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13.3.2012 Official
Journal
of
the
European
Union
L
73/9
RECOMMENDATIONS
COMMISSION RECOMMENDATION
of 9 March 2012
on preparations for the roll-out of smart metering systems
(2012/148/EU)
THE EUROPEAN COMMISSION,
the Member States’ plans for implementation of smart
metering systems, along with cost-benefit analyses.
Having regard to the Treaty on the Functioning of the European
Union, and in particular Article 292 thereof,
(4) The
Digital
Agenda
for
Europe
lists
a
set
of
appropriate
measures, in particular on data protection in the Union,
on network and information security, on cyber attacks
and on functionalities for smart grids and metering.
Whereas:
Member States, in collaboration with industry, the
Commission and other stakeholders, should take appro
priate measures to ensure a coherent approach.
(1) Smart
grids
mark
a
new
development
on
the
path
towards greater consumer empowerment, greater inte
gration of renewable energy sources into the grid and
(5) One
of
the
key
tasks
and
preconditions
for
using
smart
higher energy efficiency and make a considerable
metering systems is to find appropriate technical and
contribution to reducing greenhouse gas emissions and
legal solutions which safeguard protection of personal
to job creation and technological development in the
data as a fundamental right under Article 8 of the
Union.
Charter of Fundamental Rights of the European Union

and Article 16 of the Treaty on the Functioning of the
European Union. Member States and stakeholders should
ensure, especially in the initial phase of the roll-out of
(2) In
accordance
with
Directive
2009/72/EC
of
the
smart meters, that smart metering system applications
European Parliament and of the Council of 13 July
are monitored and that fundamental rights and
2009 concerning common rules for the internal market
freedoms of individuals are respected.
in electricity and repealing Directive 2003/54/EC ( 1 ) and
Directive 2009/73/EC of the European Parliament and of
the Council of 13 July 2009 concerning common rules
(6) Smart
metering
systems
allow
processing
of
data,
for the internal market in natural gas and repealing
including predominantly personal data. Moreover, the
Directive 2003/55/EC ( 2 ), Member States are required to
deployment of smart grids and smart metering systems
ensure the implementation of smart metering systems
should allow suppliers and network operators to evolve
that assist the active participation of consumers in the
from a broad view of energy behaviour to detailed
electricity supply and gas supply markets and implemen
information on the energy behaviour of individual end-
tation of those metering systems may be subject to an
consumers.
economic assessment of all the long-term costs and
benefits to the market and the individual consumer or
which form of smart metering is economically reasonable
and cost-effective and which timeframe is feasible for
(7)
The rights and obligations provided for by Directive
their deployment.
95/46/EC of the European Parliament and of the
Council of 24 October 1995 on the protection of indi
viduals with regard to the processing of personal data
and on the free movement of such data ( 4 ) and by
(3) The
Communication
from
the
Commission
to
the
Directive 2002/58/EC of the European Parliament and
European Parliament, the Council, the European
of the Council of 12 July 2002 concerning the
Economic and Social Committee and the Committee of
processing of personal data and the protection of
the Regions of 12 April 2011 on ‘Smart grids: from
privacy in the electronic communications sector
innovation to deployment’ ( 3 ) announces a number of
(Directive on privacy and electronic communications) ( 5 )
measures, including monitoring Member States’
are fully applicable to smart metering which processes
progress, establishing guidelines on key performance
personal data, in particular in the use of publicly
indicators and guidelines to define a methodology for
available electronic communications services for
contractual and commercial relations with customers.
( 1 ) OJ L 211, 14.8.2009, p. 55.
( 2 ) OJ L 211, 14.8.2009, p. 94.
( 4 ) OJ L 281, 23.11.1995, p. 31.
( 3 ) COM(2011) 202 final.
( 5 ) OJ L 201, 31.7.2002, p. 37.

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L 73/10
EN
Official Journal of the European Union
13.3.2012
(8)
The opinions of the Working Party on the protection of
smart metering systems will provide the information
individuals with regard to the processing of personal data
necessary in order to take appropriate protective
set up in accordance Article 29 of Directive 95/46/EC
measures. Such measures should be monitored and
provide guidance for identifying and developing ‘best
reviewed throughout the lifetime of the smart meter.
available techniques’ to safeguard personal data and
guarantee data security when data are processed in
smart metering systems and smart grids.
(16) In accordance with Directive 2009/72/EC, Member States
are expected to complete, by 3 September 2012, a cost-
benefit assessment of the roll-out of smart metering
(9)
In the light of the potential for deployment of smart
grids, particular attention should be paid to security
systems. Pursuant to the Communication from the
and protection of the personal data processed by smart
Commission of 12 April 2011, the Commission
metering systems. In this respect, data protection impact
considers it important to lay down criteria, a template
assessments should make it possible to identify from the
and more general guidelines that would improve the
start data protection risks in smart grid developments.
depth and comparability of analyses. As suggested by

