The role of smart metering and decentralized electricity storage for smart grids: The importance of positive externalities

Because of its fluctuating nature, the feed-in of renewable energy sources into low-voltage distribution grids complicates the balancing of demand and supply. This carries the risk of grid instabilities causing damage to electronic devices and power outages, which eventually lead to deadweight losses. In principle, the problems arising from fluctuating feed-in can be solved by increasing demand elasticity or decoupling generation and consumption; for the first, an advanced metering infrastructure and, for the second, decentralized electricity storage are considered core enablers. However, to date, the diffusion of these future smart grids’ core components is low. The present study provides new insights for understanding and overcoming diffusion barriers. For this purpose, a qualitative research approach was chosen. The most important stakeholders as well as related private costs and benefits are identified. The findings show that both of these smart grid components are widely considered beneficial to society by experts. However, because the numerous private benefits are widely distributed among distinct players, socially desired investments are hampered by positive externalities. The importance of well-designed and consistent regulatory and legal frameworks that provide economic incentives to involved stakeholders is highlighted in the results.