Germany could derail €33bn ($44bn) of smart grid investment if it maintains its opposition to smart meters and refuses to implement them.

That is the conclusion of a new report by analysts at consultancy Frost & Sullivan which examines the impact of Germany’s stance on smart metering.

Frost & Sullivan energy analyst Neha Vikash said: “The EU Energy Efficiency Directive mandates for 80 per cent of households in Europe to have smart metering by 2020. The exception to the directive is if a country can prove that smart metering would not pass a cost benefit analysis.”

Last month such a report, carried out by external consultants, was published by Germany’s Economy Ministry, and it has made for uncomfortable reading by those in the smart meter industry, as it concluded that smart meters would be too expensive to deliver economic benefits.

“The report has shocked the industry and could have major ramifications,” said Vikash, although she added, “it should be pointed out that the report could still be rejected by the German government.”

Germany has 48 million meters, with around 90 per cent being electromechanical which can have a working life of anywhere from 20-40 years.  

Frost & Sullivan calculated that replacing them over a period of five-to-seven years would generate an estimated €6bn ($8bn) revenues for smart meter and communications manufacturers.

This amount does not include the estimated €7.5bn that would be spent on supporting infrastructure, project management and installation.

“If Germany instead decides to install smart meters only when existing meters need replacing, this would be a massive blow to the industry,” said Vikash (pictured).  

And she added that the situation for meter manufacturers could worsen if other countries follow Germany’s lead.

“If a country with the political strength of Germany opts out it could embolden EU countries to follow suit. Prior to the German announcement, the UK government had already announced it would delay its rollout by one year to allow further consultation. Could this be scrapped or delayed further?”

Excluding Germany, there are an estimated 180 million residential meters in the EU, and of these, approximately a third are either already smart or in countries with smart rollouts that are underway and unlikely to be stopped.

This leaves 120 million meters. Assuming 80 per cent of the 120 million meters in Europe were to be replaced by 2020, this would mean an estimated 96 million meters being replaced at an estimated €9bn, and this does not take into account the support infrastructure and installation costs which would be an estimated €10.5bn.

Vikash said: “The German government may reject this report and go ahead with the rollout. Other countries may ignore Germany and install smart meters regardless. But with €33 billion in the balance, this development has got everyone in the industry concerned.”