1

Smart Meters for Power Grid Challenges,

Issues, Advantages and Status
Soma Shekara Sreenadh Reddy Depuru, Lingfeng Wang, Vijay Devabhaktuni and Nikhil Gudi

Abstract--Smart meter is an advanced energy meter that

measures consumption of electrical energy providing additional
information compared to a conventional energy meter.
Integration of smart meters into electricity grid involves
implementation of a variety of techniques and software,
depending on the features that the situation demands. Design of a
smart meter depends on the requirements of the utility company
as well as the customer. This paper discusses various features and
technologies that can be integrated with a smart meter. In fact,
deployment of smart meters needs proper selection and
implementation of a communication network satisfying the
security standards of smart grid communication. This paper
outlines various issues and challenges involved in design,
deployment, utilization, and maintenance of the smart meter
infrastructure. In addition, several applications and advantages
of smart meter, in the view of future electricity market are
discussed in detail. This paper explains the importance of
introducing smart meters in developing countries. In addition,
the status of smart metering in various countries is also
illustrated.
Index TermsCommunication technology,
design, issues, protocols, smart meters

deployment,

I. INTRODUCTION

mart meter is an advanced energy meter that measures the

energy consumption of a consumer and provides added
information to the utility company compared to a regular
energy meter. Smart meters can read real-time energy
consumption information including the values of voltage,
phase angle and the frequency and securely communicates that
data. The ability of smart meters for bidirectional
communication of data enables the ability to collect
information regarding the electricity fed back to the power
grid from customer premises. A smart meter system includes a
smart meter, communication infrastructure, and control
devices. Smart meters can communicate and execute control
commands remotely as well as locally. Smart meters can be
used to monitor and also to control all home appliances and
devices at the customers premises. They can also collect
diagnostic information about the distribution grid, home
appliances, and can communicate with other meters in their
reach. They can measure electricity consumption from the
grid, support decentralized generation sources and energy
storage devices, and bill the customer accordingly. Data
The authors are with the EECS Department, University of Toledo, 2801
W.
Bancroft
St.,
Toledo,
OH
43606-3390
(email:
sdepuru@rockets.utoledo.edu,
Lingfeng.Wang@utoledo.edu,
Vijay.Devabhaktuni@utoledo.edu, and ngudi@rockets.utoledo.edu )

978-1-61284-788-7/11/$26.00 2011 IEEE

collected by smart meters is a combination of parameters such

as a unique meter identifier, timestamp of the data, and
electricity consumption values. Smart meters can be
programmed such that, only power consumed from the utility
grid is billed while the power consumed from the distributed
generation sources or storage devices owned by the customers
are not billed. Smart meters can limit the maximum electricity
consumption, and can terminate or re-connect electricity
supply to any customer remotely [1], [2]. Fig. 1 shows an
architectural model of a conventional energy meter and a
smart meter.

Fig. 1 Metering architectures of conventional energy meter and smart meter.

A smart meter system employs several control devices,

various sensors to identify parameters and devices to transfer
the data and command signals. In future electricity distribution
grids, smart meters would play an important role in
monitoring the performance and the energy usage
characteristics of the load on the grid. Collection of energy
consumption data from all customers on a regular basis allows
the utility companies to manage electricity demand more
efficiently and also to advise the customers about the cost
efficient ways to use their appliances. In light of this, smart
meters can be used to control light, heat, air conditioning and
other appliances [3]. Smart meters can be programmed to
maintain a schedule for operation of the home appliances and
control operation of other devices accordingly. In addition,
integration of smart meters helps utility companies in
detecting unauthorized consumption and electricity theft in
view of improving the distribution efficiency and power
quality [4].
Design of future electricity markets are aimed at providing
their consumers with highly reliable, flexible, readily
accessible and cost-effective energy services by exploiting
advantages of both large centralized generators as well as
small distributed power generation devices [5]. In addition,

distributed generation would be an essential integral part of

future household energy systems. Utility companies try to
identify more profitable customers to provide optional value
added services, as smart meters can identify such customers
based on the distributed generation sources and overall power
consumption. With all these services and other demand side
management techniques require utility companies to collect
large quantity of real-time data.
Rest of the paper is organized in the following way: section
II details various communication network technologies to
date; section III discusses various issues and challenges in
developing, deploying and maintaining the smart meters,
section IV outlines the applications and advantages of
introducing the smart meters replacing the existing metering
and billing system, section V illustrates the need for
implementation of smart meters in developing countries, and
section VI summarizes the status of implementation of smart
meters.

prioritization i.e., prioritize the delivery of data based on its

time and direction sequence [8].

