Learning from Experience: By Sarang Kanchan, Former Associate Director, and Avijit Saha, Former Associate Director, Mercados Energy Market India Private Limited

By Sarang Kanchan, Former Associate Director, and Avijit Saha, Former Associate Director, Mercados Energy Market India Private Limited

The Ministry of Power came out with detailed guidelines for the “Revam­p­ed Distribution Sector Scheme: A Reforms-Based and Results-Linked

Sc­­­­he­­­­me” on July 20, 2021, envisioning an in­vest­ment of Rs 3.03 trillion in the po­wer distribution sector. The scheme has two components – Part A: Financial support for upgradation of the distribution infrastructure, prepaid smart metering and system metering; and Part B: Trai­n­ing, capacity building and other enabl­ing and supporting activities.

It is very clear that the major chunk of this Rs 3.03 trillion is going to be utilised for building smart energy infrastructure comprising smart/smart prepaid meters. Plans are being worked out to replace all the 250 million consumer meters with smart/smart prepaid meters.

In view of this, it may be worthwhile to take a closer look at the only large-scale smart meter roll-out in the country. The lessons learnt can be applied to similar infrastructure projects elsewhere in the country for faster and smoother implementation.

The beginning of a revolution

In early 2017, the dynamic management of Uttar Pradesh Power Corporation Li­mited (UPPCL) took a bold and path-breaking decision to replace 4 million existing el­ec­tronic meters with smart meters, which could also be operated in prepaid mo­de, in 13 major towns of Utt­ar Pra­desh including the rural areas of Vara­nasi. This was one of the largest smart metering projects in the world be­cause of its sheer size. The magnitude of the project can be gauged from the fact that it covered more than 50 per cent of the urban (R-APDRP) consumers across all the five discoms of Uttar Pradesh. It had a sizeable impact on the revenue of the state. Haryana also deci­ded to jump on to the bandwagon to add another 1 million smart meters thereafter. Another selfless decision the discoms took was to appreciate the super­ior bulk procurement expertise of Energy Effici­ency Ser­vices Limited (EESL) through international competitive bidding and both the states gave the tendering mandate of 5 million smart meters to EESL.

A third decision taken by the states was that EESL will not only procure but also install and maintain smart meters for a period of five years (post three years of installation). It will offer these meters to Uttar Pradesh discoms on a monthly rental of Rs 85.95 + GST per month

bas­ed on the number of bills raised and standards of performance met. The rate was arrived based on a cost-plus model and was a win-win in the sense that it insulated the project from the risk of delays due to the expected cash crunch on account of stretched balance sheets of the discoms.

Several questions were raised on the basic viability of the project on the grou­nds that the metering and billing expen­ses alone would eat up nearly 15 per cent of the average revenue per customer in a business where the input (bulk power) cost itself constituted 80-85 per cent of the total revenue. How­ever, the Uttar Pra­desh Electricity Regu­la­tory Com­mis­sion rightly gave its consent to the project, factoring in the gains of consequent AT&C loss reduction and timely payment by customers as a result of accurate and regular billing. Apart from this, a two-way communicating device performs a number of other important functions that were not previously possible or had to be performed manually, such as the ab­ility to automatically and remotely measure electricity use, remote connect and disconnect services, much easier detection of tampering, identification and isolation of outages, and monitoring voltage along with a host of others. Com­bined with customer technologies, such as in-home displays and programmable communicating thermostats, this will enable utilities to offer new time-based rate programmes and incentives that encourage customers to reduce peak de­mand, to manage energy consumption and reduce costs.


Chronology of events

  • EESL floated a global tender for the procurement of 5 million smart me­­­­te­­­rs with GPRS technology.
  • Out of 14 companies, Larsen & Toubro (L&T) emerged as the lowest bidder with a price of Rs 2,722 per meter, which was considered very low compared to the market price of around Rs 5,000 per meter prevailing in the market prior to this tender.
  • To further drive down the cost advantage, EESL went for the reverse auction and allowed the entry of some fresh players in the auction process as well.
  • ITI emerged as the lowest bidder at Rs 2,503. Finally, on November 23, 2017, EESL awarded the smart meter supply contract to ITI, Genus Power, ZEN and KEONICS, when the other three bidders agreed to match the price of ITI. The major quantity was awarded to ITI as per the normal tendering practice.
  • Amidst the meter supply issues, EESL floated another tender for the system integrator (SI), which would integrate the telecom services, the head-end sy­s­tem (HES) and the meter data management system (MDM) with the bill­ing system of discoms. It would also install the meters on the consu­mer pre­mises. The SI was to maintain the system and provide the billing data for a period of five years post the three-year installation period.
  • L&T won the contract for system integrator in February 2018 with a 4 million meter installation target by March 31, 2021.
  • L&T mobilised its team and took im­mediate action. It proposed to deploy the HES of Schneider (later switched to Trilliant owing to integration issues) and MDM of Oracle (version 2.2), both top-class products, along with 3G/2G telecom services from Vodafone and everything looked great.

