a digital database. They can detect power spikes of appliances in a home, like dishwashers, medical equipment, and water heaters. They can generate between 750 to 3,000 data points a month, hundreds of times more than traditional meters that are read once a month or once every three months.24 Consumers are concerned that the new information can be used as surveillance by a variety of parties, including government entities. Furthermore, a variety of businesses and organizations are interested in the valuable information about daily life activities, patterns, and behavior. The information can even be used by life insurance companies to assess premiums. Another related concern is the security of the information transmission paths. If providers use unsecured paths to transfer information, then the private electricity consumption data can be available to hackers.25 

Other than traditional consumer information privacy rules, no rules address the unique privacy challenges relating to smart meter data.26 The E.U. Commission Task Force for Smart Grids examined consumer privacy and suggested, among other things, that the group first determine how the existing E.U. privacy framework can apply to privacy and data protection issues associated with the smart grid.27 Despite the large rollout of smart meters in Italy, consumer privacy has not been addressed. In 2009, the Dutch First Chamber refused to approve a bill making smart meters mandatory in all homes pursuant to an E.U. Directive. The Dutch First Chamber considered the mandatory nature to violate privacy rights and, similarly, a consumer organization found that the bill violated the right to privacy as guaranteed by Article 8 of the European Convention on Human Rights.28 The E.U. does not have privacy laws specifically addressing data generated by smart meters.29

In the U.S., privacy specific to smart meters and smart grid technology is being addressed at the federal level.30 NIST is looking at privacy issues preliminarily. The recently finalized 2010 Guidelines for Smart Grid Cyber Security discussed privacy principles derived from international standards such as those from the Organization for Economic Cooperation and Development. NIST listed the following privacy principles as important when developing the policy: 1) management and accountability; 2) notice and purpose; 3) choice and consent (ownership of information); 4) collection and scope (granularity); 5) use and retention; 6) individual access; 7) disclosure and limiting use; 8) security and safeguards; 9) accuracy and quality; 10) openness in utility activities, monitoring, and challenging compliance to privacy rules.31 The Department of Homeland Security also has similar privacy principles.32 Some states are in the process of developing their own smart grid privacy rules. California mandates its investor-owned utilities to adopt smart grid deployment plans by July 2011. The plans must include a security strategy that addresses consumer information protection. A separate privacy rule will be enacted before allowing third-party access to consumer data.33

Based on the privacy principles of domestic and international organizations, three crucial characteristics of a successful privacy policy become apparent. They are: transparency, life cycle privacy, and the goal of a positive sum gained from the smart grid. First, the utility or the third party must be open and transparent in its gathering and use of the consumer information. There must be monitoring of the activity, including audits and an opportunity for consumers to challenge the activity or use of the information. Second, privacy should be prevalent in the life cycle of the information, from the collection, use, and retention to disposal. In addition, data integrity and security should be a priority during the life cycle. Lastly, smart grid development should occur in a positive-sum manner so that the benefits of the smart grid outweigh the regulatory and technical hurdles.34 Policies should avoid tradeoffs between privacy and smart grid objectives. The policy must specify the purpose of the data gathering and then minimize the amount of data gathered if the data does not serve the previously identified purpose. The acceptability of new technology, especially by consumers, depends on a clear confidentiality policy.35 The special status of privacy in a home should not be set aside simply to deploy economically and socially beneficial technology.

Distributed Generation and Microgrids

One key characteristic of the smart grid is its ability to move away from centralized generation and to accommodate a wide range of distributed generation. Distributed generation includes back-up generators powered by diesel, but the smart grid should incorporate more grid connected distributed generation from renewable sources like wind and solar.36 Environmental benefits from renewables include reducing natural resource extraction and reducing carbon emissions. In addition, distributed generation based on renewables can further improve efficiency by reducing line losses due to its close proximity to consumers.37 It can even improve power quality and reliability, important for society’s heavy reliance on communication and digital equipment. Microgrids coordinate distributed generation to create a cluster of generation capable of satisfying local demand. A microgrid can island itself from the regional grid if necessary to preserve its operations. By coordinating a group of microgrids to provide the same amount of generation as a central power plant, distributed generation obviates the need to build new power plants. Distributed generation would no longer be a passive part of the gird, but instead be integrated into the system.38

