Within an intelligent metering system, the communications unit - the Smart Meter Gateway (SMGW) with integrated security module - forms the central component, which receives and stores data from meters, and processes this for consumption by market players. This involves the SMGW communicating with various components and participating market players for the purposes of consumption data transfer as well as administrative activities (see figure).

Within the Wide Area Network (WAN), the SMGW communicates with external market participants and with the SMGW Administrator in particular. Within the Local Metrological Network (LMN), the SMGW communicates with the attached meters (electricity, gas, water, heat) from one or more final consumers. The meters communicate their measured values to the SMGW via the LMN (Local Metrological Network).

Within the Home Area Network (HAN) of the final consumer, the SMGW communicates with the controllable energy consumers or energy generators (e.g. intelligent household appliances, combined heat and power units or photovoltaic systems). In addition, the SMGW also supplies data for the final consumer and for service technicians working within the HAN. All communication flows are encrypted, and secured in terms of their integrity, authenticity and confidentiality. For these purposes, the SMGW uses a security module. This module firstly serves as a secure storage location for the cryptographic key material that is required for use in encryption. Second, the module also provides the cryptographic core routines for signature creation and verification, key generation, key negotiation and random number generation for the SMGW.