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Smart meters are crucial technologies for enabling smart grid solutions and applications. Although smart metering deployment has been started at the national and regional levels, there is still the question that how should the costs of deployment be allocated among stakeholders. Cost-Benefit Analysis (CBA) is the common method for analyzing the economic feasibility of the deployment process. Starting from the CBA approach, this paper argues an efficient cost recovery scheme depends not only on the costs and benefits for each actor, but also on the interdependencies between the behavior of different actor groups. By taking a dynamic modeling approach and using System Dynamics models, this study examines the dynamics of interaction between different actors in the technology deployment process, and proposes scenarios for an efficient cost recovery. It is claimed that a dynamic view to the common Cost-Benefit Analysis approach has three advantages. First, the possibility of including actors benefiting from positive externalities or actors that can contribute to system efficiency is provided. Second, a balance can be found between the short term and long term consequences of system interventions; and finally, the development of innovative solutions, in the forms of business and policy scenarios is facilitated. The results may explain why reluctance to participate in the technology deployment process persists even after introducing dynamic pricing policies, and what factors are more critical in analyzing the cost and benefit structures of the technological system. [ABSTRACT FROM AUTHOR]

• Early smart grid R&D advancements can indicate future technological developments. • A method for analyzing the evolution of smart grid technologies is proposed. • The Network theory is used to justify the existence of a main path of technologies. • Four innovation trajectories exist around smart energy applications. • The proposed approach complements existing methods of main path analysis. This paper investigates how the strategic decisions of innovative firms to collaborate with other firms in research and development projects shape the early evolution of smart grid technologies as an emerging technological system across Europe. The early innovations and developments in an emerging technological system are crucial for understanding further developments of the system. This early stage is highly influenced by the strategic decisions and lobbying power of the firms experimenting with different technological innovations, and the policies trying to maintain competition and steer the direction of innovative activities. Therefore, it is important to analyze how innovative firms behave in terms of collaborating with other firms and doing research on specific energy solutions, which reflect their strategic priorities. By taking a complex network approach, this paper investigates a network of smart grid R&D projects to analyze the convergence of smart grid research activities towards a stream of innovative solutions, and the variety of innovative activities branching out from these solutions. The results verify the convergence of smart grid activities towards one specific stream of innovations, and reveal the existence of four variations centered around different technological applications. The results can guide strategy development in innovative firms to take part in research collaborations or focus on specific smart energy technologies, and have implications for policy makers aiming to influence the direction of smart grid research programs, as well as for researchers in the field of smart grid innovation and technological innovation systems. [ABSTRACT FROM AUTHOR]