New Delhi [India], March 30 : Power distribution companies (discoms) could generate an additional revenue potential of around Rs 4.0 lakh crore over the next seven years by installing smart meters across India, Care Edge Ratings said in a report this week.
Should billing and collection efficiencies improve substantially, the financial gains could exceed initial projections, further bolstering the financial health of the power sector, the rating agency asserted.
India's power distribution sector is undergoing a critical transformation with the push towards smart grids. The implementation of advanced metering infrastructure (AMI) has shown positive results by far.
The installation of smart meters has been progressing, with around 2.0 crore meters installed by January 2025, according to Care Edge.
However, the report anticipates that smart meter installations will reach only 25 per cent of the target of 25 crore meters by March 2026, falling short of the government's set goal.
"The ambitious target of installing 25 crore smart meters requires a significant investment of Rs 1.25 lakh crore, with Rs 95,000 crore in debt and a 25 per cent equity contribution," said the report.
The smart metering system has significant potential, as they play a key role in enhancing power sector efficiency through real-time monitoring, reducing power theft, and improving demand forecasting.
However, Care Edge asserts that the rollout of the scheme has been slow due to consumer resistance, operational and maintenance challenges, and delayed budgetary support.
As the smart meter rollout gains momentum, timely policy support, financial incentives, and effective collaboration between power distribution companies and technology providers will be essential to install 25 crore smart meters over the next 3-4 years.
"This will be particularly important after the likely miss of the March 2026 target to fully realise the benefits of smart metering and unlock additional revenue," said the report.
Smart meter penetration in India, currently at 5-6 per cent, lags behind developed nations like Japan (100 per cent) and the USA (73 per cent), as well as the global average of 43 per cent.
Now, India is making significant strides with its ambitious plan to install 25 crore smart meters over five years, from 2021-22 to 2025-26, presenting a USD 20-25 billion opportunity for the energy sector under the Revamped Distribution Sector Scheme (RDSS), which was launched in 2017.
"Moving forward, challenges will remain in achieving consistent progress across states and further accelerating delivery while realising the intended sustainability benefits. Although state regulators and the Ministry of Power mandate this transition, discoms must take a proactive role in managing the change, both at the organisational and consumer levels, to ensure a smooth and collaborative implementation," Care Edge said.