Europe has had extensive distributed generation and microgrid R&D since the late 1990s. The E.U.’s Fifth Framework Program (FP5), beginning in 1998 and ending in 2002, involved 50 research projects focused on integration of renewables and distributed generation into Europe’s electricity networks. This research continued through the Sixth Framework Program, which began in 2002 and ended in 2006.39 Now the Seventh Framework Program, which began in 2007 and will continue until 2013, targets large scale integration of distributed and renewable energy sources.40 Demonstration projects in Germany, Denmark, Italy, Portugal, and Spain pull together a variety of generation sources such as cogeneration, photovoltaics, and battery storage to create microgrids.41 The EEGI recently issued a report titled Roadmap 2010-18 and Detailed Implementation Plan 2010-12. The report contains R&D and deployment tasks for more customer participation and integrated communication on the distribution level. Greater communication at the distribution level enables consumers to meet their demand via distributed generation from renewables instead of depending on central power plants.42 Despite these R&D projects, a study showed that many E.U. member states’ regulatory frameworks and policies do not match the level of distributed-generation penetration needed to meet the long-term targets.43 

Despite their importance, there are not as many distributed generation and microgrid demonstration projects in the U.S. as in the E.U.44 It is unsurprising that in 2007 only 1.4 percent of grid capacity was from grid connected distributed generation and only 0.6 percent of total capacity was from renewables.45 In 2009, the DOE’s Renewable and Distributed Systems Integration Program selected nine demonstration projects. Each project should demonstrate a 15 percent peak load reduction on a distribution feeder. California’s two projects examine microgrids, energy storage, and automated distribution control. Other states are experimenting with transmission intermittency management, hydro, solar thermal, waste heat recovery systems, photovoltaics, gas fired generators, and microturbines.46 The best known U.S. microgrids research is conducted by the Consortium for Electric Reliability Technology Solutions project on microgrid islanding.47 States however encourage development of distributed generation and microgrids by passing interconnection rules for distributed resources. In a 2008 study, the Environmental Protection Agency determined that 27 states had neutral or “favorable” standards depending on the project site limits, application approval rate, existence of standard forms, and the amount of study fees.48

A comparison of the efforts shows that the E.U. may place more emphasis on distributed generation and microgrids due to the success of several member states. For example, Denmark already receives 40 percent of its electricity from wind. Many of Denmark’s wind turbines only generate 50 kilowatts. Denmark is now focusing on off-shore wind and replacing smaller turbines with larger more efficient ones. Similarly, the Netherlands and Finland generate 40 percent of their electricity from wind. In contrast, Maine gets approximately 34 percent of its electricity from distributed generation.49 

Another difference between the E.U. and the U.S. is their view of the benefits availed by distributed generation and microgrids. The E.U. perceives that reliability can come from less dependence on large generators and the regional and national grid because microgrids can maintain service by islanding during outages in the large systems.50 The U.S. focuses more on reliability benefits from technology tools for sensors, greater automation, and monitoring.51 These types of technology can make distributed generation more flexible and reliable, but they have the same benefits for generation and transmission alike. It might be easier for U.S. federal programs to articulate the tools useful for all aspects of the grid than the needs of distributed generation, especially when states and local governments handle distribution.

Distributed generation and microgrids are an integral part of smart grid development. They help achieve many smart grid goals such as incorporating renewables and improving reliability. The E.U. and U.S. approaches are different given their different experiences and successes. Although the E.U. historically has more R&D in this area, the new stimulus funding will help the U.S. expand its R&D. The E.U. countries that rely on distributed generation from renewables serve as informative examples for the U.S. While the two governments’ differing views on benefits affect their priorities, this difference does not have to impact the ultimate deployment and penetration of distributed generation and microgrid technologies for both the E.U. and the U.S.

Interconnection, Interoperability, Security 

Smart grid components will involve all aspects of the grid; therefore, interconnection and interoperability standards take on a crucial role. Given the increased use of the communications network for monitoring and consumer involvement, there is also concern that the number of security breaches will rise with the increase in information access points. Digital technology in smart meters can be more susceptible to tampering. In an analogous situation in the U.K. and Scotland, scam artists have been selling electricity illegally to consumers with prepaid meters. The customers usually purchase credits to put on their key cards and pay for electricity they will use in the future by inserting the key cards into the meters. The scam artists sell electricity to unsuspecting customers with false, hacked key cards, the digital code of which may have been rewritten for acceptance by multiple meters for value that the scam artist never paid. The fraud is undiscovered until the next time the customer legitimately recharges his key card.52 

