Brussels, Belgium --- (METERING.COM) --- February 11, 2011 - A smarter approach to regulation is needed to incentivize the development of smart grids in Europe, according to a new study from the European industry association, EURELECTRIC.

Based on a survey of the current regulatory frameworks across Europe the organization found that there were several shortcomings, including sub-optimal rates of return and regulatory instability that are hampering investment in smarter distribution grids, and regulators taking a narrow view when evaluating cost efficiency, penalizing extra expenditure on R&D or smart grid pilot projects and encouraging business-as-usual expenditure instead.

Further, the rollout of smart meters is being delayed by a lack of clarity regarding the roles and responsibilities of individual market players.

The study was aimed to assess the current regulatory challenges which the European energy distributors (DSOs) face when investing in smart grids, and to establish principles towards smarter regulation.

Based on the findings, EURELECTRIC considers efficient regulation at national level to be the key tool for driving the European development of a highly modernized grid. To ensure investments in smart grids, national regulators should focus more strongly on long term requirements and provide a fair rate of return. This will imply revising the regulatory models of certain EU member states.

EURELECTRIC also invites the European Commission to keep the momentum on smart grids and continue pushing for their development and implementation in Europe. A political signal from the EU, as a first step in the form of a communication on the implementation of smart grids, would raise awareness on regulatory barriers and missing incentives for the energy distributors (DSOs) to invest in smart grids at national level. In addition, EURELECTRIC is in favor of assessing legislative measures such as annexes to the existing directives or a specific Directive on Smart Grids along with national roadmaps that should confirm the leading role of DSOs on smart grids.

Lastly, EURELECTRIC strongly supports the SET Plan and the European Electricity Grid Initiative, believing that large scale demonstration projects will be needed to accelerate and optimize smart grid implementation in Europe.