Ministry of Power has recently announced the Government’s vision to rollout smart metering on fast track for customers with a monthly consumption of 500kWh and above in Phase-1 by December 2017 and for customers with monthly consumption of 200kWh and above in Phase-2 by December 2019. This goal is reiterated in the UDAY program and in the Tariff Policy announced by MoP. In view of the massive investment required for smart metering or Advance Metering Infrastructure (AMI) to cover about 50 million customers in next 4 years ISGF presents an innovative financing and implementation model in this paper.
From our studies and analysis, we have reason to believe that it is possible to undertake AMI rollout on the suggested framework at a cost of INR 69/month per customer. We suggest splitting this amount between Discoms and the customers. Discoms obviously stand to gain from accurate meter data, avoided meter reading expenses, human errors and fraud, faster detection of outages and restoration etc. Hence, Discoms should bear 50% of the cost – say INR 35/customer/month. For customers there are several benefits in terms of availability of energy consumption data that can help save energy, options to save money by shifting certain consumption to non-peak hours at lower tariff slabs (possible with ToU tariff), reduced billing errors, faster restoration of outages, remote monitoring and control of smart appliances etc. A customer with monthly consumption of 500 kWh pays average INR 2000 or more per month today and an increase of INR 34/month should not upset their monthly budgets. Once large scale deployments starts, the prices of equipment and systems are expected to come down so that by the time we approach customers with monthly consumption below 200 kWh, the cost indicated here may be nearly half. It is recommended for Discoms to consider adopting sovereign secured public cloud infrastructure for AMI deployment to reduce CAPEX further. There could be innovative business models where in third party players might step in to offer a variety of services which could absorb the entire AMI cost -the smart meters could evolve as a smart hubs that could offer several other services to the customers. We believe that market forces and innovation will evolve in this direction at a fast pace once we unleash this revolution – 300 million smart meters in India in next 5-7 years!
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12 December 2017