New analysis from Frost & Sullivan, European Smart Meter Markets, estimates the markets to reach $11 billion by 2015. The study covers automated meter infrastructure (AMI), IT systems and communication technologies.

Members of the Smart Green Grid Initiative (SGGI), which includes the heavyweights General Electric, Landis+Gyr, Echelon and Google to name a few, are expected to hold smart grid-focused events at the UN talks in Copenhagen. Europe, being a front-runner in the smart grid space with Italy leading the way since 2005, has seen continuous development. Denmark currently generates close to 20 percent of its electricity from wind power. It has developed the most intelligent grid to manage this clean power load. The government is also simultaneously working on strategic alliances with major firms toward building better infrastructure for smart grid. The country is sure to act as an important case study for most of the investors and venture partners.

Smart meters represent the first step toward energy management. The European smart meter markets have experienced significant progress over the last few years when compared to those in the rest of the world, and they are now moving toward total grid automation.

However, challenges such as interoperability and data security are restraining the markets' growth. Another issue is the lack of clarity regarding their business case, which causes utilities to delay investments and large-scale deployments.

"Communication is the backbone for a smart grid operation and to have interoperable solutions is of paramount importance," said Ravindran. "A system which runs on multiple standards is one of the best ways to distinguish one's product over the competition."

As competition intensifies, it is important to have high product differentiation. The business case would need to traverse the range from product- to service-based benefits, thereby achieving a competitive edge.

"Smart meter manufacturers need to move from a product- to a services-based model," said Ravindran. "Investments in meters alone will not yield higher returns. In order to rapidly gain market share, manufacturers need to customize their entire AMI solution for consumers."