The deployment of smart meters is a key component of grid modernisation. Smart meters are used for monitoring the energy usage of consumers by recording time-differentiated energy consumption. It serves as a single point of access both for customers and utilities for real-time usage, price and alert information, etc. Smart meters not only help consumers in managing their power demand but also assist discoms in detecting and locating outages and ensuring fast restoration of systems, monitoring the quality of electricity supply, and identifying meter tampering, among other things. Owing to these functionalities, smart meters also form a vital component of advanced metering infrastructure (AMI).
AMI versus AMR
AMI is an integration of technologies, which enables a two-way flow of information between consumers and utilities. AMI comprises home display, advanced electricity meters, a central back-end software system and two-way communication systems, and provides an essential link between the grid, consumers, generation, storage resources, etc. Through the detailed monitoring of a consumer’s energy usage, utilities can implement demand response, dynamic pricing, critical peak pricing, real-time pricing, emergency demand response, economic demand response, etc., and also execute load control in real time with specific demand response requests sent to customers automatically. This significantly helps in improving the quality and accessibility of power.
On the other hand, automated meter reading (AMR) focuses entirely on data collection. This is primarily used for customer billing, and reduced costs of meter reading. An AMR system typically comprises static meters fitted with communication devices, a communication network as well as supporting software to manage the data.
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.
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: time-of-day 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.
A utility looks at the cost of smart meters against the cost of procuring costlier power in meeting peak loads and addressing 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, will accrue 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. To obtain the full benefit of smart meters, it is critical to ensure that end-consumers have proper 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. In addition, 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 past experiences and pilot projects.
The way ahead
After data collection is completed, the next step is to acquire the data from the meters through an appropriate communications technology. Among the various communications technologies such as ZigBee, Z-Wave, Bluetooth and Wi-Fi, the best-suited technology can be adopted based on an area’s geography, type of consumers, cost of technology, etc. Subsequently, data analytics can be undertaken to derive useful insights.
In addition to the data from smart meters, 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.