The uptake of renewable energy projects and the health of the power sector are linked to the wider adoption of smart meters. This can play a key role in efficiently integrating renewable energy into the grid and reducing losses for discoms. Smart meters help both utilities and prosumers in managing the intermittent supply of renewable energy by providing real-time data on energy production and consumption. The analysis of this data can help utilities plan power procurement and investments, and consumers gain by monitoring their consumption patterns, which now include a growing share of renewable energy. Smart meters are also expected to reduce billing losses and improve collection efficiency through the prepaid mechanism, thereby improving the health of discoms, which will lead to greater adoption of renewable energy, especially rooftop solar.
India’s smart metering market is on the cusp of exponential growth. Following the success of various pilot projects across the country and positive outcomes for stakeholders, the pace of smart meter awards and installation is increasing. As of May 2024, over 11 million smart meters have been installed in the country, while a total of 222 million smart consumer meters have been sanctioned. This is a significant increase compared to the approximately 1.7 million smart meters that were installed during 2021-22. According to the National Smart Grid Mission, in 2023-24, nearly 4.8 million smart consumer meters were installed, which is more than three times the number installed in the previous year.
The Ministry of Power’s Rs 3 trillion Revamped Distribution Sector Scheme (RDSS) has given a fillip to the installation of smart meters. The scheme aims to replace 250 million conventional meters with smart prepaid meters by 2025, with the objectives of bringing down aggregate technical and commercial (AT&C) losses, and reducing the gap between the cost of supply and tariff to zero for discoms. It is also giving an impetus to smart metering at the distribution transformer and feeder levels.
PowerLine recently organised the seventh edition of the “Metering in India” conference, where the current status of discom performance, smart meters and challenges being faced during their uptake were discussed. This article is based on the presentations and insights shared by key industry and government stakeholders at the conference…
Performance of discoms
According to the presentation by Girish Kumar Kadam, senior vice president and co-group head, ICRA Limited, during fiscal years 2022 and 2023, most states saw improvements in AT&C loss levels. These improvements were driven by enhanced efficiency efforts as part of various capex programmes and increased subsidy disbursement. Despite these advancements, states such as Bihar, Jharkhand, Madhya Pradesh, Odisha and Uttar Pradesh still face notably high losses exceeding 20 per cent for their discoms. Additionally, Telangana experienced a rise in AT&C losses due to a decrease in collection efficiency. When distribution losses exceed approved levels, discoms are unable to fully recover their power purchase costs, which affects their profitability. The ongoing infrastructure enhancements and smart metering initiatives under the RDSS aim to reduce nationwide AT&C losses to 12-15 per cent by fiscal year 2025. This strategic effort is crucial for ensuring a sustainable enhancement in the financial performance of discoms.
In fiscal year 2023, book losses for discoms at the national level rose to Rs 572 billion from Rs 309 billion the previous year. This increase was attributed to higher power purchase costs and operating expenses as well as the limited ability to pass on these costs through tariffs. Consequently, the debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio, indicating discoms’ leverage, deteriorated and remained high at 13.6 times in fiscal year 2023. It is crucial to promptly adjust tariffs to reflect cost changes and enhance operational efficiencies to ensure sustainable enhancement in discom finances. State governments’ subsidy disbursements to discoms improved in fiscal year 2022, reaching 109 per cent of the booked subsidy compared to 85 per cent in fiscal year 2021, and this level was maintained in fiscal year 2023. States such as Andhra Pradesh, Madhya Pradesh, Maharashtra and Punjab contributed to this improvement through higher subsidy payouts. The sustainability of these subsidy levels is uncertain given the increasing subsidy requirements, estimated to reach Rs 1.9 trillion in fiscal year 2025 from Rs 1.7 trillion in fiscal year 2023 due to growing supply costs and new subsidy initiatives by states such as Karnataka and Telangana.
After the implementation of the Late Payment Surcharge Rules, the debt owed by discoms to power generating companies decreased to Rs 704 billion in May 2024 from Rs 1.3 trillion on May 30, 2022, according to the PRAAPTI portal. in addition to settlement of past dues through instalments, ongoing bill payments have been mostly timely, supported by the revolving bill payment facility provided by Power Finance Corporation Limited and REC Limited. However, the continuation of this trend will depend on the improvement in the financial health of discoms, which requires the implementation of various reform measures.
