Automated electricity metering is getting big in Sweden, where public policy is driving utilities to invest in smart meters. In June 2003, the Swedish parliament passed regulations requiring all electricity meters to be read on a monthly basis by July 1, 2009. That's a big job, if it's done by visiting each location every month.

Europe's fifth largest utility is ordering smart meters by the hundreds of thousands, to comply with Sweden's mandate to read meters on a regular schedule. Intelligent meters like this unit have two-way communications capabilities, so the utility can use the infrastructure for sophisticated functions that save energy and reduce pressure on the grid.

In December 2005, state-owned Vattenfall AB ordered an automated metering system for 300,000 of its customers. The metering technology is the Networked Energy Services (NES) system from Echelon Corporation (NASDAQ: ELON). To date, Vattenfall has installed 100,000 of the meters and data concentrators.

Echelon's system allows the utility to read the meters remotely, rather than sending a person to take down meter readings by hand. An advanced metering infrastructure (AMI) can reduce energy consumption, expand customer services, and improve grid reliability.

Last week, Vattenfall ordered 200,000 additional meters and data concentrators from Echelon. That brings another $15 million in revenue to Echelon, and brings the total number of meters to 500,000. Echelon says it could receive two additional orders for 100,000 meters each, sometime between now and late 2008.

Smart meters have been deployed by a few U.S. utilities, even though most already have staff and fleets dedicated to reading meters manually. There are other advantages of AMI for utilities. AMI's two-way communications allow a utility to pinpoint power outages very quickly. If utilities want to offer time-of-use tariff plans, AMI allows more frequent meter reads, as often as every minute.

The NES system is based on the LonWorks network protocol standard; that opens up possibilities for automated demand response by enabling connectivity beyond the electric meter to devices inside businesses.

Swedish energy markets were deregulated in 1996. The completed project would represent approximately 13 percent of the entire Swedish residential market, and an unstated portion of the commercial and industrial market. Vattenfall is the fifth-largest energy company in Europe.