Smart Meters To Boost Discom Revenue By ₹4L Crore Over 7 Years: CareEdge

Smart meter deployment which currently stands at 5-6%, needs acceleration in India as it lags behind developed nations like Japan (100%) and the USA (73%), as well as the global average of ~43%, finds a recent CareEdge Report. The study highlighted an urgent need to bridge this gap and enhance energy efficiency. 

The report highlighted an urgent need for improved energy efficiency. It further explained that despite being in its fifth year, the RDSS has seen slower-than-expected progress, with only 2.0 crore meters installed by January 2025. This delay stems from several challenges, including delayed government support, a focus on IT infrastructure by developers, and consumer resistance to the installation of smart meters. India currently has sufficient capacity to install around 10 crore meters annually, with the top 8-9 manufacturers accounting for about 80% of the capacity.

The report stated, “Now, India is making significant strides with its ambitious plan to install 25 crore smart meters over five years, from FY22 to FY26, presenting a $20-25 billion opportunity for the energy sector under the Revamped Distribution Sector Scheme (RDSS), which was launched in 2017.”

The CareEdge report mentioned, “This scheme has an outlay of Rs 3 lakh crore and aims to reduce the AT&C losses to pan-India levels of 12-15% and the ACS-ARR gap to zero. The total investment for 25 crore smart meters is estimated at Rs 1.25 lakh crore to be financed by Rs 95,000 crore in debt and 25% equity contribution. Furthermore, under RDSS, the estimated budgetary support is Rs 97,000 crore, including support of approximately Rs 900 per smart meter, which translates to a budgetary support of Rs 25,000 crore.”

States With High AT&C losses will be pivotal in achieving targeted efficiency improvements

The CareEdge Ratings, stated, “The top eight states have been allocated 16.8 crore meters out of the sanctioned 22.2 crore meters. Of the 13.8 crore meters awarded, their share stands at 78%. However, execution has been lagging post-award. Bihar and Assam together account for 45% of the total installations, with Bihar leading at 60 lakh installations—approximately 30% of India’s total. In Bihar, 35% of the sanctioned smart meters have already been installed. Uttar Pradesh is a key focus area due to its high AT&C losses; although all sanctioned meters have been awarded, but the execution is lagging.”

The report elaborated, “Maharashtra has received a significant RDSS allocation, with all sanctioned meters already awarded. AT&C loss recovery trends align with smart meter installations, with Bihar achieving the highest recovery between FY16 and FY23.” States like Rajasthan, Uttar Pradesh, Bihar, and Haryana have also made notable progress. CareEdge Ratings expects the cumulative additional revenue potential of discoms to be around Rs 4.0 lakh crore over the next 7 years by enhancing billing and collection efficiency through the installation of smart meters. The savings can be higher if the billing and collection efficiency improves significantly beyond the estimated levels. 

The report found, “Smart metering implementation and potential savings, as just discussed, will lead to improved financial profiles of discoms, as they will be reflected in reduced AT&C losses and the ACS-ARR gap. While AT&C losses have improved significantly from 30.5% in FY2007, they remain relatively high, especially considering the increasing volumes and higher prices. In FY24, provisional losses stand at 17.6%, reflecting a 2% increase from FY23.”

CareEdge Ratings View

CareEdge While smart metering may not be a complete solution for discoms, it holds significant potential to address operational inefficiencies and create substantial revenue opportunities, especially for discoms that have previously struggled with inadequate billing. The RDSS initiative, designed to address these challenges, is supported by strong financial backing, including a Rs 900 subsidy per meter and a substantial pipeline of 23 crore smart meters yet to be installed.

It added, ” Timely release of government support is crucial to accelerate the rollout, which is now expected to be delayed by 2-3 years beyond the original target. Some challenges can be mitigated through effective customer training, clear communication, and proactive risk management. Ensuring smooth execution, maintaining supply chain stability, and promoting transparency will be crucial for the long-term success of the initiative.”