the Smart Grid Task Force ( 2 ), the criteria should use
quantifiable indicators.
(10) Data
protection
and
information
security
features
should
be built into smart metering systems before they are
rolled out and used extensively. Such features can effec
(17) Member States, in collaboration with industry, the
tively improve consumers’ control over the processing of
Commission and other stakeholders, should take appro
personal data.
priate measures to disseminate information about and
raise awareness of the potential benefits and risks
associated with use of smart metering technology.
(11) Member
States
should
cooperate
with
industry
and
civil
society stakeholders, in particular with national data
protection authorities, to stimulate and support intro
duction of the ‘security and data protection by design’
(18) In
this
respect,
Member
States,
in
collaboration
with
principle at an early stage in the development of smart
industry, civil society associations and other stakeholders,
grids, particularly for the roll-out of smart metering
should identify and disseminate examples of good
systems.
practice in smart metering applications and take appro

priate measures — such as large-scale pilot projects — to
increase public awareness, as a prerequisite for wider
take-up of this technology.
(12) Any
party
processing
personal
data
in
the
context
of
smart metering systems should take all reasonable steps
to ensure that data cannot be traced to an identified or
identifiable person by any means likely to be used by
(19) Establishment of a set of recommended functional
either the network operator or any other third party,
requirements would enable Member States to achieve
unless the data are processed in compliance with the
an optimum level of cost-efficiency in their roll-out
applicable principles and legal rules on data protection.
plans more easily and simultaneously. Setting the same
requirements would also provide regulators, the metering
industry, network operators and suppliers with some
indication of the approaches most likely to be taken in
(13) The
Commission
Communication
of
2
May
2007
on
this sector.
‘Promoting data protection by privacy enhancing tech
nologies (PETs)’ ( 1 ) sets out clear measures to achieve
the goals of minimising the processing of personal data
and using anonymous or pseudonymous data wherever
possible by supporting the development of PETs and use
(20) Based
on
the
guidelines
of
good
practice
defined
by
the
thereof by data controllers and individuals.
European Regulators’ Group for Electricity and Gas (here

inafter referred to as the ‘ERGEG’) ( 3 ) and on the analysis
of the first cost-benefit assessments communicated by
Member States, the Commission sees benefit in recom
(14) A
template
developed
at
Union
level
for
conducting
data
mending to Member States and regulators a set of
protection impact assessments will ensure that the
common minimum functionalities for smart meters.
provisions of this Recommendation are followed
coherently across Member States.
(21) After
consulting
the
European
Data
Protection
Super
visor,
(15) An
assessment
of
the
data
protection
impact
carried
out
by the operator and stakeholders prior to the roll-out of
( 2 ) http://ec.europa.eu/energy/gas_electricity/smartgrids/taskforce_en.htm
( 3 ) ERGEG Guidelines of Good Practice (GGP) on regulatory aspects of
( 1 ) COM(2007) 228 final.
smart meters for electricity and gas (Ref. E10-RMF-29-05).

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EN
13.3.2012 Official
Journal
of
the
European
Union L
73/11
HAS ADOPTED THIS RECOMMENDATION:
(e) ‘data protection by default’ requires to implement
mechanisms for ensuring that, by default, only those
personal data are processed which are necessary for
I. DATA PROTECTION AND SECURITY
each specific purpose of the processing and are
CONSIDERATIONS
especially not collected or retained beyond the
minimum necessary for those purposes, both in terms
1. This section provides guidance to Member States on the
of the amount of the data and the time of their storage;
design and operation of smart grids and smart metering
systems ensuring the fundamental right to protection of
personal data.
(f) ‘best available techniques’ refer to the most effective and
advanced stage in the development of activities and
their methods of operation, which indicate the
2. This section also provides guidance on measures to be
practical suitability of particular techniques for
taken for the deployment of smart metering applications
providing in principle the basis for complying with
in order to ensure that national legislation implementing
the EU data protection framework. They are designed
Directive 95/46/EC is, where applicable, respected when
to prevent or mitigate risks on privacy, personal data
such technologies are deployed.
and security.
Data protection impact assessments
Definitions
4. The data protection impact assessment should describe the
3. Member States are invited to take note of the following
envisaged processing operations, an assessment of the risks
definitions:
to the rights and freedoms of data subjects, the measures
envisaged to address the risks, safeguards, security measures
and mechanisms to ensure the protection of personal data
(a) ‘smart grid’ ( 1 ) means an upgraded energy network to
and to demonstrate compliance with Directive 95/46/EC,
which two-way digital communication between the
taking into account the rights and legitimate interests of
supplier and consumer, smart metering and monitoring
data subjects and persons concerned.
and control systems have been added;
5. In order to guarantee protection of personal data
(b) ‘smart metering system’ means an electronic system
throughout the Union, Member States should adopt and
that can measure energy consumption, adding more
apply the data protection impact assessment template to
information than a conventional meter, and can
be developed by the Commission and submitted to the
transmit and receive data using a form of electronic
Working Party on the protection of individuals with
communication ( 2 );
regard to the processing of personal data for its opinion
within 12 months of publication of this Recommendation
in the Official Journal of the European Union.
(c) ‘data protection impact assessment’ means a systematic
process for evaluating the potential impact of risks
where processing operations are likely to present
6. When implementing this template, Member States should
specific risks to the rights and freedoms of data
take into account the advice of the Working Party on the
subjects by virtue of their nature, their scope or their
protection of individuals with regard to the processing of
purposes to be to carried by the controller or processor
personal data.
or the processor acting on the controller’s behalf;
7. Member States should ensure that network operators and
operators of smart metering systems, in line with their
(d) ‘data protection by design’ requires to implement,
other obligations under Directive 95/46/EC, take the appro
having regard to the state of the art and the cost of
priate technical and organisational measures to ensure
implementation, both at the time of the determination
protection of personal data.
of the means for processing and at the time of the
processing itself, appropriate technical and organisa
tional measures and procedures in such a way that
8. Member States should ensure that the entity processing
the processing will meet the requirements of Directive
personal data consults the Data Protection Supervisory
95/46/EC and ensure the protection of the rights of the
Authority referred to in Article 28 of Directive 95/46/EC
data subject;
on the data protection impact assessment, prior to
processing. This should allow the Authority to assess the
( 1 ) The European Smart Grid Task Force defines smart grids as energy
compliance of the processing and, in particular, the risks
networks that can efficiently integrate the behaviour of all users
for the protection of personal data of the data subject and
connected to them in order to ensure an economically efficient,
the related safeguards.
sustainable power system with low losses and high quality and
security of supply and safety: http://ec.europa.eu/energy/gas_
electricity/smartgrids/doc/expert_group1.pdf
9. Member States should make sure that once the template for
( 2 ) Interpretative note on Directive 2009/72/EC concerning common
data protection impact assessments, as provided for in
rules for the internal market in electricity and Directive 2009/73/EC
concerning common rules for the internal market in natural gas —
point 5, has been adopted, network operators implement
Retail markets, p. 7.
the points 7 and 8 in accordance with it.

