The adoption of smart meters is an essential requirement for modernising the power distribution infrastructure. Smart meters are useful for aggregate technical and commercial loss reduction, renewable energy integration, demand forecasting, load management and energy conservation.
They provide a host of other benefits to utilities as well, such as increased billing and collection efficiency, enhanced discom revenue, and management of power theft and meter tampering. The deployment of smart meters has received a significant policy push in recent years under various government schemes including the Integrated Power Development Scheme (IPDS), the Ujwal Discom Assurance Yojana (UDAY) and the Smart Meter National Programme (SMNP). The government has now urged states to replace electricity meters with smart prepaid meters over the next three years. This is expected to create a demand for around 300 million smart prepaid meters in the coming years.
One of the key government schemes for the installation of smart meters is the SMNP. Being implemented by Energy Efficiency Services Limited (EESL), the SMNP aims to replace 250 million conventional meters with their smarter versions.
To roll out the smart meter initiative, EESL is utilising its proven model of bulk procurement, aggregation of demand and monetisation of savings. It is based on the build-own-operate-transfer model wherein EESL receives a nominal internal rate of return, which is reflected in a mutually agreed automated payback structure. In February 2020, EESL announced the completion of the installation of 1.1 million smart meters.
As of December 2019, EESL has signed MoUs with eight states/ union territories for the implementation of the scheme. These are Uttar Pradesh, Haryana, New Delhi (New Delhi Municipal Council [NDMC]), Bihar, Rajasthan, Arunachal Pradesh, Andaman & Nicobar Islands and Andhra Pradesh. Besides this, Tamil Nadu, Chhattisgarh, Daman and Diu, and Tripura are likely to join the programme soon. So far, EESL has issued three tenders for the procurement of 5 million smart meters each. The first tender, on behalf of the Uttar Pradesh and Haryana utilities, was awarded to ITI Limited. The second, on behalf of Bihar and Andhra Pradesh, was secured by the French integrated electricity company Électricité de France S.A. The third tender was issued in July 2019 for the installation of 5 million meters across the country. Recently, in April 2020, EESL announced that it has successfully closed the request for proposal of 5 million smart meters worth Rs 13 billion amidst the lockdown.
Under the SMNP, as of December 2019, over 0.82 million smart meters have been installed, including 705,000 meters in Uttar Pradesh, 64,000 in Haryana, 54,000 in the NDMC area and 5,000 meters in Bihar (in prepaid mode). Currently, 5,500-6,000 meters are being installed per day in 11 cities. EESL aims to ramp up the installations by 10,000-15,000 per day in the coming weeks.
Smart metering using the pay-as-you-serve model has had significant benefits for discoms, having a positive impact on the financial position, operational efficiency and consumer satisfaction. For instance, the adoption of smart meters is expected to lead to annual savings of Rs 124.7 million for NDMC that include revenue recovery due to improvement in billing efficiency. The average increase in revenue per month per meter for NDMC has been Rs 507. Similarly, for the UP discoms, Paschimanchal Vidyut Vitaran Nigam Limited (Meerut), the increase was Rs 220 and for Kanpur Electricity Supply Company Limited, the increase was Rs 155.
In November 2019, EESL also tied up with the National Investment and Infrastructure Fund, which manages the sovereign wealth fund of India, to establish a special purpose entity, Intellismart Infrastructure Private Limited. The vision behind this move was to make Intellismart the biggest system integrator in the country, which will provide high quality service in the transition period, at a very affordable rate.
Another government scheme that has smart metering as one of the key focus areas is UDAY. Under UDAY, the aim was to install smart meters for all customers with a monthly consumption of more than 500 units by December 31, 2017 and for those with a consumption of 200-500 units per month by December 31, 2019. As of February 2020, only about 6 per cent of these targets have been achieved. For consumers with energy usage above 500 kWh per month, the scheme aims at installing 5.7 million smart meters. For those with a monthly consumption of 200-500 kWh, the programme targets the deployment of 18.4 million smart meters.
While UDAY’s term has expired and a new scheme, the Atal Distribution System Improvement Yojana, is in the works, smart metering is expected to remain one of the key focus areas of the government.
Apart from UDAY, smart meters with supervisory control and data acquisition systems are being installed in all the urban areas under the IPDS. Under the programme, the states can either procure them on a stand-alone basis or through an aggregator such as EESL or PFC Consulting Limited. A project cost of Rs 8.34 billion and a government grant of Rs 5 billion have been approved for smart metering under this scheme. As of April 2020, disbursements of around Rs 18.4 million have been made. The installation of nearly 4.3 million smart meters across 24 discoms in 14 states has been sanctioned under the programme. As of December 2019, 98,280 meters have been installed under the scheme.
Apart from this, smart meters have been installed under the power ministry’s 12 completed smart grid pilot projects. Around 156,637 smart meters have been installed under the advanced metering infrastructure (AMI) component of these projects. Apart from this, five ongoing smart grid projects under the National Smart Grid Mission (NSGM) also entail AMI/smart meter implementation. Around 750,500 smart meters are expected to be installed in five NSGM projects.
Key challenges and the way ahead
A host of issues and challenges have been hindering widespread deployment of smart meters. One key challenge has been the integration of data that comes from smart meters to the head-end system (hardware and software that receives the stream of meter data) to the meter data management system and then the legacy billing and collection software. EESL has been able to standardise the process up to the meter data management system. Hence, the key challenge that needs to be addressed now is integrating the entire system to a discom’s legacy billing software. Another concern area has been the supply of smart meters in such huge numbers. The supply, however, has now improved considerably. At present, there are six to seven meter manufacturers that have received certification from the Bureau of Indian Standards. Another recent formidable challenge has been the recent countrywide lockdown due to Covid-19, which is likely to seriously impact the timeline for installing smart meters. However, it is expected that once the situation returns to normal, smart meter deployment would take place at a faster pace.