The E.U. is making standard-setting efforts, including identifying existing international and de facto standards.53 The Third European Energy Liberalization Package required installation of smart meters, but it did not require baseline capabilities or interoperability abilities. Smart meters and home area networks in different countries do not have to meet E.U. wide technical standards. In different countries, meter manufacturers have used different communication technology applications.54 Initially, the 2004 Measuring Instruments Directive regulated essential requirements of metering products such as accuracy, durability, and security.55 The European Commission Standardization Mandate in March 2009 invited European standardization organizations to develop standards for open communication and interoperability architectures for smart meters.56 The Mandate coordinates with the Open Meter project to create standards by 2011. The Open Meter project is part of the Seventh Framework Program and will address all aspects of the smart meter equipment, including regulations, environment, communication media, protocols, and data formats. For distributed generation and microgrids, standards were based on the type of energy source (wind, solar). Now interdisciplinary committees address interoperability standards based on the connection issues of distributed generation. Another group, made up of 11 organizations, is a knowledge-exchange platform and focuses on grid requirements and certification procedures for all types of distributed generation sources.57 

In the U.S. in 2007, the EISA gave NIST primary responsibility to develop a country wide smart grid framework, protocols, and model standards for interoperability of smart grid devices and systems.58 The ARRA allocated $10 million to NIST.59 NIST is working with interest groups and partnering with the DOE GridWise Architectural Council and NIST Domain Expert Working Group, which is composed of more than 100 organizations. NIST work is divided into a three-phase approach: engage the public in identification of standards and specification; establish a formal public and private partnership, called the Smart Grid Interoperability Standards Panel, to drive long-term progress, and create a testing and performance regime. Extensive topics of study include transmission and distribution, demand response, efficiency, wide-area situational awareness, and even business and policy.60 In January 2010, NIST issued the Framework and Roadmap for Smart Grid Interoperability Standards.61 In September of the same year, NIST announced the release of the initial set of Guidelines for Smart Grid Cyber Security.62 A month later, in October, FERC created a docket to consider NIST’s interoperability standards for potential rulemaking.63

The NIST assessments of existing standards show how international frameworks already address some of the interoperability and reliability challenges of the smart grid. Although the U.S. has done more evaluation as part of a government directive, the E.U.’s recent mandate for standards formulation shows it is currently working on this issue. The communication networks are connected worldwide and just like international Internet protocols, the standard development projects of both governments are intended to be used as flexible and effective tools to create an interconnected digital smart grid that is also protected from security risks and contingencies. 

Cost Recovery, Outreach and Workforce

Regardless of the name for the grid improvements—smart grid, intelligent grid, “Intelligrid”64 or otherwise—the U.S. and E.U. governments agree there are benefits to be had from grid infrastructure upgrades. It is estimated that an upgraded grid will cost $165 billion over 20 years.65 The U.S. stimulus has set aside $3.4 billion for smart grid deployment. The E.U. EEGI budgets €1 billion for projects from 2010 to 2012 (money for research and demonstrations, but not deployment), 32 million for fiscal year 2010, and 39 million for fiscal years 2011 to 2014. The benefits of these expenditures are difficult to measure in the short term because of the diverse nature of smart grid improvements and applications, but there is growing consensus that without new investment, the existing grid will not meet the needs of an even more sophisticated digital society. The grid is at least 50 years old in the U.S. and much of the grid in the E.U. was built after World War II.66 In order to meet our future society’s dependency on advanced digital and communication technology, the grid must be more reliable. In fact, the 2003 outage in the East Coast of the U.S. and Canada cost $7 to $10 billion.67 In total, outages cost at least $100 billion per year on average.68 

At this time, it is difficult to determine if smart grid demonstration projects and technology will result in the anticipated benefits. The U.S. smart grid funding from the ARRA was only distributed in 2010 and evaluations are forthcoming. Clearly work must be undertaken to adequately address the topics discussed above. There are still three important policy considerations in implementing a successful smart grid deployment program, but they appear not to have received sufficient attention: public education, cost recovery, and the aging workforce.

As part of initial rollout of smart grid technology, smart meters have garnered much bad press. Consumers complain that they have not seen a reduction in their bills, but in fact substantial increases. Customers have filed suit against utilities alleging that smart meters malfunction, causing bills to be more than seven times than before. Pacific Gas and Electric (PG&E) customers in California have petitioned for PG&E to stop its smart meter rollouts.69 This is an example of misunderstandings and inaccurate expectations of smart grid benefits that could be prevented if the utility and third-party contractors explain, from the onset, through public outreach efforts, the advantages and potential disadvantages. One of the disadvantages is that more complex rate structures could increase bills. 

