Smart meter installations set to surge, but 2025 target may elude govt: ICRA Report

  • Industry News
  • Jan 12,24
The ratings agency stated that the allocation of smart meters by state distribution utilities or companies (discoms) is projected to rise to 222 million in the near-to-medium term, compared to the 99 million awarded so far.
Smart meter installations set to surge, but 2025 target may elude govt: ICRA Report

The installation of smart meters in the country is anticipated to surge in the next two years; however, meeting the government's target of 250 million smart meter installations by 2025 might be a challenge, as per ICRA. In a report, the ratings agency stated that the allocation of smart meters by state distribution utilities or companies (discoms) is projected to rise to 222 million in the near-to-medium term, compared to the 99 million awarded so far.

Vikram V, Vice President & Co-Group Head of Corporate Ratings at ICRA, remarked, "As of December 2023, out of the sanctioned 222 million meters, only 99 million have been awarded, and merely 8 million smart meters have been installed. Given the current pace, it is unlikely that the Indian government will achieve its target of replacing 250 million conventional meters with smart meters by 2025."

He noted that installations are expected to pick up significantly over the next two years, with high tendering activity in the near-to-medium term due to the pending award of the remaining 123 million meters. This, in turn, provides order book visibility for Advanced Metering Infrastructure Service Providers (AMISP) and meter manufacturers.

Vikram added, "The success of winning bidders is closely tied to the capital cost of establishing smart meters, including associated communication and IT infrastructure. Moreover, the implementation of a direct debit payment mechanism, routing online payments from consumers through the payment gateway to the AMISP, is likely to mitigate counterparty credit risks linked to discoms. However, the effectiveness of this mechanism remains to be seen."

Smart meter installations play a crucial role in the revamped Distribution Sector Scheme (RDSS) initiated by the Centre in July 2021. The RDSS follows the Design, Build, Finance, Own, Operate, and Transfer (DBFOOT) model for smart meter installation, aiming to reduce Aggregate Technical and Commercial (AT&C) losses and eliminate the gap between the cost of supply and tariff by FY25. The RDSS targets lowering pan-India AT&C losses to 12-15% and closing the gap between the average cost of supply and average realizable revenue by the fiscal year 2025.

Source: Mint

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