Smart Metering Solutions: Key advantages and challenges

Key advantages and challenges

In the past, the electromagnetic meters installed on consumer premises were read by the utility staff manually. As the number of consumers grew, the meter reading staff with the utilities became inadequate. As a result, the utilities began outsourcing this function. This further increased the challenges with consumers and agency personnel often being involved in malpractices such as bypassing and reversal of meters.

The utilities, therefore, realised the need to deploy state-of-the-art technologies that could reduce the human interface in meter reading, assess the consumption patterns, and even connect and disconnect consumers remotely.

The first generation of smart metering technologies to be deployed by utilities was automated meter reading using GSM technology. This helped utilities obtain readings and ascertain consumption behaviour. This technology became popular amongst utilities and was initiated in many states for the HT consumer category. However, this did not entirely resolve their problem, especially pertaining to the large section of consumers in the domestic and commercial categories, particularly in rural areas.

Other improved technologies such as wireless, radio frequency and common meter reading instrument units have since been introduced. These have significantly improved meter reading accuracy and collection of payments. That said, one major drawback is that it still requires the meter reader to visit the vicinity, if not each customer.

Need for smart metering

Smart metering solutions, which could eliminate human interface, are thus the need of the hour. The key advantages of smart meters are remote metering and billing. Further, they would help in the implementation of peak and off-peak tariffs, which is crucial for load generation balancing due to the increasing penetration of intermittent sources of generation like wind and solar. They are also important from an environment point of view. Smart meters can help in demand-side management. By helping control discoms’ load during peak hours, they reduce the need for setting up additional thermal units.

Under the Ujwal Discom Assurance Yojana, smart meters will be provided to consumers consuming more than 500 units by December 2017 and to those with more than 200 units by 2019. There are various technology options available and their practicality for various consumer categories must be carefully examined. Smart meters help in not only revenue collection but also load control, system planning, tariff structuring, reduction in transmission and distribution losses, etc.

Automated metering infrastructure (AMI) has many distinct features and is a prerequisite for smart meters. Hence, AMI and smart meters must be implemented together for better results. AMI provides two-way communication, keeps tabs on bill defaulters, enables monitoring of demand-side load, meter reading on a regular basis and allows access to historical data.

Challenges and the way forward

One of the biggest challenges associated with smart meters is their high cost. According to estimates, the average cost (including infrastructure and software) of a smart meter is Rs 4,000- Rs 6,000. Therefore, in a large state like Uttar Pradesh with a consumer base of 20 million, the cost of metering alone would be about Rs 80 billion. Hence, the biggest challenge for utilities is to arrange such a significant quantum of funds.

The cost of the meter is normally borne by the consumer. This does not form a part of the aggregate revenue requirement (ARR). If a new consumer is added to the network, a smart meter can be installed on the consumer’s premises and the cost recovered. However, for existing consumers, the utility cannot ask for an upfront payment from them. It can consider recovering that amount in instalments as meter rent. This can reduce the consumer’s financial burden to some extent. In rural areas, the cost of smart metering is very high; hence, conventional single-phase meters can be considered for such consumers. Another challenge in smart metering is the limited number of manufacturers of smart meters against their high requirement. There are, moreover,  only a small number of certified testing laboratories for smart meters.

One way of reducing the financial burden for utilities is for the central government to provide them financial support. While the government’s Integrated Power Development Scheme (IPDS) has an outlay of around Rs 350 billion, this will be used for network expansion and to increase the capacity of transformers, among other things – works that could also be implemented by the utilities through bank loans and the costs passed onto the ARR. Hence, the funds under the IPDS should first be allocated for metering, as this would strengthen the distribution segment in real terms and yield sizeable benefits to the entire country.

With inputs from a panel discussion among Suresh Kumar Agarwal, Member, Uttar Pradesh Electricity Regulatory Commission; R.K. Choudhary, Member, Bihar Electricity Regulatory Commission; and P.J. Thakkar, Member, Gujarat Electricity Regulatory Commission