In addition to giving consumers realistic expectations about the technology, it is important to introduce other factors that might affect the amount of benefits and how they accrue. For example, it is important to show customers that economic benefits of the smart meter require the customer to be more aware of when he uses electricity.70 In the case of time-of-use pricing structure, also known as dynamic pricing, electricity at high load times, usually between 6 p.m. and 9 p.m., will be more expensive than electricity after 9 p.m.71 If a consumer usually runs most of his appliances after dinner and before bed, between 6 p.m. and 9 p.m., then his electric bill will probably increase because he is consuming electricity at a high price period. In order to experience the price benefits, the consumer will have to adjust his electricity consumption to after 9 p.m. It is also worthwhile to take a broader view of consumer education by including other ways to decrease their bills, such as efficient light bulbs and appliances. Even if the smart grid technology is not 100 percent responsible for the benefits, a positive consumer experience will give long-term support to successful smart grid implementation. 

Electricity infrastructure is expensive, which contributed to the trend towards centralized generation so as to take advantage of scale and eliminate the need to pay for small inefficient power plants. The appropriate cost recovery must be instituted to facilitate smart grid deployment, especially when some of the existing infrastructure is still depreciating.72 

At first glance this should not be an issue because there is growing consensus that investment in existing infrastructure, and in the right circumstances investment in new infrastructure, are necessary to best serve consumers. Consumers are the main beneficiaries of the grid, so it therefore makes sense that the utility should be allowed to recover both the stranded cost and the cost of new technology from consumers. In reality, this is not always the case because the existing technology still functions in keeping the lights on and it is difficult to prove that the new technology is required or creates immediate consumer benefits. It is also politically unpopular to increase consumer electricity bills in the short term for unclear future savings. Consequently, one of the most important questions is how the utility will recover the cost of smart grid improvements. 

In the E.U. the consumers usually pay.73 The directive requiring member states to have 80 percent smart meter penetration by 2020 did not include cost recovery guidance and the cost mechanisms vary by country.74 The U.S. cost recovery approach is more particular given its federal and state division. Currently in the U.S., federal funding pays for some of the implementation. On the transmission side, the FERC interim rate recovery policy applies to smart grid devices and equipment used and useful if the applicant shows that the smart grid facilities will not adversely affect reliability and security of the grid, and that the applicant has minimized the possibility of stranded costs.75 There is no E.U. equivalent to the FERC rule. 

Cost recovery at the distribution level will be especially challenging for two reasons. First there will simply be a greater quantity of cost recovery requests for distribution items than transmission items because much of the smart grid upgrades will happen at the distribution level (e.g., smart meters, communication software, substation automation, technologies enhancing fault detection, isolation and restoration, and load management). Second, at least in the United States, distribution cost recovery depends on state governing bodies, which can vary in their standards of reviews.76 Similarly, cost recovery will differ among E.U. member states. 

Neither the E.U. nor the U.S. has presented a comprehensive plan to address cost recovery for utilities. Although cost recovery may be specific to the particular group of consumers and the local governing body, smart grid deployment requires a consistent and supportive regulatory structure to allow the implementers to see how their investments will develop, with or without a return. Even if there is no specific legislation, there can be helpful guidance. In the end there must be clarity and consistency in government regulation. 

Both the E.U. and the U.S. recognize that a more sophisticated work force is crucial to implementing the smart grid.77 While new technology will help with the work force transition, technology improvements cannot replace the 25 to 35 percent technical utility workforce that will retire in the next five years.78 Often, reports highlight this issue, but only recently did it become part of U.S. planning. The DOE awarded $100 million to 33 projects that developed training programs, strategies, and curricula, and 22 projects to conduct workforce training programs for new hires.79 Some of the funding will last as long as three years. The E.U. has not implemented a program targeted at increasing the depleting workforce. Both governments are investing heavily in the smart grid. If they do not commit to long term development of the electric industry labor force, then the public might not realize all the benefits of smart grid improvements.

Setting Examples

This examination of smart grid developments in the E.U. and the U.S. is only the beginning of many future evaluations because smart grid deployment is still a relatively new phenomenon in an industry where some technology has remained largely unchanged for more than 50 years. When other industries were going through the digital revolution, the electric grid remained mostly mechanical. Now the electric grid is becoming part of the digital age. Despite similar understandings of the definition of the smart grid, the different approaches used by the E.U. and the U.S. have resulted in different levels of focus on similar issues. Although both governments are engaged in large numbers of smart meter installments, the E.U. has done more research on distributed generation and microgrids and the U.S. has created more legislation, although far short of being a comprehensive framework.

