Smart Metering: Intelligent Metering System Explained

Smart metering as a digital solution for the energy transition

The significant fluctuations in the feed-in of renewable energy sources and the increasing load on electricity grids present major challenges for energy consumers, and to manage supply and demand more efficiently, digital solutions are required. The digitalization of the energy sector creates transparency, efficiency, and flexibility. Smart metering plays a central role in this process, using IoT smart meters as intelligent measurement systems for electricity with integrated data processing. In this way, smart metering becomes a key technology for a sustainable energy future.

What is smart metering?

Smart metering refers, by definition, to a digital system for the automated collection, processing, and transmission of energy consumption data. The objective is to make consumption transparent and to enable more efficient use of energy. The intelligent metering system is used for electricity, gas, and heat. 

The smart metering system represents a typical application of the Internet of Things (IoT), as smart meters function as connected devices that continuously send and receive data. This allows real-time communication with energy suppliers, grid operators, and users.

What is a smart meter? 

According to the definition, a smart meter is a physical measuring device or intelligent metering system for energy data and is part of the smart metering process. These devices measure energy consumption at short intervals and automatically transmit the data to grid operators or energy suppliers, eliminating the need for manual readings. 

Users gain near real-time insight into their consumption, which encourages more conscious behavior and leads to long-term energy savings. Grid operators benefit from improved control of power grids, especially when integrating renewable energy sources. 

Modern smart meters are identified as IoT appliances. As connected devices, they are an integral part of digital infrastructures and enable automated, secure, and flexible energy supply within an IoT environment.

A comparison of meter types

Electricity meters today differ significantly in terms of technology, functionality, and benefits. While older devices only display total consumption, modern systems offer far more information and capabilities. Depending on the type, they allow for detailed consumption analysis, automated data transmission, and even active control of energy flow:

• Basic meters: The classic mechanical basic meter is purely analog, featuring a rotating disk, and displays electricity consumption as a continuous reading. The data must be read manually on-site, and there is no capability to store or transmit data. For consumers, this meter offers no transparency regarding temporal consumption patterns.
• Digital meters: These measure consumption electronically and display the values on a screen. They store consumption data over extended periods, such as daily, weekly, or monthly values, and are not equipped with a communication module. Manual reading is still required, and external control or data transmission is not supported. Digital meters provide users with initial insights, but do not yet offer true interactivity.
• Smart meters: Intelligent metering systems combine precise digital measurement with secure data communication. The smart meter system consists of a digital meter and a smart meter gateway that encrypts and automatically transmits consumption data, enabling the continuous monitoring and analysis of electricity use. Smart Metering forms the basis for digital billing, load management, and integration into smart home or IoT systems.

How smart meter systems work

The technical structure of an intelligent metering system enables the collection of consumption data and forms the basis for transparency, grid stability, and active control of energy flow. It consists of three central components:

1. Measuring unit: This component is a digital electricity meter that measures and stores energy consumption at short intervals. Compared to analog meters, it enables more precise and time-specific consumption recording and forms the foundation for all further functions of the smart metering system.
2. Communication unit: This unit securely transmits the measurement data to authorized parties, such as grid operators or energy suppliers. At its core is the smart meter gateway, which encrypts all data transmissions and strictly regulates access.
3. Software: The software stores, analyzes, and presents the collected data in a clear and accessible format. This provides a detailed consumption overview for both users and energy companies. The data supports load optimization and integration into smart home systems.

Current applications of smart metering 

IoT smart meters are already being used in many areas today, ranging from private households to industrial settings. Various user groups benefit from greater transparency, increased efficiency, and automated processes.

Private households

The intelligent metering system provides a precise, real-time overview of energy consumption, as users can immediately see when and how much electricity is being used. When integrated with smart home systems, devices can be automatically controlled and power-hungry appliances identified.

Housing Sector

In multifamily buildings, smart metering simplifies the billing of electricity, water, or heat. Data is transmitted automatically, eliminating the need for manual readings, saving time, reducing costs, and minimizing billing errors.

Industry and commercial sector

Companies use intelligent metering systems to detect and manage peak loads. This allows them to lower energy costs and optimize production processes. Maintenance requirements can therefore also be identified at an early stage.

Grid operators

Smart meters support real-time grid monitoring. Grid operators can see where and how much electricity is being consumed or fed into the grid, which helps prevent bottlenecks and enhances the reliability of the energy supply.

Smart meters: Benefits and challenges at a glance

In addition to improved consumption control and greater convenience, questions regarding data protection, technology, and costs arise. The following overview highlights the key aspects that are particularly relevant when implementing smart metering:

A smart meter system provides greater transparency and convenience in energy management, but also raises concerns about data protection, technical complexity, and costs. In addition, the availability of intelligent metering systems still varies by region, which should be taken into account when considering their use.

Smart meter laws and regulations explained

Specific smart metering laws clearly define who is required to install an intelligent metering system, which technical requirements must be met, and how data protection is to be ensured. 

