The roll-out of smart meters at a pan-Indian level is expected to receive a significant push. The government has readied a bid strategy for the procurement of smart meters by state discoms and expects roll-outs to begin this year. At the recent India Smart Grid Week 2017, P.K. Pujari, secretary, Ministry of Power, talked about the government’s plans for smart metering, the need for discoms to invest in smart grids, and the key initiatives and priorities of the government going forward. Excerpts…
India’s power system is the third largest in the world. It is also highly complex and challenging, with more than 325 GW of installed capacity, 175 million customers and an integrated transmission grid covering a land mass of 3 million square km and operating in one frequency. Moreover, it is growing at a rate of 8-9 per cent every year, in terms of both generation capacity and customer numbers. This is adding to the complexities of the power system.
India’s power system is quite modern and efficient. It has a high voltage grid with a number of 400 kV and 765 kV alternating current (AC) lines and 500 kV and 800 kV direct current lines. At present, we are constructing 1,200 kV lines, which will be the highest voltage in India. Further, the five regional control centres and the national control centre are equipped with the latest technologies such as supervisory control and data acquisition (SCADA) and energy management systems (EMS). From this point of view, at the national level, the grid operates quite efficiently and is equipped with all modern technologies.
However, we have significant challenges on the distribution side. Making available 24×7 quality power to citizens is the top priority of the government and also the biggest challenge. In the power distribution segment, the ownership and regulatory systems are complex to manage. Most of the distribution utilities are owned by their respective state governments. There are a few private distribution utilities, though a large number of them are still controlled by the state governments. At the central level, we have a regulatory commission, which regulates interstate matters. States have their own regulatory commissions for intra-state matters and customer tariffs. This federal structure results in its own complexities.
Only a few villages across the country are yet to be electrified, which we plan to complete by the end of the current financial year. Now the main challenge is connecting the large number of households that do not have electricity access. There are about 50 million households in the country that are yet to be connected to the grid. Providing connectivity to these households is a huge task, which we are planning to complete by 2019.
Another major issue is distribution losses. Distribution utilities are saddled with high aggregate technical and commercial losses. Intervention through new technologies is needed to reduce these losses. Recognising this, the government undertook a distribution grid modernisation technology initiative way back in 2002, through the Accelerated Power Development and Reforms Programme, which focused on 56 urban towns. Subsequently, this programme was renamed Restructured Accelerated Power Development and Reforms Programme in 2008 and was extended to 1,411 towns. Both the programmes had IT infrastructure building and IT and automation application deployment components, which are the basic building blocks of a smart grid. These two schemes cover most of the urban areas with a population of more than 30,000. So, the basic building blocks have been set. Now, we should take advantage of the infrastructure that has been created and leverage it to the next level.
The IT-enabled infrastructure that has been created so far includes SCADA, EMS, distribution and enterprise resource planning systems, as well as geographic information system, advanced metering infrastructure, meter data acquisition system and distribution automation solutions, among others. In order to take the journey towards smart grids forward, the government released the Smart Grid Vision Roadmap in August 2013 and the National Smart Grid Mission subsequently to coordinate the implementation of smart grid projects.
A few smart grid pilot projects are being implemented in different states, some of which are expected to be completed during the current calendar year. The learning from these pilot projects has been of immense value to us. Based on these learnings, we have awarded certain smart grid projects in some of the towns. It has not been a smooth ride and challenges still remain, but we hope that the projects that have been awarded will get implemented the way they have been anticipated and designed.
The Central Electricity Regulatory Commission also issued model smart grid regulations in 2015, which several state regulatory commissions have already notified. Hence, the basic framework has been put in place by the regulators. These will facilitate recoveries for investments in smart grid projects. Earlier, the regulators did not recognise the capex investments being made in smart grid projects. These regulations clarify this aspect, though there are a few regulators that still have some reservations and we plan to take it up with the Forum of Regulators.
The Bureau of Indian Standards, the government agency responsible for standards, has already issued the standards for smart meters in 2015. In the Tariff Policy approved by the government in January 2016, all customers with a monthly consumption of 200 kWh and above are envisaged to be brought under the smart metering initiative by December 2019. We recognise that there are difficulties and challenges in doing so and hence, it would be most appropriate to implement this for commercial and industrial consumers in the first phase and take up smaller consumers at a later stage. We have left this project at the discretion of the respective state governments and utilities as to how they want to run the smart meters programme. The Central Electricity Authority, the technical arm of the Ministry of Power, issued technical specifications and smart meter roll-out strategies in August 2016. We expect large-scale smart meter roll-outs to begin from the current year.
We have had a tremendous learning from the LED bulbs business model. The model envisaged the aggregation of demand, which led to a reduction in the market price of LEDs. We want to follow the same model for smart meters. We have spoken to all state governments and in the first round, we have received a general request for almost 70,000 smart meters. We will aggregate this demand and come out with a bid. Through aggregation in the subsequent bidding rounds, the numbers will keep on increasing and we hope that the market opportunity created by smart meters will help bring down their prices. We are proactively working towards facilitating the roll-out of the smart meter programme.
The government is taking many initiatives such as smart cities, integration of 175 GW of renewable energy by 2022, and the roll-out of smart electric vehicles. All these initiatives require not only an efficient and reliable grid but also a smarter grid.
Thus, it is well recognised that we need to move towards a smart grid. Apart from the challenges inherent in the system, there is a lot of large-scale disruption taking place in the power sector, through the integration of renewables, rooftop solar, decentralised generation, energy storage and electric vehicles. This will make it necessary and mandatory to move towards a smart grid. The question is, how do we create an ecosystem for distribution utilities to adopt the smart grid concept? This involves bringing a change in mindset and demonstrating a viable business model. We need to recognise the challenges in the Indian context and come up with a viable solution through which we can incentivise the utilities to move towards a smart grid. We recognise that it cannot be a capex-driven approach. We have to create a value proposition for distribution utilities so that they get incentivised.