Both the E.U. and the U.S. have failed to address three important policy areas. Public education and outreach, cost recovery, and labor shortage in the electric industry are policy components that are important to the ultimate success of the smart grid. 

Ultimately we do not know what the smart grid will look like, but the excitement over its development is well justified given our hopes for its ability to deliver an endless array of benefits. We do know the E.U. and the U.S. will provide valuable examples for the rest of the world. As the smart grid matures, the need to study how the E.U. and the U.S. approach its obstacles will continue.



1. McKinsey & Co., McKinsey on Smart Grid (2010) [hereinafter McKinsey Report], at 13.

2. Research Reports Int’l, The Development of Smart Grids in Europe 23–35 (2009).

3. McKinsey Report, supra note at 13-14 (stating that Germany and Netherlands do not have mandated rollouts but they are active with pilot projects); Research Reports Int’l, supra note 2, at 23–35.

4. Research Reports Int’l, supra note 2, at 23–35; Theo Frei, “Smart Grid Comes Costly for Households in Germany,” Int’l Bus. Times, Aug. 15, 2010.

5. Berg Insight, Smart Metering in Western Europe 1 (2010), available at

6. U.S. Dep’t of Energy, U.S. Smart Grid Report (2009) [hereinafter U.S. Smart Grid Report], at 14.

7. Craig Johnston, OG&E, OG&E Positive Energy Smart Grid: EEI Strategic Issues Conference 25 (2010).

8. “Oklahoma Utility Implementing Smart Metering Network with Stimulus Funds,” Transmission & Distribution World, June 24, 2010.

9. “ComEd Seeks Federal Funding to Build Smart Grid,” Transmission & Distribution World, Aug. 5, 2009.

10. Smart Grid Vermont, Vt. Energy Investment Corp. News, Dec. 01, 2009.

11. Hanah Cho, “BGE Wins ‘Smart Meter’ Approval but Must Bill Customers after It’s Built,” Aug. 16, 2010, Balt. Sun.

12. Early estimates by the DOE predicted that 52 million meters would be installed by 2012. U.S. Smart Grid Report, supra note 6, at 14. McKinsey predicted more than 50 million would be installed by 2015. McKinsey Report, supra note 1, at 4.

13. Parks Assocs., “Report: 8 Million Smart Meters Deployed in U.S.; Millions More to Come,” Transmission & Distribution World, July 14, 2009.

14. In early 2010, Italy had an estimated 30 million installations. See McKinsey Report, supra note 1, at 13. Yet by the same time, the U.S. only had 6.7 million advanced ,metering infrastructure meters installed as compared to the more than 50 million projected installations. U.S. Smart Grid Report, supra note 6, at 14.

15. McKinsey states that the E.U. has a higher level of grid automation than the U.S., but has lagged in meter implementation. McKinsey Report, supra note 1, at 49. Perhaps this is true as compared to E.U.’s overall potential for installing smart meters. In hard numbers however Europe has achieved impressive penetration especially in comparison to the U.S. Italy has reached almost 100 percent, compared to Pennsylvania—the highest in the U.S.—with only 23.9 percent. U.S. Smart Grid Report, supra note 6, at 26.

16. Natalie Solis, “Smart Meter Complaints Reach Lawmakers,” Fox 4 News, Mar. 4, 2010.

17. U.S. Smart Grid Report, supra note 6, at vi.

18. McKinsey Report, supra note 1, at 16.

19. McKinsey Report, supra note 1, at 22, Frei, supra note 4 (stating that in Germany the meter could cost from €35 to €100 with a smart meter service fee to the utilities of €60 to €240, totaling to €95 to €340 per meter); Michael Kanellos, “Dissecting the Cost of the Smart Grid,” Greentech Media, Oct. 27, 2010, (stating that installing a smart meter costs approximately $250).

20. Bill Ablondi, “Bringing the Smart Grid to the Smart Home: It’s Not about the Meter,” SmartGrid News, Jan. 13, 2010, (stating that approximately 40 million smart meters will be installed by 2012).

