Can smart meters solve India’s electricity problem? The | Opinion – analysis
A lot has changed in the electricity sector in recent years. The electricity generation capacity is now surplus after years of deficit, and the price of solar energy has fallen by 70%. But one thing that has hardly changed is the performance of electricity distribution companies (discoms), which continue to bleed money. They also face operational challenges, despite some improvements in loss reduction (and, more importantly, 100% electrification). There are now proposals to install 250 million smart meters on all users to try to radically improve discoms. While a top-down push is important, unless there is bottom-up acceptance, such solutions are likely to be ineffective or, worse, to displace complementary or parallel efforts.
A smart grid is a transformation of the electrical grid where digital communications and control allow for a more agile, resistant, flexible and efficient network. It is this last point that is driving smart meters, which can be a tool to reduce losses, which include insufficient billing, insufficient collection and total theft. Given the state of technology and measurement implementations in discoms, it is inevitable to try to jump to smart meters.
Smart meters could help improve theft detection (a necessary but not sufficient condition for viable discomfort), but they cannot accurately identify all forms of theft alone. The two really necessary things are action on the ground (surveillance) as well as analytics. Before discoms rush into paying for smart meters, they must ensure that surveillance improves through political will and analytics is incorporated into business practices, regardless of the level of smart metering. Before requesting smart meters, planners must respond if utilities are taking advantage of the data they already have.
Prepaid meters are another big boost. While this could help improve revenue collection, one must be willing to disconnect those who do not pay. Automation can make it easier, but political will is needed for automatic and manual systems. Keep in mind that in several regions, the biggest delinquent is the government itself. Most honest consumers actually pay in advance today through a deposit. Instead of focusing on prepaid, such functionality should be viewed as a subset of smart meters. Nor should we implement prepaid meters independently, such as through a keyboard to enter payment codes. This is not only inconvenient, utilities lose visibility of consumption and cannot easily offer differential rates for users.
There are few arguments against making discom smarter and the impending need for smart meters. But we should focus not only on “yesterday’s problems”, such as billing and loss reduction, but also on tomorrow’s challenges, such as renewable energy, electric vehicles, consumer choice and competition. This emphasizes that different disks have different drivers and expected functionalities of their smart systems.
Why didn’t many previous IT-driven discom projects reach their potential or even languish? It was for lack of preparation. This same challenge persists for general deployments of smart meters. While volume makes smart measurement hardware cheaper, the real challenge remains integration with existing (legacy) systems. Without solving this challenge, no direct solution can work well.
Smart meter displays are not like LED bulb acquisitions. Meters are more of an ecosystem, probably closer to smart cities. Volumes and standardization help, but only up to a point. There is also a new option of third-party implementers who invest and then charge a monthly fee. This seems to help liquidity problems more than solvency problems, that is, business model problems more than business case problems, and could transfer some risks depending on the contract design. But utility still pays, today on the order of ~ 100 per month (including GST). Is the value proposition greater than this? The average bill for Indian households is around ~ 500 per month, and we cannot expect efficiency gains of 20% to be revenue neutral across India only through smart meters.
There will be pockets and regions where high losses, high renewable energies or something else drives faster deployment. The best way forward will be what some call “leopard points” of geography deployment: intensive deployment in selected areas, which grows over time to cover the entire discom. This plan begins with a combination of the most prepared discomforts and the most urgent areas. This also gives public service companies time to do their homework: finish standardizing databases and billing platforms and GIS (digital mapping) efforts, not to mention improving their staff. Continuity of leadership with political support is another key ingredient for success. With this, even without smart meters, Haryana cut its losses in half in three years.
Smart meters fail when technology and price points are turned off, but they succeed when consumers (and utility companies) request them. Instead of just looking at sticks such as theft detection, we must also push the carrots. These may include guaranteed zero-load shedding (with a lifeline supply even during deficits), the ability to easily integrate electric vehicles and renewable energy, as well as the possibility of saving money through the price of the day.
Much of the approach has focused on efficiency, but the real value proposition comes from a transformation, including one with dynamic prices, and in which consumers respond to incentives such as changing their charges at prices outside peak hours. These require awareness, incentives and regulatory approvals, which will take time. Ultimately, smart meters are a valuable tool for improving communications, but they are not a panacea for all ills. We must take advantage of, but not rely on, technology to resolve what are fundamentally failures of governance.
Rahul Tongia is a member of Brookings India and was a technical advisor to the Working Group on Smart Networks of the Government of India. He is also the founding advisor of the India Smart Grid Forum.
The opinions expressed are personal.