India's Stuttering Smart Metering Plan Is Now Drawing Big Names

The country has installed 66 lakh smart meters in the last three years against the target of 25 crore by 2025. The programme definitely needs faster execution. But there are only two mid-sized companies to provide bulk of these devices: Genus Power Infrastructure Ltd. and Secure Meters Ltd. And they don't have the capacity yet to satisfy demand from multiple states.

That puts at risk the speed at which distribution companies can roll out the smart metering initiative. It is crucial in a nation, where 15.5% of power is lost in transmission as compared with the global average of 10%. And that is the biggest source of loss for many distribution companies, which is adding to their weak financial conditions.

The solution lies in allowing bigger players, with healthy balance sheets, who can take up projects in multiple states, industry experts suggest. More so, because the project operates under the totex model—where the meter provider invests upfront and recovers costs over up to a decade.

Smart meters are installed under the Revamped Distribution Sector Scheme. And the government has eased requirements to aid more companies to participate.

The latest standard bidding document has helped enhance the overall development parameters, allowing greater participation by private developers over the previous year, according to Anil Rawal, managing director and chief executive officer of IntelliSmart Infrastructure Pvt. The company, which is a joint venture between the National Investment Infrastructure Fund and Energy Efficiency Services Ltd., will roll out smart meters.

This shall trigger a massive capex cycle in the country, building investments to the tune of about $40 billion and leading to savings of about $1.34 trillion in billing and collection losses to the utilities in the next 10 years, Rawal said.

The size of the opportunity is drawing companies to participate in the tenders issued by states and the Union territories. Some of the large groups that are actively participating to supply meters or plan to take more such projects include the Adani Group, GMR Infrastructure Ltd., Torrent Power Ltd., Sterlite Power Transmission Ltd., Larsen & Toubro Ltd., and Tata Power Co.

According to data available with the National Smart Grid Mission portal, as of June 30, around 3 crore smart meters were awarded. Lowest price or L1 bidders were identified and the letters of award are getting finalised. The government has approved over 23 crore smart meters across 28 states and Union territories.

Intellismart, along with ESSL, has installed around 34 lakh smart meters and has become the lowest bidder in projects for the installation of 1.7 crore smart meters. The company sees a lifecycle cost, including operations and maintenance costs, of Rs 17,000 crore for these new projects over the next two to three years.

The first phase of the scheme to be implemented by December prioritises:

• All Union territories.

• All electricity divisions of 500 cities under the Atal Mission for Rejuvenation and Urban Transformation, or AMRUT, programme with aggregate technical and commercial losses of over 15% in the base year.

• Industrial and commercial consumers.

• All government offices at block level and higher.

• Other areas with higher losses.

• Any other area or agricultural consumer that the distribution company considers necessary.

At present, the developers build the projects under the totex model that involves both capital and operation expenditure. That includes the initial capital expenditure to design, build, finance, own, operate, and transfer the project after the concession period. The concession offered to the developers varies from 5 to 10 years, depending on specific states and can be extended as well.

The bidding document that was standardised last year by REC Ltd. and PFC Ltd.—the two nodal agencies implementing the programme—provides developers with Rs 900 per meter as an initial central grant. The rest of the investment is recouped over the concession period.

Distribution companies also pay developers on an average close to Rs 225 per meter every month. This is likely to come down as efficiencies increase and more states participate, increasing the volume of meters installed.

Union Power Minister RK Singh, in a written reply in the Lok Sabha, recently informed that around 20.46 crore prepaid smart consumer meters, 54 lakh smart DT meters, and around 1.93 lakh smart feeder meters have been sanctioned.

According to the National Smart Grid Mission, of the 23 crore smart consumer meters sanctioned on a pan-India level, 3.65 crore have been awarded and 66 lakh installed. Uttar Pradesh tops the list.

• Uttar Pradesh sanctioned 3.09 crore and installed 12 lakh meters so far.

• Tamil Nadu has sanctioned 3 crore and installed 1.26 lakh meters so far.

• Maharashtra sanctioned 2.35 crore but has installed zero meters so far.

• West Bengal sanctioned 2.12 crore and installed 15,164 meters so far.

Rawal said the scheme has picked up in the last year, with more than 100 million meters being placed for competitive bidding by more than 60% of Indian utilities.

Since smart metering entails huge capital requirements through a mix of debt and equity, a robust payment security structure will help secure the funding for the projects, Rawal said.

The standard bidding document provides for a direct debit facility. It secures smart meters and categorises service provider fees as operation and maintenance expenditure by the distribution companies. That will ensure state-owned distribution companies, which have a poor track record, pay regularly. And make smart metering projects bankable.

Adani Electricity Mumbai Ltd. started installing smart meters in FY21, and 100% of its high-tension network and more than 20 kW devices are smart meters.

"Till date, we have installed around 4.5 lakh smart meters and will replace over 25 lakh meters by 2025," an Adani Electricity spokesperson said. The process to award contracts for an additional 12.5 lakh meters is at an advanced stage and shall be finalised in the coming weeks, the spokesperson said.

Separately, Adani Transmission Ltd. will participate in smart metering investment opportunity pan-India, the spokesperson said.

The country has limited smart meter suppliers and they are also facing shortage of semiconductor chips even though the situation is improving, the spokesperson said.

"There may be implementation-related challenges on the ground," he said. "But, having experience of working as a distribution company, we are better prepared to mitigate such challenges and accordingly, detailed implementation plans have been prepared."

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