21. Phil Carson, “Who Pays SmartGridCity Costs? Ratepayers or Shareholders?,” Intelligent Util., Sept. 21, 2010.

22. Brianna Bailey, “Oklahoma Corporation Commission OKs OG&E’s Smart Grid Rollout,” J. Rec., July 1, 2010.

23. Elias Leake Quinn, Smart Metering & Privacy: Existing Law and Competing Policies, a Report for the Colorado Public Utilities Commission (2009) (depicting the detailed electric usage information gathered by smart meters in the cover graphic); see generally Smart Grid Interoperability Panel, Nat’l Inst. of Standards & Tech., Guidelines for Smart Grid Cyber Security: Vol. 2, Privacy and the Smart Grid (2010) [hereinafter NIST Cyber Security]; Univ. of Colo. at Boulder, Smart Grid Deployment in Colorado: Challenges and Opportunities 42–52 (2010); U.S. Dep’t of Energy, Data Access and Privacy Issues Related to Smart Grid Technologies (2010); Melissa Hathaway, “Power Hackers, The National Smart Grid Is Shaping up To Be Dangerously Insecure,” Sci. Am. (2010).

24. NIST Cyber Security, supra note 23, at 11–15; “Getting on the Grid,” 5 Power & Energy (2008) (interview with Andrew Tang, Pacific Gas and Electric (PG&E) senior director, smart energy web, explaining that PG&E is installing meters that will gather between 24 and 96 data points per day).

25. NIST Cyber Security, supra note 23, at 28 tbl. 5-2, at 30, tbl. 5-3, apps. D-3, D-6 to D-7.

26. Council Directive 95/46, Of the European Parliament and of the Council of 24 October 1995 on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data, art. 2(a),1995 O.J. (L 281) (EC) (defining “personal data” as any data relating to an identified or identifiable person). Article 6(1) requires personal data to be collected only for a specific purpose, kept accurate, and protected. Id. at art. 6(1). The E.U. Commission Task Force for Smart Grids recommended that all member states must have a clear confidentiality policy concerning the consumer data. Task Force for Smart Grids, EU Comm’n, Expert Group 1: Functionalities of Smart Grids and Smart Meters 35 (2010) [hereinafter Expert Group 1 Report]

27. Task Force for Smart Grids, Expert Group 2: Regulatory Recommendations for Data Safety, Data Handling and Data Protection 5–6, 9–10 (2010).

28. Colette Cuijpers, “No To Mandatory Smart Metering Does Not Equal Privacy!,” Tilburg Inst. for L., Tech., & Soc’y, Tilt Weblog L. & Tech., Apr. 17, 2009.

29. In the E.U., privacy is governed in a comprehensive fashion, compared to the U.S. sector-to-sector approach. Pursuant to E.U. Directive 95/46/EC, all member states must prove adequate protections to personal data used in commercial transactions using a broad and “comprehensive” scheme of standards, combining all aspects of privacy laws across various industries under one regime. Kamaal Zaidi, “Harmonizing U.S.-EU Online Privacy Laws: Toward a U.S. Comprehensive Regime for the Protection of Personal Data,” 12 Mich. St. J. Int’l L. 169, 171–72 (2003). The U.S. regulates by specified sectors. State and federal laws direct sector self regulations, meaning that U.S. companies enforce their own privacy standards. Id. at 173–74; see also A. Michael Froomkin, “The Death of Privacy,” 52 Stan. L. Rev. 1461 (2000).

30. U.S. federal laws addressing consumer privacy and security interest in energy data include the Federal Trade Act, 15 U.S.C. § 45, which prohibits unfair or deceptive acts or practices, the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and the Electronic Communications Privacy Act, 18 U.S.C. §§ 2510–2522, 2701–2712, 3121–3127.

31. NIST Cyber Security, supra note 23, at 18–24.

32. Privacy policy guidance memorandum from Hugo Teufel III, chief privacy officer, U.S. Dep’t of Homeland Sec., “The Fair Information Practice Principles: Framework for Privacy Policy at the Department of Homeland Security” (Dec. 29, 2008), listing the Department of Homeland Security principles as: transparency, individual participation, purpose specification, data immunization, use limitation, data quality, security, and accountability and auditing.

33. S.17, 2009-2010 Leg. ch. 327 (Cal. 2009); Decision Adopting Requirement for Smart Grid Deployment Plans Pursuant to Senate Bill 17 (Padilla), Chapter 327, Statutes of 2009, Cal. P.U.C., Dec. No. 10-06-047 (June 24, 2010). See also Assigned Commissioner’s and Administrative Law Judge’s Joint Ruling, Cal. P.U.C., p. 22, attachment B (July 30, 2010).

