Implications of implementation of smart meters

Implications of Implementing
Smart Meters In AP, Bihar and WB
by
Aniruddha Choudhury
MBA (Power Management),
B.tech (IT)
**As per latest information available publicly

Business Problem
There have been serious considerations in implementations of Smart Meters throughout the country. The objective is to install 300 million smart meters over the
next 3 years.
According to the Power ministry the DISCOMS loose nearly one-fifth of the total revenue due to losses pertaining to theft and distribution and transmission
losses, incorrect billing and inefficient collections.
Thus, serious measures are needed to overcome this hurdle and to empower the DISCOMS to reduce their losses.
Demand Side Management
Demand side management (DSM) is defined by the Forum of Regulators (FOR) as ‘the planning, implementation and monitoring of utility’s activities designed to
encourage customers to amend their electrical consumption patterns, both with respect to timing and level of electricity demand so as to help the customers to use
electricity more efficiently’.
What are Smart Meters?
A smart meter is a digital measuring device established with the feature to the utility to keep a -two-way communication among the consumer metering device
and the utility and it additionally manages the electric equipment of the user. A smart meter can communicate the actual time of electricity-intake of an electrical
system in very short durations of time while a smart reader is attached to the utility that's able to transmit the energy utilization on an actual-time basis.
Advantages of Smart Meters
• Accuracy in meter reading
• Data recording
• Real time tracking
• Automatic outage detection
• Easier Connect/Disconnect

Smart Meter Architecture
Consumer
Suitable Communication Technology
(GPRS/DCU/Gateway)
Head End System
(HES)
Consumer
Suitable Communication Technology
(GPRS/DCU/Gateway)
Consumer
Consumer
Consumer
Meter Data
Management
System
(MDMS)
DISCOM
SAP
 The consumers who are fitted with Smart Meters will directly send the data of
usage patterns and load and consumption will be relayed to the Head End
System which is a server which collects all meter data.
 The HES relays the data to the MDMS (Meter data Management System)
server which will collect all data related to the consumer and will send to the
Discom SAP server for billing.
 The MDMS will monitor the consumption pattern of the users and will be able
to analyse as well if it is designed further
Assumptions
It is assumed as per market trend:
 Unit cost of smart meters = Rs 3500
 Unit cost of meter box = Rs 500
 Unit cost of DCU = Rs 25000 and per 100 consumers 1
DCU is needed
 Installation cost at site = Rs 500
 Smart Meter AMC @ 2.5% of cost Per annum
 HES AMC @ 15% of cost per annum
 MDMS AMC @ 15 % of cost per annum
 Application Maintenance of HES and MDMS @ 10 % of
cost per annum
 O&M for repairs and up gradation is taken to be Rs 250
Per customer per annum
 Communication charges for WAN (leased lines/GPRS) is
taken to be 1 crore per annum per 25 Lakh customers
 It is assumed that Smart Meter Implementation will reduce
Distribution losses by 1% minimum
Note: Assumptions are based on the report on Smart meters by
Indian Smart Grid Forum dated July 2016

Implication to Discoms
with
State Wise Payback Period

Andhra Pradesh
Population
Crores
Population
group
Size(Crores)
No of
Connections
No of
Feeders
No of
Transfor
mers
%ge AT&C loss
Supply
(Million
KWh)
Consum
ption
(Million
KWh)
Million
Units
Loss
Loss
(Crores)
Energy purchase
rate/unit
4
2.82 0.0000004 7014925.00 1605 53704 33.37% 13.41% 18361 15899 2462 984.80
Daily Produce MU 146.05 5.63 0.0000004 14004975.00 8893 661037 66.63% 13.41% 36657 31742 4915 1966.00
Family size 4.02 8.45 0.0000004 21019900.00 10498 714741 100.00% 13.41% 55019 47641 7378 2950.80
Urban
Rural
Total
**Data as per latest census report, State latest Utility
reports, Losses from UDAY website, CEA
 Population size 8.45 Crores
 Urban population of 2.82 crores as 33.37% of total and Rural population of 5.63 crores as
66.63 % of total (as per latest reports of State Government and latest Census)
 Average Family size was found to be 4.02 for the state from various reports
 With that the total number of connections is calculated by finding the total number of families
from the data
 According to reports of State Utilities Daily produce of the state was found to be 146.05 MU,
with that the total supply of the State is calculated and found to be 52578 MU and in actuals it
was 55019 MU
 With an average energy purchase rate of Rs 4/- and AT&C loss of 13.41%, The total loss
amounted in 2950 Crores which was calculated in the Excel Tool Created for the purpose
**As per Urja website

