New Delhi, August 11: Smart metering will help to empower discomforts by improving billing efficiencies and reducing leakages, but, according to a report, the scale of financial investment needed is a major roadblock in its path.
India’s traditional power metering system is inadequate, leading to inefficiencies in MBC (meters, billing, and collection), high commercial losses, and revenue leakage, Crisil Ratings said in a report.
Smart metering could enhance discomforts by enhancing billing efficiencies, enhancing customer services, and reducing leakage, allowing financially distressed discomforts to maximize revenue, he added.
The report also noted that smart metering could also help meet the need for robust metering systems, given the increasing reliance on renewable energy, a growing tribe of distributed generators with net metering requirements would result.
It added, however, that there are several stumbling blocks, including the scale of required financial investment.
While the need for smart metering offers domestic manufacturers the opportunity to compete with cheaper Chinese imports, they will have to ramp up production, the report said.
State discoms with high MBC efficiencies may think they can postpone the switch to smart meters but the pandemic has shown that Indian discoms need to be better prepared to deal with such events. The report further stated that smart meters could help ensure they are ready for the future.
Despite the benefits, India has only 3 million smart meters in operation compared to 270 million traditional meters, it said.
Thus, smart meter penetration is barely 1 percent, which is much lower than in Europe and North America’s mature markets, it added.
CRISIL Research estimates that the country would need to invest Rs 65,000 crore entirely in transit from traditional to smart meters, assuming a significant decrease in current meter prices along with rising volumes.
That is achievable, as there are sufficient funds available for a phased deployment under various government schemes, Crisil Ratings said.
This includes both the recent stimulus package ‘Aatmanirbhar Bharat Abhiyan’ and the Rs 22,000 crore allocated to state discoms to implement smart meters over a three-year period in the Union Budget 2020, it added.
The Ujwal Discom Assurance Yojana (UDAY) also aims to improve the overall financial health of the discoms along with implementing 10 percent of the total smart metering requirement in the country.
However, as on July 17, only 6 percent of the targeted smart meters for connections above 500 kWh and 7 percent of the target for connections between 200-500 kWh have been achieved.
To date , the Government has released Rs 12,760 crore to 3,644 municipalities under the Integrated Power Development Scheme (IPDS) from a planned allocation of Rs 28,260 crore to strengthen sub-transmission and distribution networks, meter distribution transformers, feeders and consumers, and enable information technology in urban areas.
The government has also announced the privatization of discoms in union territories with a view to reducing revenue pilfering.
The private discom model has already resulted in increased competition, better service and quicker adoption of new technologies in cities like Mumbai and Delhi.
In addition, reforms such as direct benefit transfer (DBT) of subsidies to consumers may, once implemented, result in an improvement in discom receivables from the subsidized consumer category.
CRISIL Research therefore said this is a timely time for Indian manufacturers to ramp up smart meter production and related infrastructure. It could reduce the effective cost of meters for bulk procurement to Rs 2,000-4,000, which is on a par with the cost of Chinese imports, bringing the cost of replacing all traditional meters to Rs 65,000 crore.
In fact, the report said, the government’s increased scrutiny of equipment imports is expected to create a level playing field for domestic manufacturers to check cyber threats and ensure adherence to Indian standards and specifications, initiated in June this year.
It also added that imposing additional import duties would ensure cost parity of imported equipment and domestic equipment.