34. Info. & Privacy Comm’r, Ontario, Can., SmartPrivacy for the Smart Grid: Embedding Privacy into the Design of Electricity Conservation 19 (2009). In Canada, two major electrical utilities of Ontario are working with the Ontario Privacy Commission and the Future of Privacy Forum. See Smart Grid Privacy, Future Privacy F., (last visited Nov. 16, 2010); see also Martin LaMonica, “Coalition Enlists Consumers in Smart Grid,” CNET News, Mar. 23, 2010.  

35. Expert Group 1 Report, supra note 26.

36. U.S. Smart Grid Report, supra note 6, at 19; Nickos Hatziargyriou et al., “Microgrids: An Overview of Ongoing Research, Development and Demonstration Projects,” IEEE Power & Energy mag. 79 (2007).

37. Thomas Casten & Martin J. Collins, Optimizing Future Heat and Power Generation 3 (2002); European Comm’n, Towards Smart Power Networks: Lessons Learned from European Research FP5 Projects 5 (2005) [hereinafter E.U. FP5 Lessons] at 29; U.S. Smart Grid Report, supra note 6, at 19; Hatziargyriou et al., supra note 36, at 79.

38. E.U. FP5 Lessons, supra note at 13, 8.

39. Hatziargyriou et al., supra note 36, at 80–82.

40. E.U. FP5 Lessons, supra note 38, at 5, 33–34; European Comm’n, FP7: Tomorrow’s Answers Start Today (2006) [hereinafter FP7 Tomorrow’s Answers] at 10; see generally European Comm’n, Work Programme: 2011: Cooperation: Theme 5: Energy (2010) [hereinafter Theme 5: Energy]; European Comm’n, Introduction, Seventh Framework Programme (FP7) website [hereinafter Seventh Framework Website].

41. E.U. FP5 Lessons, supra note 38, at 17, 26; Hatziargyriou et al., supra note 36, at 81–82.

42. European Elec. Grid Initiative, Roadmap 2010-18 and Detailed Implementation Plan 2010-12 (2010) [hereinafter EEGI Roadmap & Implementation Plan] at 17-18.

43. SmartGrids European Tech. Platform, Strategic Deployment Document for Europe’s Electricity Networks of the Future (2010) [hereinafter E.U. SmartGrids SDD] at 41 (stating that a stable supportive regulatory framework is essential, but does not give examples of existing regulations); McKinsey Report, supra note 1, at 15.

44. Elec. Power Research Inst., Smart Grid Demonstration 2 (2008). Office of Elec. Transmission & Distribution, U.S. Dep’t of Energy, Grid 2030: A National Vision for Electricity’s Second 100 Years (2003) [hereinafter U.S. Grid 2030], at 20; U.S. Smart Grid Report, supra note 6, at 19.

45. U.S. Smart Grid Report, supra note 6, at 19.

46. U.S. Dep’t of Energy, Enhancing the Smart Grid: Integrating Clean Distributed and Renewable Generation (2009).

47. Hatziargyriou et al., supra note 36, at 83–86.

48. U.S. Smart Grid Report, supra note 6, at 23, 39.

49. Casten & Collins, supra note 37, at 5, 12; Peter Asmus, “What Denmark Teaches Us about the Smart Grid,” SmarGridNews, Apr. 15, 2006.

50. Hatziargyriou et al., supra note 36, at 79–80.

51. U.S. Smart Grid Report, supra note 6, at 10 (characteristics five and six describe tools such as monitoring and new devices to facilitate efficiency, reliability, and resiliency).

52. Jasper Hamill, “Thousands in City Conned by Cheaper Energy Scam,” Evening Times, Sept. 10, 2010.

53. Expert Group 1 Report, supra note 26, at 5, 25–29, 32, 33, annex C at 54–68.

54. McKinsey Report, supra note 1, at 15, 16.

55. The Measuring Instruments Directive, 2004/22/EC, regulates metering products, including water and gas meters, to ensure accuracy, durability, and security. Council Directive 2004/2, on Measuring Instruments, 2004 O.J. (L 135) (EC).  

56. The three organizations were the European Committee for Standardization (CEN), the European Committee for Electrotechnical Standardization (CENELEC), and the European Telecommunications Standards Institute (ETSI). Standardisation Mandate to CEN, CENELEC and ETSI in the Field of Measuring Instruments for the Development of an Open Architecture for Utility Meters Involving Communication Protocols Enabling Interoperability, M/441 (Mar. 12, 2009); Expert Group 1 Report, supra note 26, at 15–19, 25–26; see also E.U. FP5 Lessons, supra note 38, at 21.

57. McKinsey Report, supra note 1, at 17; Expert Group 1 Report, supra note 26, at 25–26; E.U. FP5 Lessons, supra note 38, at 22, 23.

