Target of 250 mn smart meter installations by 2025 unlikely to be met: ICRA

The pace of installations is likely to witness a significant jump over the next two years, with tendering activity expected to remain high in the near-to-medium term

Vaageesh Thirumalai
First Published10 Jan 2024, 04:28 PM IST
India’s smart meter programme aims to replace 250 million conventional meters to cut distribution losses. HT
India’s smart meter programme aims to replace 250 million conventional meters to cut distribution losses. HT

Installation of smart meters in the country is expected to increase in the next two years, however, government may not be able to meet the target of 250 million smart meter installations by 2025, according to ICRA.

A report from the ratings agency on Wednesday said that the awarding of smart meters by the state distribution utilities or companies (discoms) would increase to 222 million over the near-to-medium term from the 99 million awarded so far.

Vikram V., vice president & co-group head of corporate ratings, ICRA, said: “Of the 222 million meters sanctioned as of December 2023, 99 million meters have been awarded. However, the progress in installations remains low, with only 8 million smart meters installed as of December 2023. Given the current pace of installations, the government of India’s target to replace 250 million conventional meters with smart meters by 2025 is unlikely to be met.”

He added that the pace of installations is likely to witness a significant jump over the next two years, with tendering activity expected to remain high in the near-to-medium term due to the pending award of the remaining 123 million meters. This provides an order book visibility for advanced metering infrastructure service providers (AMISP) and meter manufacturers, Vikram added.

“The viability for the winning bidders remains largely linked with the capital cost of setting up the smart meters along with the associated communication and IT infrastructure. Further, the availability of a direct debit payment mechanism, wherein online payments received from the consumers are to be routed from the payment gateway to the AMISP, is likely to mitigate the counterparty credit risk associated with the discoms to a large extent. However, the track record of this mechanism remains to be seen,” he said.

Smart meter installations is a key component of the revamped distribution sector scheme (RDSS) launched by the Centre in July 2021, which follows the design, build, finance, own, operate, and transfer (DBFOOT) model for the installation of smart meters to bring down aggregate technical and commercial (AT&C) losses and reduce the gap between the cost of supply and tariff to zero.

RDSS targets reducing aggregate technical and commercial losses to pan-India levels of 12-15% and eliminating the gap between the average cost of supply and average realizable revenue by FY25.

Technical and commercial losses of power distribution companies dropped from 22.32% in FY21 to 16.44% in FY22. The gap between the average cost of supply and average realizable revenue declined from 0.69/kWh in FY21 to 0.15/kWh in FY22.

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First Published:10 Jan 2024, 04:28 PM IST
HomeNewsTarget of 250 mn smart meter installations by 2025 unlikely to be met: ICRA

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