II. COMMUNICATION TECHNOLOGIES

Of all design considerations, selection of the
communication network and design of the communication
devices are very important and must satisfy multiple complex
requirements. As discussed earlier, utilization of the smart
meter system involves a huge amount of data transfer between
the utility company, smart meter, and home appliances in the
network. This data is sensitive, confidential and access to this
data should be restricted to a few personnel. With these
restrictions on data, security guidelines are formulated for
transmission, collection, storage, and maintenance of the
energy consumption data. The communication standards and
guidelines were formulated to ensure that data transfer within
the network is secure. It is equally important that this data
must represent the complete information regarding the energy
consumption by the customer and status of the grids without
any potential manipulations or miscalculations. So, this data
must be authenticated and should reflect information about the
target correct devices [6]. Fig. 2 shows the generic architecture
of communication network that is capable of performing all
the features discussed above. This figure illustrates the
directionality of communication between the devices at the
customer premises, utility, neighbors smart meters, and other
power system components.
In this figure, devices in the transmission sector ensure
proper transmission of generated energy, control systems in
distribution sector ensure monitoring and controlling faults,
communication devices like protocol gateways, data collectors
and repeaters and network operations coordinates data and
control signals between all the devices in the communication
network. A smart meter or an appliance that belongs to a
customer can be identified by a unique identity assigned to it.
In general, identities given to all components are secured by
cryptographic techniques [7]. The communication network
selected has to support operation of the smart meter system
even on power outage detection and support distribution
automation. In addition, the selected network and its
components must be cost effective and must support traffic

Fig. 2 Communication network in smart meter system [9].

Communication technologies to be chosen have to be cost

efficient, should provide good transmittable range, better
security features, bandwidth, power quality and with least
possible number of repetitions. Bluetooth technology can be a
possible option for communication of control signals and to
transmit energy consumption data. In view the of
implementing this technique, B.S. Koay et al. proposed a
Bluetooth based energy meter that can collect and transmit the
energy consumption data wirelessly to a central base station
[10]. Power Line Carrier (PLC) and Broadband Power Line
(BPL) communication are the other possible options of data
transfer supporting the higher level communication suites such
as TCP/IP. One of the popular communication technologies is
PLC, which uses the existing electricity grid, cellular/pager
network, mesh network, combination of licensed and
unlicensed radio, wireless modem, existing internet
connection, power line communication [11], RS-232/485, WiFi, WiMAX, and Ethernet with protocol to upload data using
IEC DNP [12]. PLC technology is highly efficient for
automation of data in smart meter applications [13]. In spite of
substantial overhead caused by the large IPv6 header, this
protocol can be applied even at low PHY layer data rates. This
technology, with the combination of the MAC algorithm can
achieve satisfactory delay times and throughput. Though this
combination might slightly reduce the usable data transfer
rate, it will not affect the overhead at MAC layer [14]. IP
based network protocol would be another promising option for
communication because of its advantages over other
technologies while satisfying the security standards of the
smart grid communications. In addition, TCP/IP technology