58. Energy Independence and Security Act of 2007, Pub. L. No. 110-140, § 1305, 121 Stat. 1723 (codified at 15 U.S.C. § 17385).

59. American Recovery and Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115; see also NIST Information Related to the American Recovery and Reinvestment Act of 2009, Nat’l Inst. Standards & Tech., (last updated Oct. 5, 2010).

60. Smart Grid Interoperability Standards Project, Nat’l Inst. Standards & Tech., (last updated Oct. 7, 2010).

61.  Nat’l Inst. of Standards & Tech., special pub. 1108, NIST Framework and Roadmap for Smart Grid Interoperability Standards (2010);   see also Press Release, Mark Bello, Nat’l Inst. of Standards & Tech., “NIST Issues First Release of Framework for Smart Grid Interoperability,” Jan. 19, 2010.

62. Press Release, Mark Bello, Nat’l Inst. of Standards & Tech., “NIST Finalizes Initial Set of Smart Grid Cyber Security Guidelines,” Sept. 2, 2010.

63. Smart Grid Interoperability Standards; Notice of Docket Designation for Smart Grid Interoperability Standards, 75 Fed. Reg. 63,462 (Oct. 15, 2010).

64. Office of Elec. Delivery & Energy Reliability, U.S. Dep’t of Energy, Smart Grid Research & Development: Multi-Year Program Plan (MYPP): 2010-2014 [hereinafter U.S. MYPP] at 10.

65. Elec. Power Research Inst., “Executive Summary,” in Power Delivery System of the Future: A Preliminary Estimate of Costs and Benefits 1–2 (2004).

66. EEGI Roadmap & Implementation Plan, supra note 42, at 6 (describing the E.U. electricity network as “based on technology that was developed more than 30 years ago” and “designed for one-way energy flows from large centralized fully controllable power plants to the customers at the other end of the network”).

67. ICF Consulting, “The Economic Cost of the Blackout: An Issue Paper on the Northeastern Blackout” 2 (2003). U.S.-Can. Power Sys. Outage Task Force, Final Report on the August 14, 2003 Blackout in the United States and Canada: Causes and Recommendations (2004).

68. Nat’l Energy Tech. Lab., U.S. Dep’t of Energy, “Understanding the Benefits of the Smart Grid” 6 (2010).

69. John Cox, “Study Faults PG&E’s Customer Service, Not SmartMeters,”, Sept. 2, 2010; “San Francisco Moves to Stop Smart Meters,” NBC Bay Area, June 17, 2010.

70. McKinsey Report, supra note 1, at 40–41; U.S. Dept. of Energy, Smart Grid Stakeholder Roundtable Group Perspectives for Utilities and Others Implementing Smart Grids 4 (2009).

71. Supra note 16–18 and accompanying text.

72. EEGI Roadmap & Implementation Plan, supra note 42, at 10 (stating that E.U. regulations have not caught up with market failures and distortions that cause smart grid costs to be borne by grid operators while other stakeholders such as customers and generators gain benefits).

73. “Power Firms Want Funding Model for Smart Grids,” EurActiv, Nov. 30, 2009.

74. See McKinsey Report, supra note 1, at 15 (identifying, as a barrier to smart grid investment, the Third European Energy Liberalization Package’s failure to address how member states will pay for smart grid technology).

75. Smart Grid Policy (Policy Statement), at 6, FERC Docket No. PL09-4, July 16, 2009, 128 FERC ¶61,060 (codified at 18 C.F.R. ch. I).

76. Federal Power Act of 2000 § 201, 16 U.S.C. § 824.

77. E.U. SmartGrids SDD, supra note 43, at 11, 53; European Comm’n, European SmartGrids Technology Platform: Vision and Strategy for Europe’s Electricity Networks of the Future 4-5 (2006) at 9, 29; Amy Fischbach, “Linemen Prepare for Labor Shortage,” Transmission & Distribution World, Feb. 1, 2009; Rebekah Kebede, “U.S. Energy Industry Is Hampered by Labor Shortage,” N.Y. Times, May 1, 2008;  Susan Taylor & Nicole Mordant, “Labour Shortage on Clean Energy Front,” Reuters, July 28, 2010.

78. McKinsey Report, supra note 1, at 3.

79. American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (stating “$100,000,000 shall be available for worker training activities”); see also U.S. Dep’t of Energy, Workforce Training for the Electric Power Sector (2010) (listing selected workforce projects).