Smart metering plays a vital role in improving the operational efficiency of the electricity distribution segment. Through the detailed monitoring of a consumer’s energy use, utilities can predict consumer load curves, detect energy theft, undertake time-of-day (ToD) metering and make arrangements for meeting peak demand, among other things.
Choosing a smart meter
The desired outcomes from smart metering are an important consideration while choosing a meter. Depending on the requirement, meter data can be recorded on an hourly basis, half-hourly basis, etc. It is essential to ensure that the smart metering technology is compatible with the existing infrastructure and is scalable and amenable. The cost of smart metering infrastructure and technology are other important factors.
Business models
Various business models are available for smart meter roll-outs. One of the primary models is where the utility purchases hardware, undertakes installation and operates the system. The utility can also undertake only the installation of meters and outsource its operation. In addition, it has the option of buying smart metering services from a third party. Another model at the utility’s disposal is to undertake metering through an energy service company, with a third party installing the meter, providing services to the utility and at the same time getting a portion of its benefits. A customised model can also be adopted, which would be a combination of the aforementioned ones.
The cost of a smart metering set-up is closely linked to the business model. Typically, a utility decides among models based on risk and return considerations.
Need for smart meters
Pricing is one of the key functionalities and controls offered by a smart meter. At present, India has two extreme pricing models: ToD pricing and real-time pricing. However, other pricing options like critical peak pricing and hybrid pricing are available as well. Smart metering is a prerequisite for the adoption of these pricing models.
Smart meters aid in enhancing the role of the power exchanges, which have not matured fully in India. They also play a vital role in identifying and dealing with leakage as well as managing the peak load. They are crucial when dealing with high renewable energy and net metering, electric vehicles, providing open access, reducing aggregate technical and commercial losses, freeing peak capacity, avoiding load shedding and blackouts, improving power quality, load planning and asset optimisation, among others. Utilities must strive towards smart meters from a design perspective as one of their basic benefits is the enhancement of system efficiency.
Cost-benefit analysis
A utility looks at the cost of smart meters against the cost of procuring costlier power in meeting peak loads and consumer dissatisfaction, resulting in customer churn, among other things. Typically, the cost of smart metering entails the cost of the meter as well as of back-end infrastructure like communications technology and data analytics. Often, the back-end set-up costs more than the meter alone. However, with the adequate standardisation of meters and metering infrastructure, its costs are likely to plummet. The functional specifications of a smart meter must be accorded priority over technical specifications.
The end-consumer considers the cost of smart meters against the cost incurred for backup power through power generation from other sources, losses from load shedding, etc. All consumer categories will not derive equal benefits from a smart meter; certain consumers, especially those relying on diesel-based power as a backup source, receive disproportionate savings. Therefore, the overall benefits must be looked at from a societal point of view. Notably, smart meters are likely to yield better results in India than in the developed countries as consumers in the country are more sensitive to savings in electricity costs.
Challenges and solutions
One of the biggest challenges in the roll-out of smart meters is managing the static meters that have already been installed. The regulator is unlikely to approve the expense of smart meters in case a static meter has recently been replaced. Existing static meters cannot be thrown away as waste. Another challenge lies in obtaining a precise cost-benefit analysis of a project. Detailed project reports are often flawed, and these mix up the benefits for consumers and utilities. For obtaining the regulator’s approval, a utility is required to prepare a detailed roll-out plan and state the costs that would not be incorporated in the annual revenue requirement. A cost-benefit analysis is critical to determine the size and scale of the roll-out as well.
To accrue the full benefit of smart meters, it is critical to ensure that end-consumers have adequate awareness of their operations. Smart meters can also be equipped with in-home displays, web portals, smartphone applications, etc. to facilitate this.
Another issue pertains to the mindset of consumers and utilities. In addition, stakeholders must attach realistic expectations with the model. Dealing with the lack of political will and inadequate trained personnel are other challenges. For the smooth adoption of smart meters, it is imperative to learn from the past experiences and pilot projects.
The way ahead
Following the installation of smart meters, it is essential to undertake appropriate analytics on the data obtained from them. In addition to this data, various data points are available under government initiatives like the Restructured Accelerated Power Development and Reforms Programme and the Integrated Power Development Scheme. It is essential to integrate data from all these sources to derive meaningful trends.
To conclude, it is critical to choose wisely from among available technologies when adopting a smart meter. Detailed cost-benefit analyses and need-based analyses help in obtaining the full benefit of a new metering system.
