The electricity sector is facing transformation as never before. This is being further pushed due to stringent targets set to de-carbonise the sector at the United Nations Climate Change Conference (COP 21) that was held in Paris in December 2015. The power sector has reached its inflection point where its future directions are much less predictable. The trends that challenge the power utilities are low demand, difficulties of attracting investments, regulatory pressures, reliability challenges, generation mix and emerging technologies.

Within the next decade, it is anticipated that aforesaid changes including resource scarcity, demographic and social changes, a shift in global economic power and rapid urbanisation shall have a significant impact on the electricity sector. It is expected that these changes shall be more isible from 2022 onwards.

The government of India has given lot of thrust to ambitious programmes such as 24/7 Power for All by 2019, coupled with a very aggressive renewable energy programme of 175GW by 2022. It has envisaged an investment of about $250 billion over the next 4-5 years, with an investment of $75 billion in the transmission and distribution (T&D) area. Considering the growth and technology penetration required in the field of distribution, the need for enhancement will be felt shortly to meet the challenges.

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It is worthwhile noting that most breakthroughs happening in the electricity sector nationally or internationally—such as photovoltaic solar cells, energy storage, electric vehicles, energy efficiency, demand response, intelligent home appliances, smart grid, smart meters—pertain to or have greater effect on the distribution system, that too generally behind metering devices. Thus, the meter at customer premises will play a crucial role and will be the key element/fulcrum of the sector.

The recent distribution reform initiatives—Ujwal Discom Assurance Yojana (UDAY), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS)—envisage technology penetration such as SCADA/DMS (Supervisory Control and Data Acquisition/Distribution Management System), GIS mapping, consumer indexing, demand-side management and smart meters.

The power supply delivery chain of the future will be more interconnected than ever before. This value chain also forms an integrated ecosystem that is highly interlinked. Traditionally, the value chain of generation, transmission and distribution is being expanded and consumer/prosumer is emerging as enabler and optimiser in real-time grid management. We are now entering the era of connected customers; we are also seeing broader emergence of the intelligent grid. The distribution system operation has become complex, but it is not able to meet the expectations nor able to create a required environment. In fact, strictly speaking, due to fast changes in distribution system operation, it is less understood, thus due importance is yet to be given by all the stakeholders.

Perennial shortages of power and non-availability of transmission systems—including non-establishment of the national grid—have overshadowed the shortcomings of the distribution system. Further, it was the baby of state governments only, and the central government was not involved to supplement in an active manner. Now, there is a paradigm shift and the distribution system has become the focal point in both central and state governments to improve the financial health of distribution companies to supply 24/7 power to all.

The distribution system basically comprises of three major functions—(1) infrastructure network; (2) electricity supply; and (3) services such as metering, billing and collection of electricity charges.

The government has undertaken a pioneering effort to amend the Electricity Act, 2003, to separate carriage (network) and content (supply) to encourage open access by the consumers. The Act has undergone all scrutiny and is waiting for approval of Parliament for enactment. The major thing which remains to be tackled is the services part—metering, billing and collection of electricity charges. This will become more complex once smart meters—as envisaged in the UDAY—are in place.

The smart metering system comprises of three parts.

* The meter itself, to provide two-way communication between the customer and utility, enabling real-time functions like outage management, real-time pricing and power quality monitoring;

* The most critical is the metering communication infrastructure, i.e. from individual meters to communication hub and communication hub to business processor at control centre;

* Data management, which essentially means management of all data creation, storage and privacy protection of each consumer.

The deployment of smart meters will result in an explosive growth of consumer data; for example, for 5 million consumers the conventional 6 million per year data shall increase to 18 billion per year, i.e. the numbers increase by 3,000 times. The challenge is that it must be captured, ordered, studied and analysed in near-real-time. Data analytics, which is non-existent today’s scenario, will be crucial going forward. This can provide Big Data solutions, i.e. having the ability to provide insights into the efficacy of demand response and provide utilities/retailers rapid feedback.

A lot of preparatory work is needed for the installation of smart meters on the regulatory and technology front. This include rights and obligation of energy suppliers, network operators and other relevant parties involved in the end-to-end management of smart meters, data storage and system architecture. It also includes the interoperability protocol to avoid monopolistic approach of manufacturers.

The most critical aspect is that the consumption, tariff data and quality data are stored in smart meters, which is in customer premises. This is customers’ prerogative to allow data access by others. The Smart Energy Code (SEC) needs to be in place before large-scale installation.

Recently, the Central Electricity Authority (CEA) came out with the functional requirement for smart meters, but we have a long way to go for appropriate technology selection for meters, communication infrastructure and standardised communication protocol, such that it can also be utilised by multi manufacturers, users and functionaries—gas, intelligent home appliances, other service providers—to reduce costs.

The UK government is installing 53 million smart meters at a cost of 11.7 billion euros (Rs 89,400 crore). This is being implemented in three phases. Phase 1 is establishment of high-level policy design. In Phase 2 the industry builds and tests systems to establish the best for the consumers. Phase 3 is installation of smart meters on all households by 2020. They have also made this service a separate licence activity and it is being carried out by a specialised agency called the Data Communications Company. The infrastructure/data is utilised by authorised agencies.

In India, it is worth pondering whether this activity needs to be carried out by our distribution companies or could it be outsourced or separately licensed like in the UK and other countries. We have to keep in mind that the work involved is huge, where technology will play a major role. So, it might remain a challenge for government-owned entities. Smart metering platform coupled with distribution system operation will support the development of a wide range of new technologies and services. It will also empower consumers to take all saving measures, enabling consumers to switch energy suppliers more smoothly and they could benefit with lower electricity bills. Clearly, continuous reforms are needed in distribution systems to match with the new developments.

The author is former chairman and managing director, Power Grid Corporation of India Ltd. Views are personal