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.
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 their smarter versions. It is estimated that the country can save around Rs 8,700 billion by investing Rs 1,000 billion for replacing 250 million conventional meters during 2021-31. Meanwhile, the cumulative commercial losses are estimated to reach up to Rs 11 trillion by 2031-32 without smart meters.
Smart metering is critical to reduce the aggregate technical and commercial (AT&C) losses in the country, which currently stand at 22 per cent during 2018-19 but the actual losses, including agricultural losses, may be higher at about 30-35 per cent. The gross energy sold by discoms stood at 958 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 increased further with the implementation of smart meters.
The SMNP is being implemented under the build-own-operate-transfer (BOOT) 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. In order to expedite the deployment of smart meters in the country, EESL, along with the National Investment and Infrastructure Fund (NIIF), has formed a joint venture company called IntelliSmart Infrastructure Private Limited. Set up in 2019, IntelliSmart aims to replicate EESL’s success with the same BOOT model, in order to improve the 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.
Currently, 1.7 million smart meters have been installed in six states under the SMNP. State-wise, Uttar Pradesh accounts for the largest number of installations of smart meters. The order book includes 4 million meters to be installed in Uttar Pradesh, 2.4 million meters 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 at 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 in reducing the commercial losses of utilities and thereby serves as an important tool in the power sector reforms.
Smart meters offer many advantages over conventional meters, including better user experience, increased discom efficiencies and revenue realisation. Besides, they have the potential of positive domino impact across the power value chain in terms of financial health. States/Utilities, which have installed smart meters, have reaped several benefits. For instance, the average monthly revenue of Bihar discoms increased by 41.03 per cent, after the installation of smart meters. Similarly, Uttar Pradesh discoms and the New Delhi Municipal Corporation (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-Rs 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 the implementation of smart meters. For instance, in Uttar Pradesh, billing efficiency, after the installation of smart meters, recorded an increase from 78per 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 the 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 in 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 too 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. The billing efficiency further increased to 98 per cent during the second wave, in areas where smart meters have been deployed. Meanwhile, during March-April 2021, revenue collection from Bihar discoms increased 12 per cent in smart meter areas, whereas it came down by 30 in non-smart meter areas. The SMNP has assumed greater importance in the current times of Covid-19, when there is no physical interface between discoms and customers, as it enables a two-way communication between them.
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 by using the right technologies. Other challenges in rolling out smart meters are cybersecurity and component shortage due to Covid impact, leading to an impact on meter supply. Further, there are issues pertaining to interoperability, integration of the legacy billing system and manpower training in the near future.
Having seen how smart meters have especially benefited utilities during the pandemic, when physical meter reading and billing was not 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.
(Based on remarks and presentation by Anil Rawal, Chief Executive Officer, IntelliSmart Infrastructure, at a recent “Metering in India” videoconference, organised by PowerLine)