How can smart metering offset the impact of COVID-19 for DISCOMs in India?
The COVID-19 pandemic has caused global turmoil in financial and commodity markets. The energy sector was also hit hard, with demand dipping sharply as nearly one-third of the global population stayed indoors during the lockdown. While the world concurrently deals with the continued pandemic and the complexities of climate change, it needs to plan for a clean and resilient recovery. Smart metering presents exciting new opportunities for energy and utility (E&U) companies and consumers alike, and is likely to play an important role in growing a low carbon energy sector.
Smart metering benefits for both consumers and DISCOMs
The technology enables real-time energy consumption and bi-directional communication with energy suppliers for accurate billing and analysis. Smart meters also offer postpaid or prepaid plans on a single device, or interchanging between, without the hassle of meter replacement. Consumers can see how much energy they use—and how they might utilize energy more efficiently—through detailed feedback. Commercial and industrial establishments will see greater control over their electricity use when they couple smart meters with time-based rates, like smart switches that can prioritize running heavy equipment. The ability to track real-time energy usage easily translates into energy and cost savings.
Smart metering lets DISCOMs track points of losses and inefficient—or unauthorized—usage of electricity networks. It goes beyond analyzing and predicting energy requirements to improve long-term demand response programs and effective load/demand forecasting that bolsters network planning and economic power procurement. Smart metering offers shorter outage durations, better outage management, and fewer billing errors, as well as long-term benefits like commercial loss monitoring, reduced call center traffic, and improved operational efficiency for DISCOMs (see figure below). Furthermore, smart grid optimization leads to grid stability and grid expansion at a reduced cost.
Considering COVID-19 social distancing guidelines and government regulations—or those caused by any natural calamity where physical access is disrupted—it is important to note that smart metering supports remote meter reading. This provides energy suppliers with the option to connect (or disconnect) remotely, thus avoiding potential concerns for a consumer’s employees. It also reduces the operational expenditure of DISCOMs due to manual meter reading and associated inefficiencies or manipulations. Furthermore, by eliminating physical activities, remote access helps reduce the utility’s carbon footprint.
New opportunities with smart meters
Smart metering provides major benefits to both consumers and energy suppliers. It also opens doors to new potential business areas and business models. Small and medium energy suppliers can take advantage of software as a service (SaaS) solutions to support the roll-out process. Analytics, coupled with the Internet of Things (IoT), enables companies to provide smart solutions that help customers efficiently manage their energy requirements. For example, in-home displays provide real-time feedback to end users, empowering them to analyze their consumption patterns and maximize savings. In this way, energy suppliers can act as energy advisors, venturing into additional service offerings to increase revenue. These advances invite utilities to roll out more demand response initiatives that they can then combine with existing energy efficiency programs.
Smart metering also offers the opportunity for Peer-to-Peer (P2P) trading, a major change—bringing with it much potential—from the current provision of purchasing electricity only through DISCOMs. In Slovenia, SunContract set up a blockchain powered P2P trading platform that sets prices and offers provision to share energy among users. To make it work, the company partnered with several European nations and many energy sectors that provide an energy trading platform to households. Similarly, a partnership between Bax Company, Enervalis, and Eemnes Energie plans to allow 4,000 participants the opportunity to sell and trade their renewable energy for the next 10 years. This pilot is currently the largest P2P energy trading platform in Europe.
Where India stands
With the expected demand of 300 million smart meters, India is the largest untapped smart metering market in the world. To this end, the Ministry of Power launched the Smart Meters National Program (SMNP) with an ambitious plan to roll out 250 million smart meters over the next three years. Energy Efficiency Services Limited (EESL), to date, has installed around 1.44 million smart meters in the states of Uttar Pradesh, Haryana, New Delhi Municipal Council, and Bihar. As a follow-up to the Bureau of Indian Standards (BIS) standards for smart metering (IS 16444 and IS 15959 Part 2), the Central Electricity Authority (CEA) launched functional requirements for Advanced Metering Infrastructure (AMI) and technical specifications for smart metering. The roll-out program has faced some challenges, including a lack of consumer awareness regarding both the value of smart meters and how to utilize the detailed data, as well as cyber security and interoperability issues. The market also faces manufacturing challenges as well as a shortage of proper testing facilities. This, in turn, poses additional issues of integrating smart variants within the existing setup.
What India’s rollout can learn from the UK
The British government placed a legal obligation on all energy suppliers to install smart meters in every home and small business by the end of 2020. It also licensed the Data Communications Company (DCC) to run a secure, central wireless communication system that enables any energy supplier to communicate with any smart meter, not just the ones it installed. With this in mind, the government set technical specifications—SMETS 1 and SMETS 2—to ensure all smart meters’ compatibility with the DCC communications networks system. It is crucial to establish an easily accessible communications network that allows seamless information exchanges between all relevant data providers and collectors. The importance of having a communication system rolled out alongside smart meters cannot be underestimated, as these systems provide a reliable service to consumers. For example, they help integrate renewable energy options like installations of solar rooftop panels, which in turn helps access the flow of energy to and from the consumer.
The British government kept consumers at the heart of the rollout, giving all households free in-home energy display linked to their smart meters, and installers well-equipped to train consumers with tailored energy efficiency advice during the installation. This also offered an additional service-based business opportunity.
Offsetting the impacts of COVID-19 through a green recovery
As COVID-19 created a slowdown of economies and shut down industries worldwide, it also triggered fast-tracking of smart metering rollouts for countries that had not yet developed a smart metering roadmap. It is becoming evident to energy suppliers that smart metering not only offers a reduction in losses, improved operational efficiency, and grid reliability, it also provides opportunities for increased revenue generation to offset DISCOMs’ demand losses due to lockdowns.
Several pilot projects have shown significant cost savings after implementing smart metering. Indore DISCOM, Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. (MPPKVVCL) increased their revenue per feeder from 65% to 98% within a period of 8 to 10 months after installing 150,000 smart meters. The change also improved customer service and reduced billing errors. Additionally, the use of smart meter alerts resolved many theft cases. Indore DISCOM has subsequently shown a return of investment (ROI) of up to 2.5 years.
Ajmer Vidyut Vitran Nigam Limited (AVVNL) conducted a pilot project covering 1,000 customers as part of the U.S.-India Partnership to Advance Clean Energy Deployment [PACE-D] Technical Assistance Program. After implementation, AT&C reported a drop in losses from 20% to 13.5% with a reduced bill generation cycle from 14 to 5 days. The pilot also demonstrated improved service and reliability, reducing outage time by 20% and time spent on customer inquiries by 80%. The pilot recorded total annual savings of ₹1.3 million ($17,500) against total capital expenditure of ₹6.7 million ($90,300), with a payback period of five to six years. The DISCOM saw a benefit of ₹108 ($1.45) per consumer on an expenditure of ₹83 ($1.11) per consumer.
Smart metering offers tremendous promise in data access and connectivity, accurate billing and transparency, energy advisory services, and energy efficiency. It, along with IoT and big data analytics, will pave the way for smart solutions for both E&U companies and their customers. With increased revenue generation opportunities for energy suppliers, it can also offset losses incurred by the pandemic. Clearly, this is the way forward for a low carbon energy sector.