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L 73/12
EN
Official Journal of the European Union
13.3.2012
Data protection by design and data protection by default settings
all necessary measures to impose, as much as possible, use
of data rendered anonymous in such a way that the indi
10. Member States should strongly encourage network
vidual is no longer identifiable. In cases where personal
operators to incorporate data protection by design and
data are to be collected, processed and stored, Member
data protection by default settings in deployment of
States should ensure that the data are appropriate and
smart grids and smart metering.
relevant. Data collection should be limited to the
minimum necessary for the purposes for which data are
processed and data should be kept in a form which permits
11. Data protection by design and data protection by default
identification of data subjects for no longer than is
settings should be incorporated in the methodologies of
necessary for the purposes for which the personal data
parties involved in development of smart grids when
are processed.
personal data are processed.
12. Data protection by design should be implemented at legis
19. Processing of personal data by or within a smart metering
lative level (through legislation that has to be compliant
system should be legitimate in accordance with one or
with data protection laws) at technical level (by setting
more of the grounds listed in Article 7 of Directive
appropriate requirements in smart grid standards to
95/46/EC. The opinion of the Working Party on the
ensure that infrastructure is fully consistent with the data
protection of individuals with regard to the processing of
protection laws) and organisational level (relating to
personal data on smart metering ( 1 ) should be taken into
processing).
account.
13. Data protection by default should be implemented so that
the most data protection friendly option is provided to the
20. The processing of personal data by third parties offering
customer as a default configuration.
value-added energy services should also be lawful and based
on one or more of the six grounds for legitimate
processing listed in Article 7 of Directive 95/46/EC.
14. Member States should encourage European standardisation
Where consent is chosen as the ground for processing,
organisations to give preference to smart grid reference
the consent of the data subject should be freely given,
architectures based on data protection by design and on
specific, informed and explicit and be given separately for
data protection by default.
each value-added service. The data subject should have the
right to withdraw his or her consent at any time. The
withdrawal of consent should not affect the lawfulness of
15. For the purposes of optimising transparency and the indi
the processing based on consent before the withdrawal.
vidual’s trust, Member States should encourage use of
appropriate privacy certification mechanisms and data
protection seals and marks, provided by independent
parties.
21. Member States should clearly determine the roles and
responsibilities of data controllers and data processors.
16. Article 8 of the Charter of Fundamental Rights of the
They should be compatible with their respective obligations
European Union and Article 8(2) of the European
set out in Directive 95/46/EC.
Convention on Human Rights require justifying any inter
ference with the right to the protection of personal data.
The legitimacy of interference must be assessed on a case-
by-case basis in the light of the cumulative criteria of
22. Member States should perform an analysis prior to
legality, necessity, legitimacy and proportionality. Any
launching processing operations, in order to determine to
processing of personal data which interferes with the
which extent suppliers and network operators need to store
fundamental right to the protection of personal data
personal data for the purposes of maintaining and
within the smart grid and smart metering system
operating the smart grid and for billing. This analysis
therefore has to be necessary and proportional for it to
should allow Member States to determine, inter alia, if
be considered fully in compliance with the Charter.
the periods for the storage of personal data currently set
in national law are no longer than necessary for the
purposes of operating smart grids. This must include mech
17. In order to mitigate the risks on personal data and security,
anisms to ensure that the time limits set for the erasure of
Member States, in collaboration with industry, the
personal data and for a periodic review of the need to store
Commission and other stakeholders, should support the
personal data are observed.
determination of best available techniques for each
common minimum functional requirement listed in point
42 of the Recommendation.
23. For the purpose of this analysis, each Member State should
particularly take into account the following principles:
Data protection measures
the principle of data minimisation, the principle of
18. When deciding the range of information allowed for
( 1 ) Opinion No 183 of the Article 29 Working Party on smart
processing within smart grids, Member States should take
metering, April 2011.

