India is aiming to help its ailing power distribution companies by buying five million smart meters for Uttar Pradesh and Haryana in a global tender later this month
New Delhi: India is aiming to help its ailing power distribution companies by buying five million smart meters for two of its northern states in a global tender to be conducted later this month.
Energy Efficiency Services, the government agency responsible for running the country’s energy efficiency programs, will conduct the tender, managing director Saurabh Kumar said in a phone interview.
“This is a pilot project where four million smart meters will go to Uttar Pradesh and the rest to Haryana," Kumar said. If successful, the program could be adopted by a large number of states, he said.
For India, smart meters represent a possible game changer by handing power distribution companies the ability to address billing inefficiencies that have contributed to their losses and debt burden. Global investment in the technology is expected to hit $19 billion this year, according to research from Bloomberg New Energy Finance.
A smart-meter is an electronic device that records electricity consumption at short intervals and communicates it back to a utility for monitoring and billing. The devices are capable of two-way communication.
An information meeting ahead of the tender will be held on 20 August in India’s capital of Delhi, while a second session will take place in London on 24 August.
Most of India’s power distribution companies, or discoms, lose money on every unit of power sold due in part to theft, inadequate billing and selling below cost to poor and agricultural consumers.
State-run distributors held combined debt of Rs4.3 trillion ($67 billion) as of September 2015, the latest year of available data.
The debt levels limit their ability to adequately meet the power demands of existing customers or add new consumers in a country where millions of households don’t have electricity, but where power plants also remain underutilized.
The average technical and commercial losses at discoms in 24 states who’ve signed up under a reform plan currently stand at 21 percent, according to the government.
“We have committed to raising billing efficiency, which means monetizing the cost required to bill and also resolving inefficiencies like under or inadequate billing, thereby increasing revenues for the discom," EESL’s Kumar said.
Last year, the Indian government said it’s aiming to outfit approximately 35 million customers with smart meters by the end of 2019.
“Considering that there are 1-2 million meters installed as of today, this would require an installation ramp-up faster than any country except China," said James Sprinz, a Vancouver-based analyst with BNEF.
BNEF’s forecast is for India to have installed 15 million meters by 2020.
“If we were to see a number of large utilities announcing large procurements then this might alter the forecast but currently I think it looks reasonable," Sprinz said.
In terms of market size, BNEF estimates a cost of $73 per installed meter, which is toward the lower end of global costs. Due to the low costs and limited installations, BNEF expects India’s market position to fall somewhere between third and sixth in Asia in the next 3 years to 4 years.
Smart-meter assets have become attractive to bidders in recent years ahead of a European Union goal to replace at least 80 percent of electricity meters with smart meters by 2020 in a drive to reduce emissions.
In July, Hong Kong billionaire Li Ka-shing agreed to acquire CVC Capital’s German smart-meter business Ista International GmbH for about 4.5 billion euros ($5.3 billion), including debt.
EESL is a joint venture between India’s ministry of power and state-backed companies in the power sector such as NTPC, Rural Electrification Corp. (REC), Power Grid Corp. of India, Power Finance Corp. (PFC) and the Bureau of Energy Efficiency (BEE). Bloomberg