Positive Impact

Discoms derive efficiency and performance gains through smart metering

Smart metering holds the potential to significantly improve the financial and operational performance of power utilities. 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. In the latest union budget too, the finance minister has announced a Rs 3 trillion reforms-linked scheme for five years for the power distribution segment, of which Rs 1.5 trillion has been provisioned for smart metering. The Smart Metering National Programme (SMNP) is one of the key government schemes for the installation of smart meters. Being implemented by Energy Efficiency Services Limited (EESL), the SMNP aims to replace 250 million conventional meters with smarter versions. It is estimated that the country can save around Rs 8,700 billion by investing Rs 1,000 billion in replacing 250 million conventional meters from 2021-2031. Without smart meters, the cumulative commercial losses could reach an estimated Rs 11 trillion by 2031-32.

Smart metering is critical to reducing aggregate technical and commercial (AT&C) losses. These losses stood at 22 per cent in 2018-19, though the actual losses, including agricultural losses, may be higher at about 30-35 per cent. The gross energy sold by discoms stood at 958 billion units (BUs) in 2018-19, with a billing efficiency of 83.42 per cent and a collection efficiency of 93.49 per cent. These efficiencies can be further improved through the implementation of smart meters.

SMNP model

This programme is being implemented under the build-own-operate-transfer (BOOT) model, wherein EESL undertakes all the capital and operational expenditure with zero upfront investment by states and utilities. In turn, EESL receives a nominal internal rate of return that is reflected in a mutually agreed upon automated payback structure.

In order to expedite the deployment of smart meters in the country, EESL has formed a joint venture (JV) company with the National Investment and Infrastructure Fund (NIIF), and IntelliSmart Infrastructure Private Limited. Set up in 2019, IntelliSmart aims to replicate EESL’s success with the same BOOT model in order to improve operational efficiencies of discoms, revenue management, billing efficiency and consumer satisfaction. The entire capex and opex is funded by the developer, with no additional burden on the discom. This is then recovered from the discom over the project period as lease rental on a monthly basis. This model adopts the pay-as-you-save (PAYS) approach.

State-wise progress

Currently, 1.7 million smart meters have been installed in six states under the programme. State-wise, Uttar Pradesh accounts for the largest number of smart meter installations. The order book includes 4 million meters to be installed in Uttar Pradesh, 2.4 million in Bihar, 70,000 in the New Delhi Municipal Corporation (NDMC) area, 1 million in Haryana, 300,000 in Rajasthan and 80,000 in the Andaman & Nicobar Islands.

On the smart prepaid metering front, Bihar is the first state in India to install about 25,000 smart prepaid meters. It has resulted in a significant 140-150 per cent increase in revenues. Consumers on an average are recharging their prepaid smart meters with a credit of Rs 20 daily, resulting in daily recharge revenues of Rs 500,000. In January 2021, EESL entered into an agreement with Bihar utilities to install 2.34 million smart prepaid meters in the state. This is the first time that smart prepaid meters are being installed on this scale and are set to have a transformative impact on the state’s energy landscape. Smart prepaid meters are connected through a web-based monitoring system, which helps reduce the commercial losses of utilities, thereby serving as an important tool in power sector reforms.

SMNP impact

Smart meters offer many advantages over conventional meters, including better user experience, increased discom efficiencies and revenue realisation. They also potentially have a positive domino impact across the power value chain in terms of better financial health. States/Utilities that have installed smart meters have reaped several benefits. For instance, the average monthly revenue of Bihar discoms increased by 41.03 per cent after it installed smart meters. Similarly, Uttar Pradesh discoms and NDMC have recorded an increase in their monthly revenue by 6-20 per cent. The average monthly gain per meter to discoms stood at around Rs 225, whereas EESL/IntelliSmart charges stood in the range of Rs 75-110 per month per meter, resulting in immense benefits to discoms.

The billing and collection efficiency of discoms has also seen a measurable increase post smart meter implementation. For instance, in Uttar Pradesh, after the installation of smart meters, the billing efficiency recorded an increase from 78 per cent to 98 per cent and the collection efficiency increased from 79 per cent to 112 per cent. Similarly, in Haryana, the billing efficiency increased from 78.5 per cent to 94.2 per cent and in Bihar, the billing efficiency and collection efficiency increased from 69.3 per cent to 96.25 per cent and 92 per cent to 100 per cent respectively. The billing efficiency by NDMC recorded an increase from 89.7 per cent to 96 per cent.

Smart meters gave an upper hand to utilities during the Covid-induced lockdown, when conventional billing and collection routes could not be followed. During the lockdown, the billing efficiency in areas with smart meters stood at 95 per cent as against 71 per cent provisional billing in non-smart meter areas during the first wave. Billing efficiency increased further to 98 per cent during the second wave in areas where smart meters have been deployed. Meanwhile, during March-April 2021, the revenue collection from Bihar discoms increased 12 per cent in smart meter areas, whereas it came down by 30 in non-smart meter areas. In the current times of Covid-19, when there is no physical interface between discoms and customers, the smart metering programme has assumed greater importance, as it enables two-way communication between customers and discoms.

Issues and challenges

A key issue faced during the implementation of smart meters is that all associated processes, from meter reading to billing and payment have to be automated. Currently, utilities have these processes on separate platforms and it is a challenge to bring them together on to a single standard platform. These challenges can be overcome with the use of right technologies. Other challenges in rolling out smart meters are cybersecurity and component shortage due to Covid impact, leading to an impact on the meter supply. Further, there are issues pertaining to interoperability, integration of legacy billing system and manpower training in the near future.

Conclusion

Given how smart meters have especially benefited utilities during the pandemic when physical meter reading and billing have not been possible due to the lockdown, the central government has decided to switch to smart prepaid meters over the next three years. Along with improved billing and collection efficiency, discoms have benefited from improved operational and financial parameters such as improved and readily available working capital, increased on-time payment by consumers and reduction in disputes with respect to billing errors and provisional bills. Needless to say, smart prepaid meters are the future and the most critical element in improving the distribution sector in the country. n

Based on the presentation and remarks by Anil Rawal, Chief Executive Officer, IntelliSmart Infrastructure, at a recent “Metering in India” videoconference, organised by Smart Utilities