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EN
13.3.2012 Official
Journal
of
the
European
Union L
73/13
transparency — by ensuring that the end consumer is
(a) the identity and the contact details of the controller and
informed in a user-friendly and intelligible form using
of the controller’s representative and of the data
clear and plain language, of the purposes, timing, circum
protection officer, if any;
stances, collection, storage and all other processing of
personal data, and the principle of empowerment of the
(b) the purposes of the processing for which the personal
individual — by ensuring that the measures taken safeguard
data are intended, including the terms and general
the individual’s rights.
conditions and the legitimate interests pursued by the
controller if the processing is based on Article 7 of
Data security
Directive 95/46/EC;
24. Member States should ensure that personal data security is
(c) the period for which the personal data will be stored;
designed in at an early stage as part of the architecture of
the network, within a data protection by design process.
(d) the right to ask the controller for access to and rectifi
This should encompass measures to protect personal data
cation or erasure of the personal data concerning the
against accidental or unlawful destruction or accidental loss
data subject or to object to the processing of such
and to prevent any unlawful forms of processing, in
personal data;
particular any unauthorised disclosure, dissemination,
access to or alteration of personal data.
(e) the right to lodge a complaint with the supervisory
authority referred to in Article 28 of Directive
25. The use of encrypted channels is recommended as it is one
95/46/EC and the contact details of the supervisory
of the most effective technical means against misuse.
authority;
26. Member States should take into account that all present
(f) the recipients or categories of recipients of the personal
and future components of smart grids ensure compliance
data;
with all the ‘security-relevant’ standards developed by
European standardisation organisations, including the
(g) any further information necessary to guarantee fair
smart grid information security essential requirements in
processing in respect of the data subject, having
the Commission’s standardisation mandate M/490. The
regard to the specific circumstances in which the
international security standards should also be taken into
personal data are collected.
account, in particular the ISO/IEC 27000 series (‘ISMS
family of standards’).
II. METHODOLOGY FOR THE ECONOMIC ASSESSMENT
OF THE LONG-TERM COSTS AND BENEFITS FOR THE
27. Member States should ensure that network operators
ROLL-OUT OF SMART METERING SYSTEMS
identify security risks and the appropriate security
30. This section provides guidance to Member States along
measures to guarantee the adequate level of security and
with a framework for cost-benefit analysis as a foundation
resilience of the smart metering systems. In this regard,
for conducting a consistent, credible and transparent
network operators, in cooperation with national
economic assessment of the long-term costs and benefits
competent authorities and civil society organisations,
of the roll-out of smart metering.
should apply existing standards, guidelines and schemes
and where not available develop a new one. Relevant
guidelines published by the European Network Information
31. The economic assessment should follow the guidelines set
and Security Agency (ENISA) should also be taken into
out in the Annex and should always include the following
account.
four steps:
— tailoring to local conditions,
28. Member States should ensure that in accordance with
Article 4 of Directive 2002/58/EC, in the event of a
— cost-benefit analysis (hereinafter referred to as ‘CBA’),
personal data breach, the controller notifies without
undue delay (preferably not later than 24 hours after the
breach has been established) the supervisory authority and
— sensitivity analysis,
the data subject, if the breach is likely to have an adverse
effect on protection of his or her personal data.
— performance assessment, externalities and social impact.
Tailoring to local conditions
Information and transparency on smart metering
32. When carrying out the economic assessment of the roll-out
29. Without prejudice to the obligations of data controllers, in
of smart metering, Member States or any competent
accordance with Directive 95/46/EC Member States should
authority that they designate should examine and take
require that network operators develop and publish an
into consideration, where available, appropriate pilot
accurate and clear information policy for each of their
programmes that have already implemented smart
applications. The policy should include at least the items
metering systems. They should also consult, where
mentioned in Articles 10 and 11 of Directive 95/46/EC.
possible, actual field performance data and pertinent ‘real-
life’ experience, in order to fine-tune their assumptions on
Where personal data relating to a data subject are collected,
technology choices and to optimise the associated costs and
the controller should also provide the data subject with at
benefits and consumer engagement, both in terms of public
least the following information:
awareness and use of smart metering systems.