Cost Implications and ROI for Implementation of Smart Meters in Andhra Pradesh
Scenario I : Implementation on all feeders in AP
 In the Excel tool created the yellow marked cell are taken as input from the above Andhra Pradesh
demography data from the table given in Sampling.
 Average monthly units consumed is around 2600 units by the total connections of AP calculated as
per latest demography data of states.
 With a declared AT&C loss of 13.41% the state seems to loose around 88.5 Billion Units of energy
yearly with a monthly loss calculated gross of around 7.3 Billion units.
 The costing for the system is taken higher than report of ISGF and the tool calculates the average of
the total state from the Demographic data taken as input
 The total cost is divided into, Cost at individual premises, Cost at neighbourhood Network and
System cost
o Cost at Individual Premises takes in considerations of the cost at the premise of the
consumer
o Cost at neighbourhood Network comprises of the Communication charges which can be
GPRS and can be implemented by complex technologies
o Cost of the System is calculated on the basis on inputs from primary sources and ISGF
reports and has been downscaled in this report to showcase the sure short way towards
cleaner energy.
 A rough O&M cost has been assumed based on the report of ISGF and rough approximate state
specific value is calculated
 Over all the report the loss reduction is kept to only 2% due to implementation of Smart Metering
 Nos here are total number of connections
Feeders Per Feeder Total
10498 2002 21019900.00
Usage %ge Nos
Monthly usage
min (units)
Total KWh
Urban 33.37% 7014925 2617 18,36,10,00,000
Rural 66.63% 14004975 2617 36,65,70,00,000
Monthly 55,01,80,00,000
Yearly 6,60,21,60,00,000
Percent Monthly KW Yearly KW
13.41% 7,37,79,13,800 88,53,49,65,600
2%
All Consumers at all feeders
Scenario I
On All Feeders
AT&C losses @ 25%
Loss Reduction
No of Connections

Cost at Individual Premises
Item
Unit
Cost(INR)
Quantity Total Cost (INR)
Smart meter with
communications module 3,500 2,10,19,900 73,56,96,50,000
Meter box 500 2,10,19,900 10,50,99,50,000
Installation charges 500 2,10,19,900 10,50,99,50,000
Total 4,500 2,10,19,900 94,58,95,50,000
At all feeders
Scenario - I
 Quantity is the number of connections
Cost at Neighbourhood Network
No of DCU
Per DCU 100 connections 210199
Item
Unit Cost
(INR)
Quantity Total Cost(INR)
Data Concentrator
Unit/Gateway* 25,000 2,10,199 5,25,49,75,000
Installation and setting up
of network 1,500 2,10,199 31,52,98,500
5,57,02,73,500Total
Scenario - I
At All feeders
Note: It is assumed that per 100 customers 1 Gateway/Data
Concentrator is needed
So, the average cost at the neighbourhood networking is around
INR 557 crores for all feeders serving total Andhra Pradesh
consumers.
 At the Neighbourhood network, suitable communication
technology available can be used, here for the report
purpose it is assumed to be in a simple network connection
with efficient servers.
 So there is a component cost considered for gateways for
the HES, MDMS, Meters and DISCOM servers to
communicate