can also be used as a common platform for multiple

communication devices [15].
In addition to above options, Session Initiation Protocol
(SIP) is a text-based signaling protocol that is used for
controlling multimedia sessions such as video and Voice over
Internet Protocol (VoIP). SIP can be used on Transmission
Control Protocol (TCP), User Datagram Protocol (UDP), or
Stream Control Transmission Protocol (SCTP). SIP
incorporates several elements of HTTP and Simple Mail
Transfer Protocol (SMTP). SIP is an open and standards-based
technology, which provides a robust communication medium
for the smart grid applications [16].
T. Mander et al. proposed a communication architecture
that uses DNP3 to produce the protocol discontinuity between
the DNP3 devices for regulated power system operations and
TCP/IP devices for the smart load and demand management.
This discontinuity in protocols limits the number of vulnerable
attacks from other TCP/IP devices. Some security
enhancements such as data object security and a security layer
to DNP3, as this protocol by itself is not adequately safe for
collaborative operations. Data object security provides several
rules for accessing the data in order to avoid unauthorized
access that manipulates the data and device operations [17].
S. Rusitschka et al. proposed an energy meter that
communicates using a Peer-to-Peer (P2P) based network. A
smart meter that employs P2P network can enhance the range
of operations of the appliances. In addition to such advantages,
several value added services can also be implemented with
less capability requirement. As the P2P based communication
uses internet, this can lead to cost effective design of smart
grid communication network [18]. In addition, the P2P
network utilizes the resources of participating homes
optimally. Zigbee [19] network is another important and
potential communication network for transfer of data and
control signals. As many industrial and household entities
maintain a computer with 802.11.x, Zigbee protocol can be
used with Home Area Networks (HAN) for data transfer over
802.11.x [20]. Using this technology, instead of increasing the
operating clock frequency in the crypto core in order to reduce
the response time and verification delay, J. Kim et al.
proposed the mode toggling approach on the design process
for AES-CCM module. They have also adopted the optimal
security material management module. These design
methodologies and the obtained response time allow the
cryptographic core to maintain the minimum clock frequency,
while staying within the constraints, ensuring the reduction in
total dynamic power consumption [21].
GPRS technology can be a potential communication
medium for transferring both the data and control signals
wirelessly over long distances. In contrary to other
communication network technologies, only a few
communication characteristics that represent GPRS
communication network have been assessed. In view of this,
lack of tools for detection of a network failure would be major
setback for implementing GPRS network in many
geographical locations. Before deploying a GPRS based
communication system in a specific location, availability and

quality of the signal has to be determined [22]. Parallel

processing and implementation of field-programmable gate
array (FPGA) hardware can reduce the total computation time
for interpreting the data and to obtain the status of the
distribution network. Adoption of reconfigurable logic for
processing of data minimizes the amount of data to be
generated by a smart meter [23]. Of all proposed and available
possibilities of communication technologies, GPRS and PLC
technologies are currently implemented because of the ease in
maintenance and economic factors.
III. ISSUES AND CHALLENGES
In general view, efficient management of the grid can be an
alternative solution instead of revamping the existing grid.
But, in view of technical advantages and enhancements to
operation capability, integration of the smart grid stands as a
valuable solution in managing the existing grid. However, the
design, deployment and maintenance of the smart meter
system involve many issues and challenges. Implementation
of smart meter system in the distribution system involves
several billion dollars of investment for deployment and
maintenance of the network. Indeed justifying the investment
is difficult. So, this investment has to be realized as a function
proportional to the projected increase in the energy demand
and portion of the distributed generation [24]. Initially, the
process of replacing the existing energy meters with a smart
meter system will be a challenge for utility companies. Lack
of proper infrastructure for synchronizing this new technology
with the existing ones might interrupt the introduction of smart
meters. Though several devices are integrated with the smart
meter system, they can be used to their fullest extent only
when all the appliances and devices in the distribution and
metering network are included in the communication network.
Integration of the devices becomes even more complicated
with an increasing number of customers. Deployment of
communication network in some localities might be difficult
due to terrestrial difficulties [15]. In the USA, utility
companies receive incentives for selling more electricity,
which might not drive them to encourage their customers to
conserve energy [1].
Collection and transmission of energy consumption data is
a continuous process that is done automatically, but it is a
tedious and expense job. In this context, a common notion
might arise in several customers is that, smart meters they
might essentially create some privacy and security risks as the
data and signals are being transmitted. Additionally, this data
might also reveal the information about presence of people at
their residence, when they were present, and what appliances
are in use. In view of this, some customers might be unwilling
to communicate their energy consumption data with their
neighbors meter. Fundamentally, it would be an issue about
the choice of parameters to be transmitted and administrator
authentication to access that information [20], [25].
In addition to communicating the data and control signals
with the base station, smart meters must execute these control
commands from the utility companies. Operation of a smart
meter system involves a huge quantity of data transfer

