India’s smart meter rollout – 250 million meters by 2025

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After years of efforts on the massive task of modernising India’s distribution sector to reduce losses and improve operational and financial efficiencies, the government has doubled down on the drive to deploy smart meters to all residential customers by 2025.

Anil Rawal, Managing Director and Chief Executive Officer of IntelliSmart Infrastructure, the JV leading the drive for smart metering initiatives, discusses the rollout with Jonathan Spencer Jones.

What is the current status of India’s smart meter market?

Smart metering has been in India for more than two years now, but it has been at a very early stage. Initially, there was an issue around acceptance with resistance from consumers, but slowly, developments have started to increase, thanks to EESL, which took the initiative with various states.

Today, we have more than 2 million smart meters installed across the country by various entities. Of these, over 1.7 million have been installed by IntelliSmart and EESL in six states and union territories and the others by other agencies.

With this, we are slowly seeing an increasing acceptance of the programme because the utilities who went in for smart metering have seen the benefits in terms of their financial and operational efficiency improvements and the various other benefits consumers receive. The market has also responded well in terms of manufacturing capacities, cloud services, telecoms services, etc.

I think the market is fairly well prepared to take on the second leap of smart metering, which is being enabled by the policy and regulatory drive of the government.

We have a current order of about 8 million meters, including the 1.7 million already installed. The government’s plan is to install 250 million smart meters in the next three to four years across all the states. For that, various tenders are out based on a model document prepared by the government.

What is the local smart meter manufacturing capability?

The government’s definition of local manufacturing is more than 50% value addition to the meter – or to any appliance – from local parties and all the meters in our order book meet that requirement.

We are confident there is a reasonable supply available locally and I have met the manufacturers and they have promised to increase the capacity to meet new tenders and to support the rollout programme to whatever extent required.

Why the focus on prepaid smart metering?

The lead has been taken by Bihar, which is one of India’s largest states in terms of population but not among the richer states of the country in terms of per capita income, and there they decided to install all prepaid meters. The reason was to provide an empowerment tool for consumers to purchase the amount of electricity they need and can afford, e.g. as little as Rs 20 (US$0.27) at a time.

For a distribution company, prepaid removes the requirement of working capital as payment is upfront. This increases their ROI by about 0.5%, which is a lot of money.

While government is focusing on the prepaid mode of smart metering in the country, various states are evaluating their needs and pursuing more and more consumers to opt for prepaid metering as technically both options are available to choose for the consumers. We need to align with the regulatory environment as well as with the distribution utilities and consumer requirements.

What are the key challenges facing the distribution companies and between states?

The first challenge is utility inertia. They have to think beyond the conventional and to think digital in order to be financially and operationally independent and strong, but there is a gap in terms of the skills to move to digital.

Secondly, we have always had an issue with a large number of consumers who were not paying for their electricity. That’s why we have losses to the tune of beyond 20%, which totals up to billions of dollars being lost every year. Getting consumers to pay and understand that power is no longer free as it used to be thought of in the past is a major challenge.

Thirdly, consumer awareness and educating them about the benefits of smart metering is another critical challenge to be worked on in all states of the country to ensure smooth build-up on the programme.

What consumer engagement is being delivered with the smart meters?

The programme has so far had a top-down approach obliging consumers to adopt smart meters. If we continue this way, it may not be very successful. For a successful large-scale implementation there has to be a pull coming from the consumers and that they conceive it as positive and not as a move against them.

We have been pitching a programme telling consumers that this empowers them in terms of monitoring and controlling their consumption, it makes them law abiding and saves them from defaulting on payment. It also offers net metering with two-way flow detection for those with rooftop solar to become a source of revenue and obliges the distribution companies to be more responsive to consumer rights.

The other part, which the government is working on, is to link account subsidies directly with the programme. If we have a section of society which we feel should not be given free power, then the subsidy money can go to their accounts and they can pay that way. Their electricity is accounted for, they feel responsible and law abiding although at the same time they are not actually paying for the power. So that is the last piece of the puzzle to make it a pull-oriented rather than a push-oriented programme.

Why was the Build-Own-Operate-Transfer (BOOT) model selected?

The reason for adopting the BOOT model is the ‘catch 22’ that the discoms have been caught in because of the high nonpayment. This has led to a lack of revenue for investment in the distribution sector and the inability to draw power even for those who are willing to pay for it, further impacting revenues.

The BOOT or OpEx model, which essentially enables an investor to invest in installing and operating the infrastructure and receive a return based on the value it creates over an agreed period of time, has been applied successfully in various Indian states in generation and transmission.

The main investor at present is the government-backed National Investment and Infrastructure Fund but there are a large number of investors waiting on the fence and set to come in once the contracts and security mechanisms are in place, which I expect soon.

What does the new ‘Revamped Reforms-based and Results-linked, Distribution Sector Scheme’ bring?

Under this new initiative, government has committed to investing up to 15% in BOOT-based smart metering as well as other distribution upgrades. With this sweetener, the government expects more lenders to enter the picture and adoption by the federal states.

The first state to participate in the programme is Assam and we participated as one of the bidders in their project, and several more states are ready to do it. We also are still working to finalise the tender document which should give confidence to external investors.

We think this BOOT model can be applied in other developing nations where power sector utilities are in trouble. For governments with a credible base, sovereign backing would encourage investors into the sector and elevate the utilities. Ultimately, if we can strengthen the lowest end of the power value chain, i.e. distribution, we can strengthen the whole power value chain and enable it to become a leading indicator for growth.

How do you see smart meters in the integration of renewables?

Renewables have put the distribution utilities under pressure with their variability and challenges in delivering demand side management. An additional issue unique to India is that the utilities have long-term Power Purchase Agreements (PPAs) with thermal plants. To honour those as well as use green power, both costs have to be paid.

Smart meters can help to stabilise the grid with the granular demand information they provide. The utilities also can use this data for other value-added services for consumers to SCADA and other services. Smart meters are ultimately the base for the smart grid, which is the future of the sector.

And for an Indian ‘supergrid’?

I believe the concept of ‘supergrid’ should rest on the fulcrum of the grid being responsive. We have a large grid which is doing reasonably well when it comes to management and smart meters would only add to further stabilisation. Variability in the grid is going to increase as the penetration of renewables increases. With more and more smart metering, the stability and harmonics issues could be reduced.

If a supergrid plays out, it will obviously do so through the smart meters. That’s why we as a nation are focussed on driving the mission!

About Anil Rawal

Anil Rawal has a long history of service in India’s government and corporate arena, and the power sector in particular, and is a specialist on the financial, contractual, regulatory and commercial aspects for large national and international infrastructure projects. He also has been involved in the evolution of the public-private partnership framework for infrastructure development projects.

About IntelliSmart

IntelliSmart Infrastructure Private Limited is a JV between Energy Efficiency Services Ltd (EESL), an Indian government energy service company, and the National Investment and Infrastructure Fund (NIIF), established to enable the implementation of smart meters through a BOOT (Build, Own, Operate, Transfer) model.

For more insights from Anil Rawal, visit POWERGEN India and Indian Utility Week’s digital platform and watch the Fireside Chat, as well as the webinar recording ‘Smart Metering – Adopt, Accelerate and Transform, Co-organised by EESL’.