Operational and financial inefficiency in the power distribution segment has been a longstanding challenge. Aggregate technical and commercial (AT&C) losses in the distribution segment currently stand at 22 per cent, as per official estimates (the actual losses could be higher given the possibility of non-precise measurement). As per government reports, of the total losses, around 10-11 per cent comprise technical losses and the remaining 10-12 per cent comprise collection and billing losses, also referred to as commercial losses.
While an improvement in distribution infrastructure can help tackle technical losses, smart metering can help deal with the issue of commercial losses. Smart metering holds the potential to significantly improve the financial and operational performance of power utilities. In fact, the adoption of smart meters has been one of the key focus areas of discoms and policymakers in the past couple of years to address the challenge of commercial losses.
Unstated/Unaccounted losses also stem from collection and billing losses because agricultural and other feeders are not billed. With the installation of smart meters, around 10-12 per cent of commercial losses can be directly mitigated.
Smart metering can have other spin-off benefits as well. They can, for instance, help resolve working capital issues. Discoms can save a significant amount of money on manpower management as smart meters would enhance their ability to remotely connect/disconnect consumers, reduce operations and maintenance costs, and improve the quality of service by providing consumers with demand-side management (DSM) options. Further, smart metering can help manage and improve the quality of power with the right analytics and improve customer satisfaction. It can, moreover, enable the implementation of time-of-day and time-of-use regulations, and incentivise consumers to shift demand to off-peak hours. Savings of around Rs 11 trillion can be achieved over the next 10 years through smart metering.
As the ongoing Covid-19 pandemic has underscored, the adoption of smart meters is even more important when physical meter reading and billing are not possible.
Status of SMNP
The Smart Meter National Programme (SMNP), the largest ever smart metering programme in the world, is being implemented by Energy Efficiency Services Limited (EESL). It is aimed at replacing 250 million conventional meters with smart meters across India. EESL has adopted the approach of bulk procurement, aggregation of demand and monetisation of savings for smart meter roll-outs under the SMNP. This programme is being implemented under the build-own-operate-transfer model, wherein EESL undertakes all the capital and operational expenditure with zero upfront investment from states and utilities. In turn, EESL receives a nominal internal rate of return that is reflected in a mutually agreed upon automated payback structure.
Currently, six states have come forward to install around 8-9 million smart meters. The order book includes 4 million meters to be installed in Uttar Pradesh, 2.5 million meters in Bihar, 75,000 in the New Delhi Municipal Corporation (NDMC) area, 1 million in Haryana, 250,000 in Rajasthan and 60,000 meters in the Andaman & Nicobar Islands.
So far, EESL has completed the installation of 1.46 million smart meters. Of these, 1.1 million smart meters have been installed in Uttar Pradesh, 204,153 in Haryana, 58,619 in NDMC Delhi and 74,044 meters in Bihar, as per the SMNP dashboard. Distribution utilities in these four states have witnessed a 21 per cent increase in billing efficiency and an 11-36 per cent reduction in AT&C losses. Smart meter installations have resulted in a 20.5 per cent average increase in discom revenues, amounting to Rs 301 per month per meter. In Bihar, prepaid meters have resulted in a 140-150 per cent increase in revenues.
Looking at the benefits, several other states such as Assam, Tripura, Jharkhand, Madhya Pradesh, Tamil Nadu, Punjab, Jammu & Kashmir, Gujarat and Karnataka have shown interest in smart metering, and the contours of the roll-out are being worked out. As per the SMNP dashboard, discussions are currently under way for the installation of meters in Jammu & Kashmir (913,132 meters), Arunachal Pradesh (182,699 meters) and West Bengal (2 million meters).
Issues and challenges
One of the key challenges in the implementation of smart metering infrastructure is overcoming the concerns of discoms. The discoms want to conduct pilots because this is the first time that smart metering is being implemented in the country. Another challenge relates to the integration of data from smart meters with the head-end system (HES), the meter data management (MDM) system and billing and collection software. The entire process has to take place seamlessly through the communication backbone and has to be automated through cloud-based services. Since most platforms in the utilities are based on different software, getting them all on to a standard platform is a challenge. Besides, utilities need to adopt a communication system that can be remotely and securely updated.
Apart from this, ensuring cybersecurity, building capacity and raising awareness is essential. The recent countrywide lockdown due to the Covid-19 pandemic has impacted the timeline for smart meter installation. However, given that distribution is an essential service, EESL has been striving to continue meter installations by deploying people, using PPE kits and following proper precautions.
The way forward
By March 2021, EESL expects to install 0.4-0.5 million meters at the current pace. This may increase to 1 million if the pandemic subsides and resources can be mobilised. By the end of the current fiscal year, it is looking at reaching a total of 2.4-2.5 million meters. However, this will depend on how fast the country can come out of the pandemic and how fast EESL is able to secure new orders from discoms.
Going forward, there is a need to ensure reliability and interoperability within the system. End-to-end responsibility should be placed with one vendor, and synergy created between a common HES and a common MDM at either the state level or the national level. The Ministry of Power (MoP) is trying to implement common back-end infrastructure facilities (CBIF). In September 2020, the MoP began the process to set up a Rs 20 billion joint venture (JV) for providing a CBIF to discoms for faster roll-out of smart meters in the country. The four promoters are NTPC Limited, REC Limited, Power Grid Corporation of India Limited (Powergrid) and the Power Finance Corporation (PFC). While PFC and REC have approved an equity investment of Rs 1.5 billion each in the JV, NTPC and Powergrid are yet to approve it. The CBIF will simplify smart meter roll-outs for discoms by offering a plug-and-play architecture with standardised, preconfigured, pre-integrated, scalable back-end infrastructure. The CBIF will also enable a centralised management information system or reporting of metering data. The facility will be offered to discoms on a software- or solution-as-a-service approach and charged only usage fees.
The Covid crisis has clearly shown that smart meters are the way forward for the power sector. While most discoms did provisional billing during the lockdown, discoms with smart meters were able to undertake actual billing. Given the central government’s repeated mandates to switch to smart prepaid meters in the next three years, discoms are expected to step up their implementation efforts.
Based on remarks by Anil Rawal, Chief Executive Officer, IntelliSmart Infrastructure, at a recent webinar, “Metering in India”, organised by Smart Utilities