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L 73/14
EN
Official Journal of the European Union
13.3.2012
33. In order to perform the cost-benefit analysis, Member
the logical sequential process proposed for estimating them.
States or any competent authority they designate should
Costs that might potentially be incurred by the consumer
ensure that a minimum of two forecast scenarios are
through the roll-out of smart metering systems should be
considered, one of them being ‘business as usual’ (‘do
explicitly indicated in the CBA and set into comparison
nothing and nothing happens’). In the case of electricity,
with long-term potential benefits for the consumers. In
the second scenario should be in line with the obligation
Annex I, tables 4 and 5 propose a non-exhaustive list of
imposed in Directive 2009/72/EC of an 80 % roll-out of
elements to be included in the CBA.
smart metering by 2020 and should consider the set of
common minimum functionalities laid down in Section
III of this Recommendation. It is recommended to
explore additional alternative scenarios. Such scenarios
Sensitivity analysis
should also take into account synergies between existing
and future energy-saving measures along with other
37. The Member States or any competent authority they
forms of feedback and advice to consumers, especially the
designate should identify critical variables for the sensitivity
introduction of frequent billing or cost statements based on
analysis and report the magnitude of the variable range
actual consumption rather than flat rates or estimated
(minimum and maximum values of the critical variables
consumption. Member States should consider in their alter
identified) for the positive roll-out conditions where
native scenarios the positive role that clear consumer
benefits exceed costs, as obtained from the sensitivity
information and price transparency, as well as competition
analyses they have performed. In addition, their analysis
on the manufacturers’ and providers’ side may have in the
might also include the volatility responsiveness and
roll-out of smart metering.
possible control measures to keep the value of the
variable within the desired range.
34. When setting the conditions and deciding on the hypo
theses for running the different scenarios, the Member
Performance assessment, externalities and social impact
States or any competent authority they designate should
ensure that they conduct timely consultations on this
38. When assessing the merits of deployment, externalities
subject with the national regulatory authorities and with
(such as on environment or health), the impact of public
promoters and enforcers of the roll-out of smart
policy measures and social benefits expected from the roll-
metering — which in most Member States are the
out of smart metering, the Member States or any
distribution system operators — and with the owners of
competent authority they designate should ensure that
relevant pilot projects, where available.
appropriate weighting factors, complementing the quanti
tative results of the previous steps of the CBA, are taken
into account.
35. As regards, and during, the process of setting the
framework conditions, Member States or any competent
authority they designate should ensure that all the appro
The Annex to this Recommendation provides a list of
priate communication infrastructure technologies, archi
references for other related benefits.
tectures and measures needed to guarantee interoperability
and compliance with the available Union’s or international
standards and best practices are taken into consideration.
Furthermore, Member States or any competent authority
III. COMMON MINIMUM FUNCTIONAL REQUIREMENTS
that they designate should ensure that the assumptions
FOR SMART METERING SYSTEMS FOR ELECTRICITY
underpinning the analysis are adapted to local circum
stances, bearing in mind parameters such as geographical
39. This section is based on best practice from early CBAs for
coverage, electricity demand, peak load and micro- and
smart metering of electricity carried out in 11 Member
macroeconomic conditions. Section 2 of the Annex to
States. It provides guidance on measures to be taken to
this Recommendation contains a list of the parameters
ensure that Member States make due use of appropriate
which the Member States should ensure are used in this
interoperability and standards for smart metering systems
operation.
currently being developed under Mandates M/441, M/468
and M/490 and of best practice.
Cost-benefit analysis (CBA)
40. Member States are provided with guidance on a set of
36. The Member States or any competent authority they
common minimum functional requirements for smart
designate should ensure that the CBA follows the
metering of electricity that would enable them to identify
supporting guidelines and the step-by-step methodological
common means of achieving cost-efficiencies in their roll-
framework (the ‘seven CBA steps’) laid down in the Annex
out plans. This could in turn serve Member States, metering
to this Recommendation. Furthermore, Member States or
suppliers and network operators as a common basis for
any competent authority they designate should ensure a
their own cost-benefit analyses and investments to facilitate
reasonable, transparent and well-documented calculation
the procurement associated with roll-out and provide regu
of all the expected costs and benefits in accordance with
lators with European reference definitions.

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EN
13.3.2012 Official
Journal
of
the
European
Union L
73/15
41. This section also provides guidance on provisions to secure
For the metering operator:
consumer benefits and contribute to increases in energy
efficiency. It should facilitate the linking of smart
metering systems with standardised interfaces equipped
with consumer oriented tools that combine consumption
(c) Allow remote reading of meters by the operator. This
data and cost information, encouraging consumer interest
functionality relates to the supply side (metering oper
in energy saving actions and response to demand. This
ators). There is a broad consensus that this is a key
approach should be fully taken into account when
functionality.
analysing the costs and benefits of the roll-out of smart
metering of electricity in line with Union legislation.
(d) Provide two-way communication between the smart
metering system and external networks for maintenance
and control of the metering system. This functionality
Common minimum functional requirements
relates to metering. There is a broad consensus that this
42. Every smart metering system for electricity should offer at
is a key functionality.
least all the functionalities listed below.
(e) Allow readings to be taken frequently enough for the
information to be used for network planning. This
For the customer:
functionality relates to both the demand side and the
supply side.
(a) Provide readings directly to the customer and any third
party designated by the consumer. This functionality is
For commercial aspects of energy supply:
essential in a smart metering system, as direct
consumer feedback is essential to ensure energy
savings on the demand side. There is a significant
consensus on provision of standardised interfaces
(f) Support advanced tariff systems. This functionality
which would enable energy management solutions in
relates to both the demand side and the supply side.
‘real time’, such as home automation, and different
Smart metering systems should include advance tariff
demand response schemes and facilitate secure
structures, time-of-use registers and remote tariff
delivery of data directly to the customer. Accurate,
control. This should help consumers and network
user-friendly and timely readings provided directly
operators to achieve energy efficiencies and save costs
from the interface of customer’s choice to the
by reducing the peaks in energy demand. This func
customer and any third party designated by the
tionality, together with functionalities referred to in
consumer are strongly recommended since they are
points (a) and (b), is a key driving force for empowering
the key to running demand response services, taking
the consumer and for improving the energy efficiency
‘online’ energy-saving decisions and effective integration
of the supply system. It is strongly recommended that
of distributed energy resources. In order to stimulate
the smart metering system allows automatic transfer of
energy saving, Member States are strongly recom
information about advanced tariffs options to the final
mended to ensure that final customers using smart
customers, e.g. via standardised interface mentioned
metering systems are equipped with a standardised
under (a).
interface which provides visualised individual
consumption data to the consumer.
(g) Allow remote on/off control of the supply and/or flow
or power limitation. This functionality relates to both
(b) Update the readings referred to in point (a) frequently
the demand side and the supply side. It provides
enough to allow the information to be used to achieve
additional protection for the consumer by allowing
energy savings. This functionality relates purely to the
grading in the limitations. It speeds up processes such
demand side, namely the end customer. If consumers
as when moving home — the old supply can be
are to rely on the information provided by the system,
disconnected and the new supply connected quickly
they need to see the information responding to their
and simply. It is needed for handling technical grid
action. The rate has to be adapted to the response time
emergencies. It may, however, introduce additional
of the energy-consuming or energy-producing products.
security risks which need to be minimised.
The general consensus is that an update rate of every
15 minutes is needed at least. Further developments
and new energy services are likely to lead to faster
For security and data protection:
communications. It is also recommended that the
smart metering system should be able to store
customer consumption data for a reasonable time in
order to allow the customer and any third party
(h) Provide secure data communications. This functionality
designated by the consumer to consult and retrieve
relates to both the demand side and the supply side.
data on past consumption. This should make it
High levels of security are essential for all communi
possible to calculate costs related to consumption.
cations between the meter and the operator. This