Systems Cost
Per 10,00,000 Customers
Item
Unit Cost
(INR)
Quantity Total Cost
Head End System (HES) 20,00,00,000 21 4,20,00,00,000
SCM 4,00,00,000 21 84,00,00,000
Meter Data Management
System (MDMS) 20,00,00,000 21 4,20,00,00,000
Integration of systems 50,00,00,000 21 10,50,00,00,000
19,74,00,00,000Total
**Cost taken As per report by ISGF
 The number of systems are calculated per 10 Lakh customers and the cost
associated with it calculated from primary data and secondary data from the
market and experts in the domain
O&M Cost Approximates
Item
Annual Cost
(INR)
Lifecycle
Cost(INR)
Life Cycle
Annual Maintenance Charges (AMC) of
Smart Meters @ 2.5% p.a. 2,36,47,38,750 23,64,73,87,500 10 Years
DCU/Gateway @2.5% p.a. 13,92,56,838 1,39,25,68,375 10 Years
Head End System (HES) at 15% p.a. 63,00,00,000 6,30,00,00,000 10 years
Meter Data Management System (MDMS)
at 15% p.a. 63,00,00,000 6,30,00,00,000 10 Years
Application Maintenance Support (AMS)
of MDMS and HES @ 10% p.a. 84,00,00,000 4,20,00,00,000 5 Years
O&M for attending to
repairs/replacements/customer
complaints/upgradation (Rs 250 per
customer yearly) 5,25,49,75,000 52,54,97,50,000 10 Years
Communication charges for WAN (leased
lines/GPRS) 21,00,00,000 2,10,00,00,000
Total 10,06,89,70,588 96,48,97,05,875
10 Years
**Percentages taken as per report by ISGF
Scenario - I
At all Feeders
 The validation of the percentages can be found in the reports
of ISGF, this report is merely a tool so showcase the return
on investment for the DISCOMs as Implications of Smart
Metering and the advantages associated with it as per
demography of states

TC for deployed system
Items Cost (INR) Remarks
Cost of equipment at Individual premises 94,58,95,50,000
Cost of Neighbourhood Network 5,57,02,73,500
System Cost 19,74,00,00,000
Total (I) 1,19,89,98,23,500
O&M Cost (including charges for
communication) for 10 years (II) 96,48,97,05,875
Total for 10 Years (III) = (I) + (II) 2,16,38,95,29,375
Overhead, contingency and other
unforeseen/contingency @ 10% of above,
i.e. (IV) = 10% of (III) 21,63,89,52,938
Grand Total 2,38,02,84,82,313
One time Cost
10 Years, for some
items AMC is for 5
years
10 Years
Scenario - I
At all feeders
Per Customer Costing for 10 Years 11323.95883
Per Customer Costing for 1 Year 1132.395883
Per Customer Costing for 1 month 37.74652945
Per customer Cost associated
 If invested, per customer cost per month is at 38 INR, which can be
accumulated and billed as done in cross subsidy to recover the cost, if push
comes to shove.
 Else it can be seen from the below table that from reduction in 2% loss due to
T&D alone INR 500 crore can be saved alone

Note 1: This value is intentionally taken
higher than the present value for
incorporating the inflation over the
lifetime of the AMI project which is
considered as 10 years
Note 2: This excludes the loss of revenue
to the DISCOM in case of DT failure
Note 3: AT&C losses is taken as per
UDAY website calculated out of Total
Energy Required MU per year in the state
It can be seen that on implanting on all feeders for all consumers the cost can be recovered in 2.59 years taken the assumptions are correct as
per ISGF report
 Here ROI is calculated on the assumptions that
o There will be savings for allowances for manual meter reading and billing mechanism
o There will be savings for faster detection of outages
o There will be savings as AT&C losses and theft can be controlled by implementation of pre-paid metering in effected areas
o There is savings associated with faster detection of failures
o As per Ministry of Power Data, Andhra Pradesh looses 9.4% of power due to inefficient billing and theft, which can be controlled using
Smart Metering Architecture
o Only 2% reduction on loses is considered for this report and tool
Items Cost Remarks Yearly Benefits
Savings on meter reading cost Including (salary of
meter readers, allowances and traveling cost of
meter readers, the stationery used ) - (I)
INR 15 Per customer per month
** Value taken as per ISGF report
3,78,35,82,000
Cost savings associated with
disconnections/reconnections in case of outages and
failures - (III)
Taken for 1 % of customers per month with a
average cost of INR 500 per visit to the premises
** Assumption Taken as per ISGF report
10,50,99,500
Annual savings due to reduction in AT&C losses
(considering INR 3 as avg. tariff). This includes energy
accounting - (IV)
% reduction
5,31,20,97,936
9,20,07,79,436
92,00,77,94,360
Payback Period (Years) Total Cost of Deployed system/Total Benefits 2.59
Annual Benefits (I+II+III+IV)
Total Benefits For 10 Years
Scenario - I
At all Feeders