between a smart meter and the server located at the base

station. Maintenance, management and storage of data could
be a tedious job. There are many technical issues that might be
considered during selection of communication network. For
instance, DNP3 does not provide sufficient security for
collaborative operations, so some security enhancements to
DNP3 are proposed by T. Mander et al. using data object
security and a security layer [17]. In addition, most of the
smart meter communication networks use low bandwidth,
which generates high traffic and limits the quantity of data to
be transmitted. Integration of devices for modulation,
demodulation and additional memory for storing the data logs
could increase the overall deployment costs. Energy
consumption data transmitted through public communication
networks like cellular networks might involve security risks
[6]. Other possible security vulnerabilities might be weak
authentication, quality of implemented software, error
handling, weak protocols, and improper session management
[26]. In spite these issues, though deployment and
maintenance of some communication networks are cheap,
utility companies might encounter some challenges in the
form of limitations in network coverage, data capacity, and
propagation issues. In addition, data concentrators may lead to
accommodation and safety issues. In case of wired
communication, physical damage to the cable might also cause
discontinuity in data transfer.
Figs. 3, 4, 5 illustrate various issues and challenges in
design, deployment, utilization and maintenance of the smart
meter system. Apart from utility companies, there are certain
sections of people who might be interested in collecting and
analyzing the energy consumption data of a customer. They
include revengeful ex-spouses, civil litigants, illegal
consumers of energy, extortionists, terrorists, political leaders
with vested interests, thieves, etc. for knowledge about
peoples presence at their homes [27]. Quantification of the
potential benefits from smart metering is very difficult due to
the lack of historical data. Future of smart metering depends
on the policies of utility companies and respective
governments. Though customer gateways are intelligent and
are easily compatible with other devices, they are prone to
physical as well as cyber security risks [29], [29]. In addition,
energy meters are located in open and insecure environments
and need proper shelter to be physically secure.

Fig. 4 Maintenance issues for a smart meter system.

Fig. 5 Challenges with data transfer for a smart meter system.

Fig. 3, illustrates several major design issues and constrains

including the extent of technology to be included; this
technology might include the kind of billing, control systems
related software and other metering technology, the physical
safety aspects such as positioning of the smart meter and
physical strength of the structure that houses the smart meter
components, cost of the smart meter devices, specific ID to
identify all smart meters and other components in the smart
meter network, and the type of communication infrastructure
required, including overall cost for the data collectors, data
repeaters, transmission, antenna system, type of network to be
chosen based on terrestrial difficulties, availability of signal,
cyber security, type of the signal and range of the signal. After
deploying the required infrastructure, next major encounter
would be the maintaining all the components of the network in
case of any failure. Maintenance of network include issues
with the base server that stores the energy consumption data,
software and hardware issues with the smart meter, electric
network as well as distribution network failures. Besides these
issues, dealing with the data could be another major issue.
They include quantity of data to be transmitted, what are the
variables to be transmitted, the extent and quantity of
information that the customer and the utility companies, can
access parameters, parameters required to represent the energy
consumption, modulation of the data before transmission,
demodulation of the data at the reception.
IV. APPLICATIONS AND ADVANTAGES

Fig. 3 Design issues for a smart meter system.

Smart Grid System determines the need of aspects such as

daily workflow, workforce management, asset management,
call center philosophy, billing systematic etc. Smart meters
can enhance the operation of SCADA system. As smart meter
system provides several benefits such as efficient power
system control and monitoring, operational decisions those are
taken timely to minimize outages and losses [30]. Particularly
in micro-grids, smart meters can perform energy cost
allocation, fault analysis, demand control and power quality
analysis. Smart meters can schedule preventive maintenance,
and support the operation of check meters for accurate billing.
In addition, smart meters can detect the presence of unwanted
harmonic component in current supplied from the de-centrally

