Smart metering is a key focus area of the government, to address the challenge of commercial losses as well as inefficiencies in the distribution segment. Although the national aggregate technical and commercial (AT&C) losses stand at about 21 per cent, the actual losses, including agricultural losses, may lie between 30 per cent and 35 per cent. Smart metering is critical to reduce AT&C losses as well as to improve the billing and collection efficiencies of distribution utilities. The central government has undertaken various programmes and initiatives for implementing smart metering across the country. The Smart Metering National Programme (SMNP) is one such scheme, being implemented by Energy Efficiency Services Limited, for the installation of smart meters across the country. The programme aims to replace 250 million conventional meters with smart meters. A large amount of potential savings are expected from the SMNP, given that the cumulative commercial losses without smart meters are estimated at Rs 11 trillion, while the estimated commercial losses with smart meters would be only Rs 1.3 trillion by 2031-32.
The SMNP is being implemented by EESL 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, which is reflected in a mutually agreed upon automated payback structure. EESL, along with the National Investment and Infrastructure Fund, has formed a joint venture company called IntelliSmart Infrastructure Private Limited to implement, finance and operate the smart meter roll-out programme for discoms. IntelliSmart has the same BOOT model under competitive bidding or nomination route, wherein the entire capital and operational expenditure is funded by the developer, with no additional burden on the discom. This is recovered from the discom over the project period as lease rental on a monthly basis. This model adopts the pay-as-you-save approach.
Progress of the SMNP
Till date, over 1.57 million smart meters have been installed across the country under the SMNP. As per the SMNP dashboard, accessed on November 30, 2021, Uttar Pradesh has installed 1,144,932 smart meters, Haryana 246,951, Bihar 103,941, Delhi 58,840, the Andaman & Nicobar Islands 23,906, and Rajasthan 494, under the scheme. As a result of smart meter installation, the average discom revenues in these states increased by 20.5 per cent, translating to an increase of Rs 301 per month per meter. AT&C losses were reduced by 11-36 per cent on average, and billing efficiency improved by 21 per cent. The total revenues increased by Rs 2.64 billion per annum for about 1.1 million smart meters.
Seeing the success of smart metering, several states such as Assam, Tripura, Jharkhand, Madhya Pradesh, Tamil Nadu, Punjab, Jammu & Kashmir, Gujarat and Karnataka have shown interest in smart metering, and the contours are being worked out. The SMNP is under discussion prior to implementation in Jammu & Kashmir (913,132 smart meters), West Bengal (2 million smart meters) and Arunachal Pradesh (182,699 smart meters).
Recently, IntelliSmart has won a Rs 5 billion order from the Assam government to install about 600,000 smart meters in the state. Assam Power Distribution Company Limited has awarded a letter of award to IntelliSmart for installing the meters in 19 circles. The project will be implemented in TOTEX (capex + opex) mode under the design-build-finance-own-operate-transfer arrangement. IntelliSmart will maintain the advanced metering infrastructure system for a total contract period of about nine years. The project will cover the Nagaon, Morigaon, KANCH, Cachar, Badarpur, Jorhat, Golaghat, Sibsagar, Dibrugarh, Tinsukia, GEC-I, Kokrajhar, Bongaigaon, Barpeta, Rangia, Mangaldoi, Tezpur, North Lakhimpur and GEC-II circles of Assam.
Impact of the SMNP
Smart meters offer many benefits over conventional meters, such as better user experience, increased discom efficiencies and revenue realisation. Besides, they have the potential of a positive domino effect across the power value chain. States and utilities that have installed smart meters have reaped several benefits. For instance, the daily revenue collection of Bihar discoms during the lockdown period was around Rs 0.5 million, through smart prepaid meters. In March-April 2020, revenue collection in Bihar discoms increased 12 per cent in smart meter areas, whereas it came down by 30 per cent in non-smart meter areas.
In the New Delhi Municipal Corporation (NDMC) area, the average monthly revenue per consumer was Rs 2,735 before installation of smart meters, after which it increased to Rs 3,050 (an increase of 11.52 per cent). In Uttar Pradesh there was an increase of 20.6 per cent, from Rs 1,175 to Rs 1,420, and in Bihar there was an increase of 41.03 per cent, from Rs 502 to Rs 708.
After the implementation of the SMNP, the average billing and collection efficiency has improved significantly. For instance, in Uttar Pradesh, billing efficiency after the installation of smart meters recorded an increase from 78 per cent to 98 per cent, while collection efficiency increased from 79 per cent to 112 per cent. Similarly, in Haryana, billing efficiency increased from 78.5 per cent to 94.2 per cent, while in Bihar billing efficiency and collection efficiency increased from 69.3 per cent to 96.25 per cent and from 92 per cent to 100 per cent respectively. Billing efficiency in the NDMC area recorded an increase from 89.7 per cent to 96 per cent. On the whole, billing efficiency has been in the range of 94-98 per cent, while collection efficiency has been in the range of 99-112 per cent. During the Covid-induced lockdown, smart meter billing was 95 per cent against 71 per cent provisional billing in non-smart meter areas during the first wave. Smart meter billing increased to 98 per cent during the second wave.
In addition to improved billing and collection efficiency, discoms have benefitted from improved operational and financial parameters such as increased and readily available working capital, increased on-time payment by consumers, and reduction in disputes with respect to billing errors and provisional bills.
Challenges and the way forward
Smart prepaid meters are the future of the country’s distribution segment. However, there are a few issues and concerns that need to be addressed. Small-scale capex projects by discoms, low communication coverage in the country, inadequate cybersecurity and information technology (IT) back-end, component shortage due to Covid impacting meter supply, and the impact of legacy regulations on smart meters are the key challenges.
Going ahead, integration with the discom legacy system is critical before mass roll-out in a state. Consumer indexing, if done well, can mitigate the majority of future concerns. Last but not the least, the implementation of the SMNP needs to be a joint effort between discoms and the implementation agency, and not the responsibility of an individual organisation. The future of smart meters includes a common IT back-end infrastructure platform, value-added services, geographic information system-based consumer indexing, a universal communication module, and push standardisation of meter specifications and processes, all eventually giving way to the development of smart grids and smart cities.
Net, net, smart prepaid meters are the future and a critical element in improving the distribution sector in the country.
(With inputs from a presentation by Anil Rawal, Chief Executive Officer, IntelliSmart Infrastructure, at a recent “Metering in India” videoconference, organised by PowerLine)