The roadblocks

L&T started in earnest without wasting any time and quickly deputed a formidable team at the UPPCL headquarters to implement the project. EESL also op­en­­ed its project office in Lucknow to mo­nitor and support the SI. However, it faced several roadblocks. These include:

  • Haphazard and often qualitatively de­ficient installation: Any consumer that offered the slightest resistance would be left out and the team would move to another consumer to maxi­mi­se its daily throughput. Discom offi­cials also detected several malpractices by these teams.
  • 2G/3G communication technology: Considering the small volume of data exchange required, the deployed 2G/ 3G technology was adequate. However, there were weak signal/no coverage is­sues at several places, especially in the basements of buildings. Pha­sing out of 2G/3G also remained a topic of concern for UPPCL management. How­ever, EESL committed to replacing the communication module for all the meters free of cost as and when the 2G/3G technology was phased out. This was acceptable to the UPPCL ma­­nagement. For EESL thou­gh, apart from the substantial cost, the sheer logistics of replacing 4 million communication modules in the field will be mind-boggling, should such a need arise in the future.
  • The integration of Oracle MDM and UPPCL’s billing engine, that is, Oracle CC&B version 2.3.1, posed some serious questions. The maintenance of this billing system, being COBOL based, is in itself a challenge and integration wi­th smart metering MDM is always go­ing to be difficult. The continuous mo­­­ni­toring and support by UPPCL ma­nagement helped overcome this challenge, but after considerable del­a­ys and management efforts.
  • The service-level agreements (SLAs) demanded in the tender documents were too stringent, especially for In­dian conditions. While a 99.5 per cent daily profile reading could be the norm in Europe and other advanced countries, India is a different kettle of fish with its own vagaries, where prior to smart metering the billing percentage was not flattering even in urban areas. Needless to say, till the date of writing the paper, the above SLAs have not been achieved despite best efforts. This has been very demoralising.

Despite all these problems, the teams of L&T and EESL have done a good job of installing over 1.14 million smart meters as of February 28, 2020, when further ins­ta­llation was stayed till all the pending is­s­ues were streamlined. The installation restarted, albeit on a low key, in July 2020, but was finally stayed in August 2020, after the event of false disconnection as stated. The start-stop also creates problems for the SI and the contractors that have to keep their field for­ce idle. One hopes that the balance 2.8 million meters are quickly rolled out once the installation restarts after the completion of the user acceptance test and other quality audits ordered by UPPCL management.

The data so far suggests that revenue gains from consumers with smart me­­­­te­rs have been much more than the mo­nthly rentals to be paid to EESL, thus justifying the stand of UPPCL management to go for this project and overruling the cost objection.

Lessons and suggestions

Since India is at the cusp of a smart me­­tering revolution, it may be worthwhile to take into account the lessons learnt from the first major roll-out in Ut­tar Pradesh so that future roll-outs are free of those troubles. The major lessons are summarised below.

  • The roll-out of smart meters should strictly be feeder-wise instead of being scattered all over the place. Within a fe­e­­der also the teams should be assigned distribution transformer (DT)-wise. It may be noted that with 100 per cent smart meter roll-out, consumer tagging along with any addition/deletion can be done automatically. Insistence on feeder-wise roll-out will also wea­ken consumer resistance to some ex­t­e­nt. The discom officials must do the active hand-holding of installation tea­ms to counter the possible consu­mer resistance. This insistence on feeder-wise/DT-wise roll-out may actually be a win-win situation as it may actually increase the productivity per team with limited movement requirements.
  • The SI must select the contractors ve­ry carefully and train/educate the tea­ms ab­out the quality and ethical aspects be­fore deploying them in the field. Te­ch­nology-based monitoring of these te­a­ms is a must to keep them on their toes.
  • Several malpractices that crop­ped up in Uttar Pradesh were quickly tackled by discom officials. Their ex­pe­rience must be fully utilised to tackle/avoid similar malpractices.
  • The indigenous capacity to supply 250 million smart meters over the next three years is grossly inadequate. All ef­f­orts must be made to boost this capa­city. If required, foreign partnerships should be encouraged in the areas of technology and critical components to meet this phenomenal demand.
  • The SLAs should be kept somewhat mo­dest to protect the interests of the SI and financiers, keeping in mind the ground realities of Indian conditions. These may be gradually stepped up to match international levels. For example, the daily profile reading SLA may start at 95 per cent during the initial phase of roll-out and may be upped by 0.5 per cent every quarter until it rea­ches 98.5 per cent.
  • Cybersecurity must be beefed up and additional security measures apart from passwords may be deployed to avoid the breach of security.
  • Consider the fact that a large number of smart meters, especially in ur­ban areas, will be installed in the basement of buildings. GPRS will alwa­ys face communication signal issues in such places. Therefore, we strongly recommend the adoption of a hybrid technology where radio frequency co­m­mu­ni­cation is utilised at least up to the nearest pole or up to outside of ba­se­ments and GPRS is used thereafter.
  • The Government of India can consi­der installing critical infrastructure like universal HES and MDM and provide those to discoms on a pay-per-use ba­sis. We believe that this aspect is al­ready under active consideration of the authorities.

By Sarang Kanchan, Former Associate Director, and Avijit Saha, Former Associate Director, Mercados Energy Market India Private Limited