Tomorrow in Madrid, 14 major utility companies, numerous senior government officials, and other energy executives are set to announce the European Industry Initiative for Grids (EIIS): 2 billion Euros for the initiation of production-scale smart meter and Smart Grid projects.

And what’s the plan for spending these funds? To begin…

To begin, the participants are a who’s who of Europe’s leading energy companies, serving over 60% of the half billion people living there: on the transmission side are Amprion, Elia, Red Electtrica, RTE, Tennet, Transpower and 50Herz; on the distribution side are Vattenfall, CEZ, EON, Enel, Erdf, Iberdrola, and RWE. The EIIG projects are expected to include communications, sensing, control, and detailed data collection from grid devices, substations, smart meters, and “Intelligent Homes.”

Europe leads the world with approximately 40 million smart meters installed (including at eMeter clients Vattenfall-Finland and Vattenfall-Sweden), but is promoting initiatives such as the IIG to ensure it meets its target of 80% rollout by 2020 [link to attached] through the addition of 235 million smart meters by then.

In his Brussels office yesterday, European Commission Electricity & Gas Policy Officer Manuel Sanchez-Jimenez told me a main driver of the IIG is demand response. To date, Europe has lagged the U.S. in programs to manage and reduce peak demand. Dr. Sanchez-Jimenez expects IIG to result in substantial new pilot and other programs to drive demand response in Europe’s wholesale power markets, reduce price volatility, and lower costs to consumers.

In a refrain that’s becoming more and more familiar, Dr. Sanchez-Jimenez emphasized the need to focus on consumers, deliver Smart Grid benefits to them, and get their buy-in to Smart Grid investments.

As for the EIIG, check back for more as details of the spending plan are revealed.