The timely filing of tariff petitions and subsequent issuance of tariff orders by state regulators is crucial for improving the finances of discoms. While tariff orders for fiscal year 2024 were issued in 26 states, they have been delayed for fiscal year 2025. As of May 2024, only 11 states have issued tariff orders, which are still pending in key states such as Gujarat, Punjab, Rajasthan, Tamil Nadu, Telangana and Uttar Pradesh.
Utilities’ experience with smart meters
The uptake of smart meters is a key technological intervention to improve the efficiency of discoms. Sumit Chaudhury, additional chief engineer, West Bengal State Electricity Distribution Company Limited; Sandeep Dhamija, chief executive officer, TP Power Plus Limited, TATA Power; Rishi Goyal, assistant vice president, BSES Rajdhani Power Limited; and Deepak Kumar, chief engineer, commercial, North Bihar Power Distribution Company Limited, shared the utilities’ perspective on smart meter uptake.
According to the industry experts, on the technology front, new-age smart meters are being integrated with emerging technologies such as artificial intelligence (AI) and machine learning (ML), enabling greater insights for utilities and enhancing consumer satisfaction. Utilities are increasingly leveraging data analytics to enhance demand forecast accuracy and reduce power purchase costs. That said, the successful implementation of a smart metering project requires proper planning and execution. A robust communication network that facilitates the seamless integration of meter data, as well as foolproof data privacy and cybersecurity, is essential. Utilities are implementing load and network management alongside real-time pricing to incentivise load adjustment.
Utilities encounter several challenges such as technical glitches in meters, which require streamlining; slow progress in smart meter adoption due to outstanding customer dues; and consumer reluctance to migrate from prepaid to postpaid meters. Moving forward, utilities require more data from net meters for precise forecasting and decision-making. It is crucial for the entire system to collaborate, avoiding complete reliance on AI. Energy audits and accurate indexing are necessary to pinpoint and mitigate losses and theft. Utilities aim to classify their areas of operation into high-medium-and low-revenue zones for enhanced operational management.
For utilities, enhancing consumer awareness about smart meters is vital. Engaging customers through methods such as distributing informative pamphlets detailing procedures, benefits and recharge instructions; establishing kiosks and conducting small demonstrations is essential. Employee training and raising awareness are also crucial aspects. Further, dispelling the misconception that smart meters lead to higher consumption compared to traditional meters is imperative.
Cybersecurity and data privacy issues with smart meters
Another key issue with smart meters is privacy and security risks. While fine-grained power usage data can reveal household behaviour accurately, it also increases the risk of breaching privacy and increasing the vulnerabilities related to hacking and cyberattacks, endangering both utilities and consumers. Therefore, strong security measures are crucial to prevent data breaches, hacking and data snooping. Shaleen Khetarpaul, additional vice president, chief information security officer, BSES Rajdhani Power Limited; Dr Sudhakar, scientist “D” (joint director), CERT-In; and Amit Verma, director, cybersecurity and leader, EY, shared their perspective on this issue.
According to the experts, designing security requirements for smart meters is crucial to ensure their security and reliability. Smart meters are vulnerable to various cyberthreats, such as unauthorised access, denial-of-service attacks and data breaches. Misconfigured software settings can expose sensitive customer records, and if widely used software is compromised, millions of users could be at risk. Additional risks include software vulnerabilities and the use of default passwords.
To ensure smart meter data privacy, utilities should implement strong data encryption and perform vulnerability assessment and penetration testing of meters, along with strict access controls with user consent and data anonymisation. Additionally, adopting data minimisation and robust security measures can protect against unauthorised access and cyberthreats.
Going forward, collaboration between utilities, regulators and consumers is essential to balance energy efficiency with privacy preservation. Leveraging ML and AI will help in detecting fraudulent activity and cybersecurity vulnerabilities. Further, ethical professional hackers should be hired to identify weaknesses in the system.
Net, net, the implementation of smart meters across the country will facilitate the uptake of renewable energy, especially rooftop solar, and improve the health of discoms. Smart meters enable the efficient integration of renewable energy into the grid, reduce losses and improve the financial health of discoms. This power sector is in dire need of these improvements.