In Germany, the Metering Point Operation Act provides the legal basis for the mandatory smart meter rollout. Beginning January 1, 2025, households with an annual consumption exceeding 6,000 kWh, operators of larger solar power systems, and controllable consumption devices will be required to use an intelligent electricity metering system. By 2030, 95 % of the affected metering points are to be equipped. Only certified devices with a smart meter gateway that meet strict data protection and IT security standards are permitted.

In Austria, the smart meter rollout is monitored by E-Control and governed by the IME-VO regulation. The goal is to equip at least 95 % of all metering points with an intelligent metering system by the end of 2024. Depending on the network region, the current implementation rate already ranges between 85 % and 99 %. Data protection, data sovereignty, and technical standards, are legally binding. In certain cases, there is an opt-out right regarding data transmission.

Other European countries are even further advanced in smart metering. Italy has already installed approximately 36 million smart meters, with the second-generation rollout exceeding 80 %. Sweden has fully completed its smart meter rollout, with around 5.4 million meters in operation. In France, the penetration rate of smart metering systems stands at about 90 %, while Spain and the Netherlands have nearly achieved full coverage. The United Kingdom has reported over 34 million installed devices, corresponding to a penetration rate of approximately 61 %.

Smart grids and energy efficiency as future perspectives of smart metering

With the continued expansion of photovoltaic systems, electric mobility, and heat pumps, the demand for flexible energy control is increasing. Smart meter systems for electricity, gas, and heat provide the required real-time data and link generation, consumption, and storage in a seamless manner. Within smart grids, they play a crucial role by responding to grid load conditions, optimizing power flows, and improving supply security.

In the future, these processes will become increasingly automated. An important element in this development is the growing use of IoT smart meters, connected measuring devices that communicate via the Internet of Things and integrate effortlessly into digital energy management systems. Based on this infrastructure, devices such as electric vehicles and heating systems can be controlled in a targeted way. This allows surplus solar power to be used or stored locally without overloading the grid. The integration of smart meter systems thus enhances efficiency, flexibility, and stability, making an active contribution to the energy transition.

IoT smart meters as a key technology for a digital energy future

Intelligent metering systems for smart metering provide transparency, efficiency, and digital control within the energy system. Consumers gain control over their energy usage, while grid operators benefit from more stable networks. This technology is essential for the success of the energy transition.

Smart meter laws ensure security and standardization. In the future, these systems will become even more closely integrated with artificial intelligence, IoT, and renewable energy sources. The result being an intelligent overall system that is flexible, sustainable, and future-ready.

Frequently asked questions about smart metering

What is a smart meter?

By definition, a smart meter describes the digital recording, transmission, and evaluation of energy consumption data. The intelligent metering system automatically captures gas, electricity, or heat consumption, a process known as smart metering. In a broader sense, a smart meter also includes the ability to provide consumption data in real time and to actively contribute to the control of the energy system. The objective is to achieve greater transparency, improved efficiency, and better control of energy flows.

How do intelligent metering systems work?

An IoT smart meter measures energy consumption in short intervals and transmits the data automatically and in encrypted form to authorized recipients. The collected data is then digitally and instantly analyzed. Smart Metering is based on three main components:

1. Measuring Unit: Continuously records energy consumption
2. Communication Unit: Securely transmits data to grid operators or other authorized parties
3. Software: Analyzes the data immediately to present a transparent view of consumption and enable control functions if needed

Are there specific smart meter laws?

In Germany, smart metering systems are regulated by the Metering Point Operation Act. It mandates certified systems for households using 6,000 kWh or more annually and for large solar installations. The law ensures strict standards for data protection, system security, and technical compliance. Countries like Italy, Sweden, the UK, France, Spain, and the Netherlands have also introduced legal frameworks to support nationwide smart meter rollouts, focusing on transparency, security, and integration into digital energy systems.

What is the difference compared to conventional meters?

Unlike mechanical or basic digital meters, IoT smart metering can store, analyze, and automatically transmit consumption data. It offers significantly more transparency and enables digital energy management. Manual readings are no longer necessary.

What are the benefits of smart meters?

Smart metering provides increased transparency in energy consumption, allows for more accurate billing, and actively supports energy savings. Real-time consumption data helps both households and grid operators improve planning. It also facilitates the integration of renewable energy sources and serves as a foundation for intelligent and flexible energy systems.

What are the challenges?

The main challenges include data privacy, IT security, and consumer acceptance. A nationwide smart meter rollout is also technically and organizationally demanding. Additionally, all stakeholders must be integrated into the digital infrastructure and receive appropriate training and information.

What role do IoT smart metering play in the energy transition?

Through their integration with power grids, control systems, and end-user devices, smart meters are seamlessly embedded in digital energy systems. They record consumption data in real time, transmit it automatically, and enable demand-based control of energy flows. This contributes significantly to the efficiency and flexibility of modern electricity networks.

Where are smart meter systems used?

Smart meters are used in private households, the housing sector, commercial enterprises, and by grid operators. Applications range from automatic billing to load management and grid monitoring, and with ongoing digitalization, the areas of application continue to expand.