With climate change at the top of the political agenda, governments across Europe are introducing radical compulsory emission reduction targets. In the UK alone, carbon emissions from 1990 levels must be slashed by 34 percent by 2020, and by at least 80 percent by 2050.

A recent study by UK electricity regulator Ofgem suggested that an investment of up to £200 billion (about $321.68 billion) is required to hit these environmental targets and to secure supply. As the UK’s energy industry struggles with rising prices, fuel poverty, growing exposure to a volatile global gas market and a raft of rapidly expiring power stations, governments have never been under more pressure to back new clean technologies, improve energy efficiency and reduce consumption.

As part of the drive to meet its legally binding targets, the UK is moving towards a smart grid model for its energy market. The smart grid is a simple idea: an intelligent power generation and distribution system that automatically balances and controls supply and demand to make maximum use of energy at minimal cost.

But while the idea of the smart grid is simple, there are significant challenges when it comes to implementation and impact. It will drive a fundamental change in the way we all consume energy and this starts with smart meters. These meters transmit and receive detailed data on energy use and act as the communication channel between suppliers and consumers. This two-way exchange of information means that consumers can play a far more active role in the supply chain and take greater control over their energy consumption, carbon emissions and energy costs.

While the shape of the final model for smart metering remains unclear, it will certainly need to be underpinned by a solid communications network – something that is sorely lacking. Smart meters can only provide their intelligent functionality if they are supported by a seamless communications structure that provides bi-directional transmission of consumption and control data in real time. Broadband powerline (BPL) technology does exactly that.

BPL, already widely deployed in Germany, turns existing electricity grids into an internet protocol-based communication platform. Every power line becomes a broadband data interface and power grids turn into intelligent systems, connecting to meters in homes and businesses.

Because BPL uses the existing power networks, gearing up the grid for the technology is comparatively straightforward. It eliminates the need for additional networks, support services or third-party approvals and significantly reduces investment costs. Furthermore, as a plug-and-play solution, BPL can work instantly with any meter from any vendor.

As well as relatively low set-up costs, a BPL-enabled smart grid has some clear advantages for the consumer in terms of savings. Remote metering will give them a very detailed, real-time view of their actual power consumption. BPL will provide the technology to enable suppliers to introduce more flexible, lower-cost tariffs at non-peak times. Access to this broader range of tariffs should also encourage consumers to reduce their peak-time consumption, reducing the need for extra plants to cope with this peak demand. These same carbon-belching plants could then be replaced by cleaner sources of renewable energy such as wind and solar power.

Crucially, BPL is not a static technology: its use of internet protocol means that a wide variety of additional smart grid applications can be implemented step-by-step as they become available. In the future, intelligent power networks could also be used for load management through automatic, time-of-day and load-dependent adjustment of user appliances such as freezers or dishwashers.

Besides the consumer, there is one other group that could be a key beneficiary of BPL. The advent of smart metering will also support the creation of new and profitable revenue streams by the owners of the electricity networks themselves, the distribution network operators (DNOs).

The UK network is owned by a small number of DNOs – such as Scottish Power and EDF – who are licensed to distribute electricity in their own particular region. As the UK moves to wide-scale adoption of smart meters, DNOs are in a prime position to capitalise on the benefits of BPL.

With just eight DNOs, the structure of the UK market is currently very flat compared to markets like Germany, which has as many as 800. And as the network owners, they have a direct connection to every meter in the UK.

A partnership between the DNOs and BPL communications providers would be an important step towards reducing the UK’s carbon footprint by supporting the integration of renewable energies. Altruism apart, it could also generate significant benefits for the DNOs themselves, enabling them to generate new revenue streams if they have the strategic vision to grasp the opportunity to make the most of this and take the money before other people catch on. In addition to these new revenue streams, DNOs can also benefit from other applications opened up by this, such as power quality measurements and other network monitoring.

Current studies indicate that 60 percent of companies in the energy market plan to invest in smart metering over the next three years, with a quarter of these firms already having committed money. This level of investment by governments and energy companies alike gives a clear insight into the potential of smart metering technology in terms of improving energy efficiency, securing supply and exploring new products and markets.

As the UK approaches its carbon reduction deadlines, BPL technology makes sense from all sides of the energy equation. With the smart grid poised to transform the way energy is produced, bought, sold and consumed, BPL will provide the vital communications platform to support large-scale, low-carbon generation through renewable sources and by helping consumers to monitor – and improve – their patterns of energy usage. As an economic, straightforward and undisruptive solution, BPL is poised to give energy suppliers the power to turn the electricity grid of today into the smart grid of tomorrow.