Smart meters: A Game-changer Solution to help distress the power sector in India

Globally, Smart Metering has manifested its true value with benefits delivered to DISCOMs and consumers, which makes a stronger case for the adoption of Smart Meter technologies in developing countries.

Globally, the power sector is ushering in a digital transition by undertaking Digital initiatives and leveraging Digital Disruptions to upscale the sector’s overall performance. DISCOMs in India in the last two decades have seen many ambitious drives by the Ministry of Power using Digital to focus on improving Discom’s operational and financial health by targeting different performance indicators. GoI’s performance-linked scheme, the Revamped Distribution Sector Scheme (RDSS), a magnanimous scheme with a project outlay of over INR 3 Lac crore, will act as a panacea to improve the performance and financial health of DISCOMs.

Reducing AT&C losses and ARR gaps at the utility level

Smart Metering is one of those key solutions that would help in resolving many of the perennial problems the sector was struggling with. Largely, Indian Utilities consistently struggle with challenges like high AT&C losses, ARR Gaps, the unavailability of real-time data to monitor, and most importantly, real-time tracking of electricity usage for consumers. Smart meters are becoming increasingly prominent in the power distribution segment, owing to their ability to improve the operational and financial performance of utilities. Smart Metering in pre-paid mode will be a boon for Discom’s financial health. Indeed, Smart meters are the energy industry’s most efficient and beneficial invention. Not only do they provide richer data to utility providers and consumers to use to their own advantage, but they also help MoP with its initiatives, such as the Right of Consumer Rules, by empowing consumers and encouraging DISCOMs to focus on providing reliable services and quality electricity. The distribution segment is a crucial segment of the power sector value chain, considering it to be the primary source of cash flow for the entire sector and the only link in the entire chain to face end-consumers. Smart meters are much needed and have other widespread benefits that will be felt across the entire power value chain.

Addressing the possible vulnerabilities of smart meters for DISCOMs

Smart metering has evolved drastically, gaining traction across the nation, and DISCOMs have ventured into the deployment of smart meters at a large scale. It is important to keep the momentum going, and there is also an urgent need to safeguard the AMI system from vulnerabilities and the possibility of risk associated with technology-enabled solutions such as cyberattacks, inconsistent network connectivity, data delays that impact real-time monitoring, etc. Following the “Think Global, Act Local” approach and realising the nuances of the “One-Size-Fit-for-All” approach, dedicated monitoring of “Methods like Software” and management for large-scale rollout need to be leveraged to unlock the full potential of smart metering, thereby providing better quality of service to consumers. Furthermore, smart meters are a foundation for building a smart grid and must also be used as anchor infrastructure for a smart city.

Every reform requires a consistent push to be successful. The unprecedented COVID-19 crisis indeed helped DISCOM realise the true value of Digital Transformation. Though the Smart Meter journey has already been embarked on by a few DISCOMs, the momentum required for its success and the manifestation of benefits to all stakeholders has been largely missing so far. Globally, Smart Metering has manifested its true value with benefits delivered to DISCOMs and consumers, which makes a stronger case for the adoption of Smart Meter technologies in developing countries.

The RDSS Scheme has fully funded components for communication plans and consumer engagement activities. Studies have shown that across other global nations, consumer engagement has been a crucial decision-maker for regulators to understand and ensure whether the power market is working for consumers and thus take decisions that reflect consumers’ interests. Getting it at the right stages of the process so that the engagement and the input can ‘influence’ and ‘add value’. Indian Power sector policies, too, need to do more to make consumers aware of their rights. And need to site more cases where consumers’ rights are protected, like in other developing or developed countries. This may be the only way to shape trust and assurance in consumers’ minds.

Now is the time to unlock Smart Meters’ true potential and get their benefits beyond solving today’s grid problems of stability and loss reduction. As custodian of Smart Meter’s huge chunk of data available, Discom needs to fully leverage Smart Meter data analytics to mine electricity consumption data to improve consumption forecasting, thus creating revenue insights for energy utilities and value for their consumers. Also, a much bigger collaborative approach with consumers, their empowerment, and their participation needs to be prioritised. Smart metering has the potential to be one of the solutions for optimal energy availability by improving energy efficiency and reducing household energy bills; however, smart meters in themselves do not automatically lead to energy savings for residential consumers; the absence of an effective display of consumption patterns like an in-home display (to provide consumer feedback on energy use) can impair performance; and only end-users who clearly opt for their use and who are motivated can achieve energy savings. Empowering the consumer by engaging and activating a network of trusted stakeholders is essential to any Smart Meter rollout.

Looking at the journey of utilities embarking upon the Smart Meter rollout, consumer engagement and empowerment haven’t been easy, as there were a lot of barriers to accepting smart meters. Besides baseless myths like Smart Meters running faster, etc., Health and privacy issues were at the top of the list. This is primarily due to a lack of information about and confidence in smart meters. Consumer confidence in smart metering needs to be built to ensure a successful smart meter rollout.

Participative, collaborative, and Empowered Consumers who have smart meters implemented can see a significant reduction in electricity consumption, or efficient consumption of electricity. To have Consumers on board, a reasonable motivation to save energy is key, with the leverage of Technological interfaces to provide convenience in usage and monitoring. A planned approach to consumer empowerment starts from within the utilities. Adequate change management to fully understand the related changes is the first step. There is a need to start consumer engagement and mass marketing to boost consumer sentiment in Discom. Later, the performance can be measured and improved by setting goals for performance parameters.

Vinit Mishra, Partner, Ernst & Young LLP

Amit Sharma, Director, Ernst & Young LLP

Chetan Firake, Senior Consultant, Ernst & Young LLP

Pritha Karforma, Senior Consultant, Ernst & Young LLP