generated sources, which helps in identification and

rectification of the source of the problem [31]. Micro
generators integrated into the distribution network must be
registered, so that they are under the access and control of the
smart meter system. Pattern recognition techniques can also be
employed as part of the smart metering system in order to gain
access to the performance information of the devices and
financial incentives to the customer [32]. Manual energy meter
reading is a tedious, continuous and an expensive job. In
conventional metering system, meter reader has to go and take
the reading manually to generate and issue the bill. This whole
process can be simplified with the help of a smart meter and
proper communication mechanism. Increased energy security
as well as energy saving drives the installation and adoption of
smart meters [3]. Smart meters encourage consumers to
conserve energy by helping them maintain the quantity and
cost of their energy consumption. There are several models of
smart meters proposed by several researchers. Of which a few
models are discussed in this section.
Power strip smart meters can be employed to monitor and
control the appliances of customers. These meters provide
data, identity and location of home appliances under operation
[33]. Generally, unbalanced loads cause fluctuations in the
voltage profile of a distribution feeder located far-away from
the substation. Smart meters can analyze and control these
fluctuations in low voltage grids [34]. Information about the
load at the customer end and control of the maximum load
demand helps utility companies in maintaining a flat voltage
profile on the power supplied. Smart meters control the
maximum load demand of a customer during peak load, and if
any customer exceeds their limit, the supply of electricity will
be disconnected to that customer [35].
Present electricity grids are designed for large scale
generation, centralized control, transmission, and distribution
of electricity. As such, these devices and system might not be
efficient for housing intermittent power generation sources
such as wind turbines and PV panels without compromising
on the overall power system stability. In addition, present grid
systems are designed for unidirectional power flow [36].
Integrating additional devices to the smart meter system
enhances the capabilities of smart metering technology.
Geographic Information System (GIS) can be integrated to the
smart meter system in order to obtain specific information
regarding the geographical location of a potential fault. Quick
identification and rectification of faults and other issues that
demand the attention of utility company reduces the overall
power outage duration [30]. In addition, smart meters reduce
the average power outage duration to 4 to 6 minutes due to
their fast response and rectification to power outages and
faults [37].
C. Claudio and R. Emilia proposed a smart total harmonic
distortion (THD) meter that monitors the quality of the power
supplied from the grid and evaluates the THD [38].
Particularly, when the distribution grid is integrated with wind
turbines, occurrence of a fault similar to sudden disconnection
of a generation unit or large load can alter the supply
frequency. Smart meter system can quantify and maintain

these parameters within desirable range even under high wind

circumstances [39].
In a smart meter system, a central control station at the
utility company directs the smart meter at a customer premises
to control the home appliances based on the preselected
schedule for operation of devices that the customer opts for
[40]. Implementation of smart meters enables the utility
companies to change or introduce new tariff schemes. Apart
from the discussed advantages, other major arguments for
introducing smart meters are the possibility of introducing
new and dynamic tariff schemes that allow benefits for the end
customer. This would enable the possibility to provide demand
response by shifting loads which helps in flattening the energy
usage profile. In addition to time of use tariff and real-time
pricing schemes [1], introduction of pre-paid smart card
system [41] will allow utility companies to impose a
reasonable tariff for the benefit of consumers. A smart card
can be bought based on the consumers load requirement and
it can be recharged after consumption of the prepaid amount
of energy. The prepaid smart card system reduces the
possibility of billing irregularities [42]. Smart meters can be
designed such that they can control illegal consumers from
bypassing or tampering with the meter. They can manage the
denial of service, hijacking, hacking, and control introduction
of malware into the metering system.
Billing for the energy consumed by the customer is done
with human intervention, which can be avoided using mobile
agents to access the energy meters remotely. Each agent can
be assigned a particular task for a particular location. Multiple
mobile agents can be employed to overcome difficulties in
accessing large amounts of data. C.D. Suriyakala and P.E.
Sankaranarayanan proposed intelligent congestion controlling
software that facilitates the operation of multiple mobile
agents [42]. V.V. Das proposed a new communication system
for existing energy meters, in which, the billing software is
integrated with the communication mechanism so that the
utility company can access any energy meter in the network
and generate the bill remotely [7].
HAN technology can integrate load control devices with the
target load and equipment to display the data related to overall
energy consumption and other power quality parameters.
HAN technology supports plug-in hybrid electric vehicles
(PHEVs) and distributed energy generation facilities in the
communication network [43]. Penetration rate of PHEVs is
expected to grow very high in future, which implies great ease
for numerous smart meter applications. Environmental savings
because of utilizing the energy from renewable energy sources
can be calibrated and displayed on smart meters. Displaying
such information might encourage some customers to use PVs
and wind energy technologies instead of consuming energy
generated from fossil fuels based generation units [9], [44].
Energy web ecosystem proposed by D. Tuan allows
consumers to monitor the parameters of distributed generation
units and their load on grid. This might acquire attention of
consumers and involve them in operation of the power
systems while encouraging large scale integration of
renewable energy sources [45].