Savings on meter reading cost Including (salary of meter
readers, allowances and traveling cost of meter readers, the
stationery used ) - (I)
INR 15 Per customer per month (as per ISGF)
** Value taken as per ISGF Report
1,26,26,86,500
Cost savings associated with disconnections/reconnections in
case of outages and failures - (III)
**Assumption as per report of ISGF
3,50,74,625
Annual savings due to reduction in AT&C losses (considering
INR 3 as avg. tariff). This includes energy accounting - (IV)
1 % reduction
1,77,27,91,272
3,07,05,52,397
30,70,55,23,970
Scenario - II
Urban Feeders only
Annual Benefits (I+II+III+IV)
Similarly the Scenario II is calculated from the demography of AP and
It can be seen that on implanting on all feeders for Urban consumers the cost can be recovered in 3.51 years taken the assumptions are correct
as per ISGF report
 Here ROI is calculated on the assumptions that
o There will be savings for allowances for manual meter reading and billing mechanism
o There will be savings for faster detection of outages
o There will be savings as AT&C losses and theft can be controlled by implementation of pre-paid metering in effected areas
o There is savings associated with faster detection of failures
o As per Ministry of Power Data, Andhra Pradesh looses 13.41% of power due to inefficient billing and theft, which can be controlled using
Smart Metering Architecture
o Only 2% reduction on loses is considered for this report and tool

Bihar
Population
Crores
Population
group
Size(Crores)
No of
Connections
No of
Feeders
No of
Transformer
s
%ge
AT&C
loss
Supply
(Million
KWh)
Consumption
(Million KWh)
Million
Units
Loss
Loss (Crores)
Energy purchase
rate/unit
4.02
1.176 0.0000006 2138182.00 591 14442 11.30% 27.39% 3954 2871 1083 435.37
Daily Produce MU 103.68 9.234 0.0000006 16789091.00 1572 95303 88.70% 27.39% 31046 22543 8503 3418.21
Family size 5.5 10.41 0.0000006 18927273.00 2163 109745 100.00% 27.39% 35000 25414 9587 3853.57
Urban
Rural
**Data as per latest census report, State latest Utility reports,
Losses from UDAY website, CEA
Total
 Population size is around 10.4 crores
 With an Urban constituency of 33.37%, ie 2.82 crores and rural constituency of 66.63 % amounting to
5.63 crores as per State Government reports and latest Census reports
 Average family size was found to be 5.5 for the state from state government reports
 The daily produce was found to be 146.05 MU with a total of 55000 MU in a year
 Average AT&C loss for the state was found to be 27.39%
 With an average Energy purchase cost of 4.02 INR the losses surmount to INR 3800 crores
**Here it can bee seen that on an average Bihar faces 23 %
of losses in Theft and Distribution losses as per URJA
website but UDAY website reports a average loss of 27.39%
in Bihar

Cost Implications and ROI for Implementation of Smart Meters in Bihar
Scenario I : Implementation on all feeders in Bihar
Feeders Per Feeder Total
2163 8750 18927273.00
Usage %ge Nos
Monthly usage
min (units)
Total KWh
Urban 11.30% 2138182 1849 3,95,40,00,000
Rural 88.70% 16789091 1849 31,04,60,00,000
Monthly 35,00,00,00,000
Yearly 4,20,00,00,00,000
Percent Monthly KW Yearly KW
27.39% 9,58,65,00,000 1,15,03,80,00,000
2%
All Consumers at all feeders
Scenario I
On All Feeders
AT&C losses @ %
Loss Reduction
No of Connections
 Loss reduction is taken as only 2% for the calculation of ROI
 With a loss of 27.39% Bihar looses 116 BU per year which is a
huge amount for a DISCOM
 Total number of connections are calculated based on
demography data as presented and as per family size of the
State as per Census
 With an average AT&C loss of 27.39% the State seems to loose
115 BU every year with a monthly gross loss of 9.5 BU which is
a huge amount for a DISCOM to bear
 The total cost is divided into, Cost at individual premises, Cost
at neighbourhood Network and System cost
o Cost at Individual Premises takes in considerations of the
cost at the premise of the consumer
o Cost at neighbourhood Network comprises of the
Communication charges which can be GPRS and can be
implemented by complex technologies
o Cost of the System is calculated on the basis on inputs
from primary sources and ISGF reports and has been
downscaled in this report to showcase the sure short way
towards cleaner energy.