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applies both to direct communications with the meter
stakeholders involved in designing and operating smart grid
and to any messages passed via the meter to or from
applications within the Union.
any appliances or controls on the consumer’s premises.
For local communications within the consumer’s
premises, both privacy and data protection are required.
44. Member States should report to the Commission by
3 September 2012 on the results of their cost-benefit
analysis regarding the roll-out of smart metering systems
(i) Fraud prevention and detection. This functionality
and on the measures and plans they have adopted in
relates to the supply side: security and safety in the
relation to this Recommendation.
case of access. The strong consensus shows the
importance attached to this functionality. This is
necessary to protect the consumer, for example from
45. The Commission intends to assess, in the light of this
hacking access, and not just for fraud prevention.
Recommendation, the economic appraisals reported on
the roll-out of smart metering.
For distributed generation:
Addressees
(j) Provide import/export and reactive metering. This func
tionality relates to both the demand side and the supply
46. This Recommendation is addressed to the Member States
side. Most countries are providing the functionalities
and to any competent authority they designate to be
necessary to allow renewable and local micro-gener
involved in the economic assessment of smart metering
ation, thus future-proofing meter installation. It is
systems.
recommended that this function should be installed
by default and activated/disabled in accordance with
the wishes and needs of the consumer.
Done at Brussels, 9 March 2012.
Follow-up
For the Commission
43. Member States should take all necessary measures to follow
Günther OETTINGER
this Recommendation and to draw it to the attention of all
Member of the Commission

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EN
13.3.2012 Official
Journal
of
the
European
Union L
73/17
ANNEX
Guidelines on the methodology for the economic assessment of the long-term costs and benefits of the roll-out
of smart metering in accordance with Annex I to Directives 2009/72/EC and 2009/73/EC
1. REFERENCES
1.1. European Commission — Joint Research Centre Institute for Energy and Transport (2012). ‘Guidelines for
conducting a cost-benefit analysis of smart grid projects’, available at: http://ses.jrc.ec.europa.eu/
1.2. European Commission — Joint Research Centre Institute for Energy and Transport (2012). ‘Guidelines for cost-
benefit analysis of smart metering deployment’, available at: http://ses.jrc.ec.europa.eu/
1.3. European Regulators’ Group for Electricity and Gas. ‘Final Guidelines of Good Practice on Regulatory Aspects of
Smart Metering for Electricity and Gas’, February 2011, Ref.: E10-RMF-29-05 http://www.smartgridscre.fr/media/
documents/ERGEG_Guidelines_of_good_practice.pdf
1.4. European Commission Task Force for Smart Grids (2010), Expert Group 3: Roles and responsibilities of actors
involved in smart grids deployment, ‘Merit deployment matrix’ available at: http://ec.europa.eu/energy/gas_electricity/
smartgrids/doc/expert_group3_annex.xls
1.5. Proposal for a Directive on energy efficiency and repealing Directives 2004/8/EC and 2006/32/EC [COM(2011) 370
final, 22 June 2011]
1.6. SEC(2011) 288 final — Commission Staff Working Document ‘Impact Assessment’ accompanying the Communi
cation from the Commission to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions, ‘A roadmap for moving to a competitive low-carbon economy in
2050’ (COM(2011) 112 final) (SEC(2011) 289 final)
2. NON-EXHAUSTIVE LIST OF VARIABLES/DATA TO BE SET/COLLECTED IN THE CASE OF ELECTRICITY
Variables/data to be set/collected Unit
Projected variation of energy consumption
%
Projected variation of energy prices
%
Peak load transfer
%
Electricity losses at transmission and distribution level
%
Estimated non-supplied minutes Number
of
minutes
Value of lost load; value of supply EUR/kWh
Discount rate
%
Hardware costs (e.g. smart meter, GPRS/PLC modem, etc.) EUR
Number of smart metering systems to be installed Number
of
smart
meters
Installation costs for smart metering system EUR
Life expectancy of smart metering system Number
of
years
Meter reading costs EUR/year
Telecommunication success rate
%
Inflation rate
%