V. SMART METERS FOR DEVELOPING COUNTRIES

In many developing countries, conventional energy meters
are used for billing the energy consumed by customers. For
ease of operation of the home appliances, monitoring the grid,
improving the power quality, improved load sharing, detecting
non-technical losses, and other implied advantages, smart
meters are to be introduced in developing countries. Power
utility companies worldwide lose about 20 billion dollars each
year because of non-technical losses [4]. In addition, growing
non-technical losses because of theft and billing irregularities
force the utility companies to implement a transparent and
genuine metering system. However, deployment of smart grid
and smart meter system involves huge budgets. It would be
very difficult for utility companies to invest billions of dollars
on an infrastructural upgrade that has no direct return on the
investment. So, smart meters with minimum required, but
essential features may be designed for implementation in
countries with weaker economy. So, smart meters might not
be implemented for luxury in operation, but they must be
introduced in order to fight the basic problems that power
utility companies and its customers face. Smart meters with
great networking capability and advanced software tools are
difficult to tamper and hack, which improves the distribution
efficiency. Integration of smart meters enhances facilitation of
decentralized generation and power storage devices. In the
near future, total energy demand is expected to become double
the current demand. In view of this situation, many developing
countries do not have resources for the additional capacity
addition. To fill this gap, apart from increasing the installed
generation capacity, controlling the electricity theft and
regularizing the existing electricity customers can manage the
load within demands.
VI. STATUS OF SMART METERING
In view of the advantages and applications, smart meter
systems are being under large scale deployment worldwide.
For instance, Austin Energy, one of the largest electric utility
companies in the US with about 400,000 customers, has begun
deploying smart meters to about 260,000 residential customers
in 2008 [46]. Centerpoint Energy, a Houston based utility
company will have deployed smart meters to about 2 million
customers by the year 2012 in the Houston-Metro and
Galveston service locations. In US, targeted implementation of
smart meters requires an investment of about $50 billion. In
North America, penetration rate of smart meters was about 6%
in the year 2008 and is expected to reach 89% by 2012 [1].
By the year 2014, worldwide deployment of smart meters is
expected to reach about 212 million units. In Italy, Enel, the
third-largest energy provider in Europe has started deploying
smart meters to about 27 million customers, which is the
worlds largest smart meter deployment project [47]. In
Canada, the government of Ontario has planned to deploy
smart meters to about 800,000 consumers including both
residential and small businesses by the year 2007 [48]. In
Korea, Korea Electric Power Corporation (KEPCO) started
implementation of AMR based energy metering system for its
industrial customers in 2000. Currently, these meters

automatically transmit the energy consumption information

from about 130,000 high voltage consumers. Using these
smart metering systems, KEPCO provides value added
services for about 55,000 of their low-voltage customers [49].
In Australia, the Essential Services Commission has mandated
installation of interval meters for 2.6 million electricity
consumers in Victoria. In 2007, the Dutch government has
proposed a policy that mandated the adoption of smart meters
to 7 million residential consumers by the year 2013. Later, the
government went back on its policy and left the decision about
installation to the consumers interest because of the privacy
and security concerns [50].
VII. CONCLUSION
This paper reviews several important aspects of smart
metering. It explains advantages of smart meter system in
utility company as well as in customer point of view. Various
potential communication networks for smart meter
communication are presented in detail. In addition, several
challenges, requirements and issues in design, development,
deployment, and maintenance of the smart meter systems are
illustrated. Finally, need for smart meters in developing
countries and status of worldwide installation of smart meters
are discussed in detail.
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