Cost at Individual Premises
Item
Unit
Cost(INR)
Quantity Total Cost (INR)
Smart meter with
communications module 3,500 1,89,27,273 66,24,54,55,500
Meter box 500 1,89,27,273 9,46,36,36,500
Installation charges 500 1,89,27,273 9,46,36,36,500
Total 4,500 1,89,27,273 85,17,27,28,500
At all feeders
Scenario - I
 Total number of connections are taken as input from
Government sources
 Quantity is the number of connections
Cost At Neighbourhood
No of DCU
Per DCU 100 connections 189273
Item
Unit Cost
(INR)
Quantity Total Cost(INR)
Data Concentrator
Unit/Gateway* 25,000 1,89,273 4,73,18,25,000
Installation and setting up
of network 1,500 1,89,273 28,39,09,500
5,01,57,34,500Total
Scenario - I
At All feeders
Note: It is assumed that per 100 customers 1 Gateway/Data
Concentrator is needed
So, the average cost at the neighbourhood networking is around
INR 501 Crores for all feeders serving Bihar Total consumers.

Systems Cost
Per 10,00,000 Customers
Item
Unit Cost
(INR)
Quantity Total Cost
Head End System (HES) 20,00,00,000 19 3,80,00,00,000
SCM 4,00,00,000 19 76,00,00,000
Meter Data Management
System (MDMS) 20,00,00,000 19 3,80,00,00,000
Integration of systems 50,00,00,000 19 9,50,00,00,000
17,86,00,00,000Total
**Cost taken As per report by ISGF
 The number of systems are calculated per 10 Lakh customers and the
cost associated with it calculated from primary data and secondary
data from the market and experts in the domain
 System cost is taken as per ISGF report and other primary expert
sources and here it has been kept little high to compensate for errors
O&M Cost approximation
Item
Annual Cost
(INR)
Lifecycle
Cost(INR)
Life Cycle
Smart Meters @ 2.5% p.a. 2,12,93,18,213 21,29,31,82,125 10 Years
DCU/Gateway @2.5% p.a. 12,53,93,363 1,25,39,33,625 10 Years
Head End System (HES) at 15% p.a. 57,00,00,000 5,70,00,00,000 10 years
Meter Data Management System (MDMS)
at 15% p.a. 57,00,00,000 5,70,00,00,000 10 Years
Application Maintenance Support (AMS)
of MDMS and HES @ 10% p.a. 76,00,00,000 3,80,00,00,000 5 Years
O&M for attending to
repairs/replacements/customer
complaints/upgradation (Rs 250 per
customer yearly) 4,73,18,18,250 47,31,81,82,500 10 Years
Communication charges for WAN (leased
lines/GPRS) 19,00,00,000 1,90,00,00,000
Total 9,07,65,29,825 86,96,52,98,250
10 Years
**Percentages taken as per report by ISGF
Scenario - I
At all Feeders
Communication charges are taken as 10 lakhs for each 10
lakh consumers

TC for deployed system
Items Cost (INR) Remarks
Cost of equipment at Individual premises 85,17,27,28,500
Cost of Neighbourhood Network 5,01,57,34,500
System Cost 17,86,00,00,000
Total (I) 1,08,04,84,63,000
O&M Cost (including charges for
communication) for 10 years (II) 86,96,52,98,250
Total for 10 Years (III) = (I) + (II) 1,95,01,37,61,250
Overhead, contingency and other
unforeseen/contingency @ 10% of above,
i.e. (IV) = 10% of (III) 19,50,13,76,125
Grand Total 2,14,51,51,37,375
One time Cost
10 Years, for some
items AMC is for 5
years
10 Years
Scenario - I
At all feeders
Per Customer Costing for 10 Years 11333.65263
Per Customer Costing for 1 Year 1133.365263
Per Customer Costing for 1 month 37.77884209
Per customer Cost associated
 On an average, per consumer cost per month is around
INR 38 on implementation on all feeders

