London, England --- (METERING.COM) --- November 2, 2012 - To fully utilize the benefits of smart grids, technological as well as daunting financial challenges have to be overcome and it is of utmost importance that policymakers and industry work closely together and include the wider public in their efforts, a new report from the World Energy Council (WEC) states.

For industry it is important to elaborate a positive business case with a precise definition of how investments are paid for, reflecting the fact that benefits are incurred to a wide range of stakeholders, including consumers, utilities, information technology (IT) providers, manufacturers and the environment.

The report, Smart grids: best practice fundamentals for a modern energy system, was prepared to shed light on the current status of smart grids and the financing mechanisms for their development.

The countries reviewed are India, Japan, China, South Korea, and Brazil, Europe as a region, and North America with a focus on the U.S.

The available financing mechanisms fall into four categories:

  • Public funding, e.g. the RD&D funding in the EU
  • External grants, e.g. by USTDA in India
  • Regulatory incentives, e.g. Ofgem’s Low Carbon Networks Fund in U.K.
  • Private funding, e.g. venture capital in the U.S.

The report adds that it is of fundamental importance to involve national regulatory authorities in the early stage of smart grid development, as this will allow them to better understand the benefits of the technologies and provide appropriate regulatory mechanisms to support their full deployment.

The development of smart grids is a long term process that binds capital over many years and therefore requires strong commitment from all stakeholders, concludes the report.