This work describes a general energy functional formulation of a polarizable embedding QM/MM scheme, as well as an implementation where a real-space Grid-based Projector Augmented Wave (GPAW) DFT method is coupled with a potential function for H<sub>2</sub>O based on a Single Center Multipole Expansion (SCME) of the electrostatics, including anisotropic dipole and quadrupole polarizability.