We estimate the cost of installing smart meters in the EU to be (sic)51 billion, and that operational savings will be worth between (sic)26 and 41 billion, leaving a gap of (sic)10-25 billion between benefits and costs. Smart meters can fill this gap because they enable the provision of dynamic pricing, which reduces peak demand and lowers the need for building and running expensive peaking power plants. The present value of savings in peaking infrastructure could be as high as (sic)67 billion for the EU if policy-makers can overcome barriers to consumers adopting dynamic tariffs, but only (sic)14 billion otherwise. We outline a number of ways to increase the adoption of dynamic tariffs. (C) 2010 Elsevier Ltd. All rights reserved.