India’s 250 million smart meter target by 2025 unlikely to be met – ICRA

India’s target to complete a nationwide smart meter rollout by 2025 is in doubt with progress in installations low, analysis from the rating agency suggests.

In the analysis ICRA states that the pace of installations is expected to witness a significant jump over the next two years, supported by the progress in tendering and the government’s focus on improving the finances of the distribution companies.

As of December 2023, 222.3 million smart meters had been sanctioned by the government, but of these 98.7 million had been awarded.

However, only 8 million smart meters had been installed as of December 2023.

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The Revamped Distribution Sector Scheme was introduced by the government in July 2021 with the objectives of improving the financial and operational efficiencies of the distribution companies, including reducing the aggregate technical and commercial losses to 12-15% by 2025 – a target not far off being reached in 2023, the Ministry of Power has reported.

A key pillar of the scheme is the nationwide rollout of smart meters, with the adoption of a ‘design, build, finance, own, operate and transfer’ model to enable the distribution companies to avoid the upfront investment cost of the meters and associated communication and IT infrastructures.

Advanced metering infrastructure service providers, who supply, finance, install and operate the systems, then bid for the projects, with the service charge per month per meter being the key parameter, ICRA notes.

ICRA also comments that the viability for the winning bidders remains largely linked with the capital costs of the smart meters and their associated infrastructure.

Further, the availability of a direct debit payment mechanism, wherein online payments received from consumers are routed from the payment gateway to the AMI service providers is likely to mitigate the counterparty credit risk associated with the distribution companies to a large extent.

However, demonstration of this mechanism remains to be seen.

ICRA states in the analysis that the expected jump in smart meter installations over the next two years should improve the billing and collection efficiency of the distribution companies.

However, it advises that while choosing customers for replacing the meters, the companies should be mindful of their consumption potential to achieve net positive savings after the installation.

Among the rollouts under way, the state smart metering jv Intellismart has an order book of approximately 20 million units.

Similarly Adani Energy Solutions has an approximately 20 million smart meter order book and is partnering with telecoms provider Airtel, which will power them with its IoT platform based on NB-IoT, 4G and 2G.