Economy

Smart meters can pare discom losses, boost efficiency: Crisil

V Rishi Kumar Hyderabad | Updated on August 11, 2020

Smart metering can help cut down on commercial losses   -  KSL

Estimates ₹65,000-cr investment for switching from traditional to smart meters

Advocating a switchover to smart metering of electricity billing network, rating agency Crisil estimates that the country will need to invest ₹65,000 crore to transit from traditional to smart meters.

With the Covid-19 pandemic and extended lockdowns diminishing demand and collections, and loss-making discoms slipping deeper into the red, Crisil Research expects power demand to contract 3-5 per cent this fiscal compared with a compound annual growth rate (CAGR) of 3.8 per cent between fiscals 2015 and 2020.

According to Energy Efficiency Services Ltd (EESL), utilities with smart metering infrastructure reported 95 per cent billing efficiency in the first quarter of this fiscal, when the lockdown was in force, and generated additional revenue of 15-20 per cent per meter. Smart metering would amount to additional revenue of over ₹100,000 crore annually from unbilled electricity.

AT&C losses

The national average of AT&C losses for 26 States (excluding Nagaland, Andaman and Nicobar Islands, and Lakshadweep) was 18.90 per cent as on July 17. The losses are even greater in States experiencing high demand: Jharkhand (33.96 per cent), Bihar (34.32 per cent), Uttar Pradesh (30.3 per cent), Rajasthan (22.47 per cent), Madhya Pradesh (24.9 per cent), and Maharashtra (21.32 per cent).

Smart metering can help cut down on commercial losses by eliminating physical meter readings and inspections, leading to savings on the cost of inspection teams, better load scheduling based on real-time consumption patterns, continuous monitoring, leading to targeted inspection and lower metering errors and reducing electricity theft and unbilled consumption. It will also make billing seamless.

Despite the benefits, only 3 million smart meters are operational in India compared with 270 million traditional meters. Thus, smart meter penetration is barely 1 per cent, which is much lower than in mature markets of Europe and North America.

Majority of Indian discoms that rely on physical meter readings, billing efficiencies actually came down during the lockdown as they billed on the basis of a consumer’s average reading, or on the basis of the year-ago consumption.

As of May, discoms’ outstanding dues to gencos stood at ₹1,16,656.36 crore and the Government’s Aatmanirbhar Bharat Abhiyan stimulus package provided ₹90,000 crore liquidity support to discoms in view of the pandemic and ailing financials.

This support is subject to State government guarantees for loans.

Sufficient funds

This is achievable, as sufficient funds are available under various government schemes for a phased deployment. This includes both the recent Aatmanirbhar Bharat Abhiyan stimulus package and the ₹22,000 crore allocated in the Union Budget 2020 to State discoms for implementing smart meters over a three-year period.

Moreover, reforms such as direct benefit transfer (DBT) of subsidies to consumers can lead to an improvement in discom receivables from the subsidised consumer category, once implemented.

Currently, a locally manufactured smart meter is priced between ₹6,000 and ₹7,500. At this price, the cost of replacing all existing traditional meters would be over ₹180,000 crore. Crisil states this is an opportune time for Indian manufacturers to ramp up production of smart meters and related infrastructure. That could bring down the effective cost of meters to ₹2,000-4,000 for bulk procurement — which is on a par with the cost of Chinese imports — thus bringing the cost of replacing all traditional meters to ₹65,000 crore.

Published on August 11, 2020

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