Europe’s regulators call to accelerate smart meters rollout

The ACER-CEER 2024 EU energy market monitoring report highlights the slow rollout of smart meters as a barrier to unlocking power system flexibility across the region.

The report, which is focussed on energy retail and active consumer participation, points to 10 member states having smart meter rollouts below 30%, with six of them having below 10%, and therefore that consumer choice and opportunities to participate in flexibility in these markets are limited.

These are Bulgaria, Czechia, Germany, Greece, Croatia, Cyprus, Hungary, Poland, Romania and Slovakia.

Of these, only Croatia, Poland and Romania have a rollout rate above 20%.

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Moreover, a further challenge to consumer participation is that almost three-quarters of EU households are on regulated fixed and market-based fixed electricity contracts and in many cases there are no real alternatives offered.

Pointing to the need for “swift changes” for the EU’s drive towards carbon neutrality by 2050, the market monitoring report emphasises that the energy transition will not occur without power system flexibility and the active participation of energy consumers.

For example, the report cites the increased price volatility, with the frequency of low and negative wholesale electricity prices having surged 12-fold in 2023 compared to 2022, indicating the growing need for system flexibility.

However, untargeted price interventions, seen in eight member states, have slowed the adoption of flexible pricing contracts and consumption practices.

The retail markets can play a pivotal role as providers of flexibility, the report says. Thus, unlocking more flexible retail consumption is crucial for the energy transition’s success as well as creating opportunities for consumers to benefit from lower energy prices.

To this end the report calls for a dismantling of barriers to demand response and creation of supportive investment frameworks to enable small, climate-compatible flexibility resources to participate in all electricity markets on an equal footing with traditional centralised sources of flexibility.

In particular the regulatory framework should be updated to promote demand side response, while balancing household consumer protection in the lead-up to 2030.

Regulators should incentivise DSOs to optimise grid efficiency, ensuring that infrastructure investment supports future energy needs.

Member States, regulators and DSOs need to speed up the rollout of smart meters and ensure that consumers are offered a wider range of flexible contracts, including dynamic price contracts.

They also need to consumer awareness of the benefits of flexible energy use and provide incentives that reflect these benefits.