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Smart Metering: Energizing India

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DQI Bureau
New Update

Despite the somewhat lacklustre performance in recent quarters, the Indian economy has potential to grow faster in the long term. Energy is a critical input required for economic and social development and India, ranked the world's 3rd largest energy consumer, accounted for about 5% of the world's total energy consumption in 2010.

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Even after 185.5 GW of installed power generation capacity as of November 30, 2011, and an appreciable growth in electricity generation, India faces a chronic power shortage. This, in spite of per capita consumption of electricity in India being very low at 779 kWh (FY11), as compared to world consumption (Source: Ministry of Power, Govt of India).

According to the 17th Electric Power Survey report of the Central Electricity Authority (CEA), electrical energy demand would likely reach 1,915 Tera Watt Hour by 2021-22, thereby doubling from the current level of demand.

Just scaling up on power generation will not be enough to match the future energy requirements of the country. The other worrying issue facing the Indian power sector is the commercial viability of the distribution sector, stemming from inefficiency and high incidence of power theft. According to the Planning Commission, government of India, the Aggregate Technical and Commercial (AT&C) losses are presently in the range of 18% to 62% in various states.

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As per the Ministry of Power, the average AT&C loss across India for FY10 was 27.2%. The major portion of losses is due to theft and pilferage. More than 75-80% of the total technical loss and almost the entire commercial loss occur at the distribution stage.

The India distribution sector is beset with poor billing and collection practices too. The present day grid is unidirectional and does not optimally utilize technological developments. Even to this day, consumers need to inform the utility of a problem or power failure in their area.

To improve the current power scenario in India, Smart Metering solutions such as capability of remote disconnection on non-payment of dues by consumers, automatic alarms when network is being encroached or when people engage in theft will enable utilities to stop pilferage and avoid unsafe situations or accidents.

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Current Scenario and Some Initiatives

According to industry sources, India is the third largest smart grid investment market in the world after USA and China. At present, the market in India is nascent with only few smart meter rollouts on a pilot basis.

This situation is expected to change and gather pace from 2012 onwards. India's transmission grid is in urgent need of expansion and improvement. According to industry estimates, utilities worldwide will spend $378 bn in smart grid technologies by 2030 and India is set to install 130 mn smart meters by 2021.

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Apart from smart meters, a bulk of the investment will be geared towards grid automation, communication infrastructure, IT systems and hardware, residential area networks and system integration. However investors looking at India are deterred by the sector's financial weakness, public ownership of utilities, bureaucratic delays, and political interference.

In spite of these limitations, some smart grid initiatives are taking root in India. A few key ones are described here:

India Smart Grid Forum, Smart Grid Task Force, and Planned Smart Meter Task Force: The Ministry of Power (MoP) has set up the India Smart Grid Forum, a public-private partnership uniting utilities, industry, and academia with the prime objective of accelerating development and adoption of Smart Grid technologies for the India Power Sector.

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As per Sam Pitroda, advisor to the prime minister, government of India and chairman, Indian Smart Grid Task Force, the government is planning to set up a ‘Smart Meter Task Force' that will look to modernize the primitive, manual ways of calculating power usage in India.

Since the country is estimated to need approx 130 mn smart meters by 2021, the Smart Meter Task Force will be entrusted the task of introducing Low Cost Meters priced between `1,000-1,500 each. These would be 2-chip meters that can be connected through GSM technology-basically a dumb meter that is ‘smart enough'. These low-cost meters will feed critical data into the Smart Grids and thereby provide an economical, large scale solution for India's primitive power sector, as per Pitroda.

Ministry of Power Supported `500 crore Smart Grid Pilot Projects: The MoP plans to announce 8 smart grid technology-related projects on a pilot basis worth nearly `500 crore in 2012. Fourteen utilities, which manage power distribution across India, have been asked to submit their proposals to qualify for the 8 pilot projects. According to MoP officials, the selected proposals will receive funding of `50 to 60 crore each. The pilots are expected to be completed in 12 to 18 months. While 50% of the total project cost will be borne by the MoP, the remaining 50% will have to be met by the selected utilities.

Reform of the India Power Distribution Sector: The Restructured-Accelerated Power Development and Reforms Programme (R-APDRP) is often characterized as a proto-smart grid plan. The scheme comprises of 2 parts-Part A of the scheme being dedicated to establishment of ICT-enabled infrastructure for achieving reliable and verifiable baseline data systems in all towns with population greater than 30,000.

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Installation of SCADA/DMS for towns with population greater than 4 lakh population and annual input energy greater than 350 MU (million units) is also envisaged under the plan. The Ministry of Power had earmarked `10,000 crore for R-APDRP Part A. Part B of the scheme deals with regular strengthening and upgradation projects for the Sub-transmission and Distribution systems. The focus for R-APDRP Part B is on reduction of AT&C losses on a sustainable basis.

Expected Market Developments

As the India smart meter market is currently in a nascent stage of development, a sustained campaign is needed from vendors, solution providers, industry associations, R&D institutions as well as the government and regulatory bodies to evangelize and promote the concept of safe, efficient, need-based, on-grid/off-grid power supply.

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Companies like L&T, Secure Meters, Siemens, Wallaby Metering Solutions and others are working aggressively to create a marketplace where healthy competition can ensue.

As India's projected requirement for smart meters is very large, more vendors are expected to enter the market, but ensuring smooth supply, servicing and maintenance of 130 mn smart meters by 2021-22 will be a tall order by any benchmark. The other factor that needs careful consideration of the stakeholders at large, is that the unit cost of smart meters is currently very high, ranging from `5,000 to 8,000 per unit for residential consumers.

The Way Forward

In India it takes a lot of time to adopt and install new technologies. India's major focus for the 12th Five Year Plan is on increasing generation capacities. As per industry norms, for smooth functioning and sustained growth of the country's power sector, investment should be in the ratio 2:1:2 for generation, transmission and distribution, respectively.

To create a market for smart meters, many brainstorming sessions with decision makers in power utilities and government bodies will be needed. A suitable mechanism needs to be created to share the cost of smart meters between OEMs, power utilities and consumers, with minimal impact on consumers.

As per CyberMedia Research preliminary estimates, the worldwide smart meter market is expected to surpass 128 mn units in 2016 from its current level of 46 mn units in 2011, a CAGR of 23% for the period 2011 to 2016.

During this period, global smart meter revenues are estimated to cross $15,000 mn, up from $5,900 mn, a CAGR of 21% (2011 to 2016). The major chunk of this growth will be on account of deployment of smart meters by electricity distribution utilities.

The good news is that industry watchers expect this activity to extend beyond its traditional bases in Europe and North America to the developing world and spread to emerging countries, particularly in the Middle East and Asia-Pacific regions.

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