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Variables/data to be set/collected Unit
Cost reduction associated with technology maturity
%
Implementation schedule Number
of
smart
meters/year
Percentage of meters placed in rural v urban areas
%
Carbon costs EUR/tonne
3. FLOW-CHART OF STEPS TO PERFORM COST-BENEFIT ANALYSIS AND SENSITIVITY ANALYSIS
Note: During the quantitative assessment, different discount rates can be used to weigh in distinct manners benefits
with a social dimension and those accruing to private stakeholders. A lower discount rate should be considered to
increase the present value of societal benefits and costs.

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EN
13.3.2012 Official
Journal
of
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European
Union L
73/19
In cases where the analysis permits the calculation of costs and benefits of resulting changes to carbon emissions, it
is recommended that the analysis considers the carbon prices projected both in the Commission reference and
decarbonisation scenarios ( 1 ).
4. NON-EXHAUSTIVE
LIST
OF
COSTS
TO
CONSIDER
FOR
THE
ROLL-OUT
OF
SMART
METERING
SYSTEMS
IN
THE CASE OF ELECTRICITY
General category
Type of cost to be tracked for roll-out and to be estimated for the baseline
CAPEX Investment
in
the
smart
metering
systems
Investment in IT
Investment in communications
Investment in in-home displays (if applicable)
Generation
Transmission
Distribution
Avoided investment in conventional meters (negative cost, to be added to the list of
benefits)
OPEX IT
maintenance
costs
Network management and front-end costs
Communication/data transfer costs (inc. GPRS, radio communications, etc.)
Scenario management costs
Replacement/failure of smart metering systems (incremental)
Revenue reductions (e.g. through more efficient consumption)
Generation
Distribution
Transmission
Meter reading
Call centre/customer care
Training costs (e.g. customer care personnel and installation personnel)
Reliability Restoration
costs
Environmental Emission
costs
(CO 2 control equipment, operation and emission permits)
Energy security Cost
of
fossil
fuels
consumed
to
generate
power
Cost of fossil fuels for transportation and operation
Other Cost
of
consumer
engagement
programmes
Sunk costs of previously installed (traditional) meters
( 1 ) Annex 7.10 to Commission Staff Working Document SEC(2011) 288 final — ‘Impact Assessment’: http://eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=SEC:2011:0288:FIN:EN:PDF

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5. NON-EXHAUSTIVE LIST OF FORMULAE FOR QUANTIFICATION OF BENEFITS IN THE CASE OF ELECTRICITY
Benefit Sub-benefit Monetisation
calculation
Reduction in meter Reduced meter
Value (EUR) = [Estimated cost reductions with remote meter
reading and
operations costs
operations (EUR/year)] Roll-out – [Estimated cost reductions with
operations costs
remote meter operations (EUR/year) × Communications failure rate
(%/100)] Roll-out scenario
Reduced meter
Value (EUR) = [cost with local meter readings (EUR)] Baseline –
reading costs
[Estimated cost of obtaining local ‘disperse’ meter readings
(EUR)] Roll-out scenario
Where:
[cost with local meter readings (EUR)] Baseline = number of clients in
LV ( 1 ) × Historical meter reading cost/client/year (EUR)
[Estimated cost of obtaining local ‘disperse’ meter readings
(EUR)] Roll-out scenario = [number of clients in LV × % of clients not
included in the roll-out × Average disperse reading cost per client
(EUR/client)] + [number of clients in LV × % of clients included in
the roll-out × Communications failure rate (%) × Average disperse
reading cost per client (EUR/number of clients)
Reduced billing
Value (EUR) = [number of clients in LV × Billing cost/client/year
costs
(EUR)] Baseline – [number of clients in LV × Billing cost/client/year
(EUR)] Roll-out scenario
Reduced call
Value (EUR) = [number of clients in LV × Customer care cost/
centre/customer
client/year (EUR)] Baseline – [number of clients in LV × Customer care
care costs
cost/client/year (EUR)] Roll-out scenario
Reduction in
Reduced
Value (EUR) = [Direct costs relating to maintenance of assets(EUR/
operational and
maintenance costs year)] Baseline – [Direct costs relating to maintenance of assets (EUR/
maintenance costs
of assets
year)] Roll-out scenario
Reduced costs of
Value (EUR) = [Cost of equipment breakdowns (EUR/year)] Baseline –
equipment
[Cost of equipment breakdowns (EUR/year)] Roll-out scenario
breakdowns
Deferred/avoided
Deferred
Value (EUR) = Annual investment to support growing capacity
distribution capacity distribution
(EUR/year) × Time deferred (number of years) × Remuneration rate
investments
capacity
on investment (%/100)
investments due to
asset remuneration
Deferred
Value (EUR) = Annual investment to support growing capacity
distribution
(EUR/year) × Time deferred (number of years) × number of years
capacity
capacity asset amortisation
investments due to
asset amortisation
Deferred/avoided
Deferred
Value (EUR) = Annual investment to support growing capacity
transmission
transmission
(EUR/year) × Time deferred (number of years) × Remuneration rate
capacity investments capacity
on investment (%/100)
investments due to
asset remuneration
Deferred
Value (EUR) = Annual investment to support growing capacity
transmission
(EUR/year) × Time deferred (number of years) × number of years
capacity
capacity asset amortisation
investments due to
asset amortisation