ROI
Savings on meter reading cost Including (salary of
meter readers, allowances and traveling cost of
meter readers, the stationery used ) - (I)
INR 15 Per customer per month
** Value taken as per ISGF report
3,40,69,09,140
Cost savings associated with
disconnections/reconnections in case of outages and
failures - (III)
** Assumption Taken as per ISGF report
9,46,36,365
Annual savings due to reduction in AT&C losses
(considering INR 3 as avg. tariff). This includes energy
accounting - (IV)
% reduction
6,90,22,80,000
10,40,38,25,505
1,04,03,82,55,050
Annual Benefits (I+II+III+IV+V+VI)
Scenario - I
At all Feeders
Note 1: This value is intentionally taken higher than the present
value for incorporating the inflation over the lifetime of the AMI
project which is considered as 10 years
Note 2: This excludes the loss of revenue to the DISCOM in case
of DT failure
Note 3: AT&C losses is taken as per UDAY website calculated
out of Total Energy Required MU per year in the state
 With the above bare minimum benefits taken from ISGF
report, we can see that the cost to the company can be
recovered in around 2.06 years with only 2% reduction
in losses considered if implemented on all feeders

Savings on meter reading cost Including (salary of meter
readers, allowances and traveling cost of meter readers, the
stationery used ) - (I)
INR 15 Per customer per month (as per ISGF)
** Value taken as per ISGF Report
38,48,72,760
Cost savings associated with disconnections/reconnections in
case of outages and failures - (III)
**Assumption as per report of ISGF
1,06,90,910
Annual savings due to reduction in AT&C losses (considering
INR 3 as avg. tariff). This includes energy accounting - (IV)
% reduction
77,97,60,432
1,17,53,24,102
11,75,32,41,020
Scenario - II
Urban Feeders only
Annual Benefits (I+II+III+IV+V+VI)
 Return on investment in 4.96 years with only 2%
reduction in loses and some minimal benefits
assumed as per report of ISGF if implemented on
urban feeders only
Note 1: This value is intentionally taken
higher than the present value for
incorporating the inflation over the lifetime
of the AMI project which is considered as
10 years
Note 2: This excludes the loss of revenue to
the DISCOM in case of DT failure
Note 3: AT&C losses is taken as per UDAY
website calculated out of Total Energy
Required MU per year in the state

Amount Unit Amount Unit
1 No of Connections 2,10,19,900.00 Nos 7014925 Nos
2 Losses 13.41% percent 13.41% percent
3 Reduction in losses 2% percent 2% percent
4 Feeders 10498 Nos 1605 Nos
5 TC of the Deployed System 2,38,02,84,82,313 INR 1,07,75,59,46,375 INR
6 Total Benefits 92,00,77,94,360 INR 30,70,55,23,970 INR
7 Payback Period 2.59 Years 3.51 Years
8 Per Connection costing per month 37.75 INR 51.20318292 INR
9 Savings on Meter Reading allowances 15 INR 15 INR
10
Disconnection/Reconnection is taken @
for the whole year
1% percent 1% percent
11
Actual Disconnections/Reconnection
losses
1 No of Connections 18927273.00 Nos 2138182 Nos
2 Losses 27.39% percent 27% percent
5 TC of the Deployed System 2,14,51,51,37,375 INR 58,34,51,08,250 INR
6 Total Benefits 1,04,03,82,55,050 INR 11,75,32,41,020 INR
10
for the whole year 1%
percent 1% percent
1 No of Connections 20372768.00 Nos 6492801 Nos
2 Losses 19.80% percent 20% percent
5 TC of the Deployed System 2,29,98,49,53,000 INR 1,00,87,52,22,938 INR
6 Total Benefits 43,44,04,91,200 INR 13,84,50,03,450 INR
10
for the whole year
1% percent 1% percent
11
Actual Disconnections/Reconnection
loss
lakhs INR3850
Scenario II
Scenario I Scenario II
Bihar
WB
Scenario I Scenario II
AP
Scenario I
As per the Analysis it
can be concluded that
 If minimum 2 % of losses are
reduced there is a pretty good
ROI on implementing Smart
Meters
 AP DISCOM can recover their
cost for implementing the
system in 2.6 years, if
implemented on all feeders
 Bihar DISCOM can recover the
cost by 2.06 years if
implemented on all feeders
 West Bengal DISCOM can
recover their cost in 5.29 years

Implications of implementation of smart meters

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