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Benefit Sub-benefit Monetisation
calculation
Deferred/avoided
Deferred
Value (EUR) = Annual investment to support peak load generation
generation capacity
generation
(EUR/year) × Time deferred (number of years)
investments
investments for
peak load plants
Deferred
Value (EUR) = Annual investment to support spinning reserve
generation
generation (EUR/year) × Time deferred (number of years)
investments for
spinning reserves
Reduction of
Reduced technical
Value (EUR) = Reduced losses via energy efficiency (EUR/year) +
technical losses of
losses of electricity Reduced losses via voltage control (EUR/year) + Reduced losses at
electricity
transmission level (EUR/year)
Electricity cost
Consumption
Value (EUR) = Energy rate (EUR/MWh) × Total energy consumption at
savings
reduction
LV (MWh) × Estimated % of consumption reduction with roll-out
(%/100)
Peak load transfer Value
(EUR)
=
Wholesale
margin
difference
between
peak
and
non-
peak generation margin (EUR/MWh) × % Peak load transfer (%/100) ×
Total energy consumption at LV (MWh)
Reduction of
Reduced electricity Value (EUR) = % of clients with energy theft (%/100) × Estimated
commercial losses
theft
average price value of energy load not recorded/client/year (EUR) ×
Total number of clients LV (number of clients)
Recovered revenue Value (EUR) = % of clients with ‘contracted power fraud’ (%/100) ×
relating to
Estimated price value of contracted power not paid/client/year (EUR) ×
‘contracted power’ Total number of clients LV (number of clients)
fraud
Recovered revenue Value (EUR) = % of clients requesting incremental contracted power
relating to
after smart metering system installation (%/100) × Average estimated
incremental
value of recovered revenue due to incremental contracted power (EUR)
‘contracted power’
× Total number of clients LV (number of clients)
Reduction of outage Value of service Value
(EUR)
=
Total
energy
consumed
MV
( 2 ) + LV (MWh)/minutes per
times (thanks to
year (number/year) × Average non-supplied minutes/year
advanced
(number/year) × Value of lost load (EUR/MWh) × % Decrease in
monitoring and real-
outage time (%/100)
time network
information)
Reduced cost of
Value (EUR) = Average annual client indemnifications (EUR) × %
client
Reduction of client compensations
indemnification
Reduction of CO 2
Reduced CO 2
Value (EUR) = [Line losses (MWh) × CO 2 content (tonnes/MWh) ×
emissions
emissions due to
Value of CO 2 (EUR/tonne)] Baseline –
reduced line losses [Line losses (MWh) × CO 2 content (tonnes/MWh) × Value of CO 2
(EUR/tonne)] Roll-out scenario
Reduced CO 2
Value (EUR) = [CO 2 emissions (tonnes) × Value of CO 2 (EUR/tonne)]
emissions due to
Baseline
– [CO 2 emissions (tonnes) × Value of CO 2
wider spread of
low-carbon
(EUR/tonne)] Roll-out scenario
generation sources
(as a consequence
of the roll-out of
smart metering)

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Benefit Sub-benefit Monetisation
calculation
Reduced CO 2
Value (EUR) = Avoided number litres of fuel (number) × Cost per litre
emissions due to
of fuel (EUR)
truck rolls of field
personnel
Reduced fuel usage Value (EUR) = Avoided number litres of fuel (number) × Cost per litre
due to truck rolls
of fuel (EUR)
of field personnel
Reduction of air
Reduced air
For each pollutant:
pollution (Particulate pollutants
Matters, NOx, SO
Value (EUR) = [Line losses (MWh) × air pollutant content (unit/MWh)

2 )
emissions due to
reduced line losses × cost of air pollutant (EUR/unit)] Baseline –
Line losses (MWh) × air pollutant content (unit/MWh) × cost of air
pollutant (EUR/unit)] Roll-out scenario
Reduced air
For each pollutant:
pollutants
emissions due to
Value (EUR) = [air pollutant Emissions (unit) × cost of air pollu
wider diffusion of
tant(EUR/unit)] Baseline – [air pollutant Emissions (unit) × cost of air
low carbon
pollutant(EUR/unit)] Roll-out scenario
generation sources
(as a consequence
of the roll-out of
smart metering)
Reduced air
Value (EUR) = Avoided number litre of fuel (number) × Cost per litre
pollutants
of fuel avoided (EUR)
emissions due to
truck rolls of field
personnel
( 1 ) Low voltage.
( 2 ) Medium voltage.
Note: For the ‘cost of air pollutants’ (particulate matters, NO x , SO 2 ), it is recommended to consult the Clean Vehicles
Directive – Directive 2009/33/EC of the European Parliament and of the Council of 23 April 2009 on the
promotion of clean and energy-efficient road transport vehicles ( 1 ), and the ‘CAF’ (Clean Air For Europe) air
quality benefits’ quantification process.
( 1 ) OJ L 120, 15.5.2009, p. 5.

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Document Outline

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