‘Target of 25cr. smart meters by 2025 to be missed by long mile’
The government’s aim to install 25 crore smart meters by 2025 is unlikely to be met on account of slow progress in implementation, with expectations of only up to half the numbers will be installed.
The pace of smart meter installations (only about 97 lakh were installed till February 29) has been slow.
“While it is likely to gain rapid pace during calendar years (CY) 2024 and 2025, CareEdge Ratings expects the installations to be in the range of 40%50% of the targeted 25 crore smart meters by December 2025,” CareEdge said in a report.
The ratings agency emphasised policy push and adequate supply chain will be crucial for a quick rampup of installations.
Production capacity
The smart meter manufacturing capacity in India stands at about seven crore units per annum and is dominated by a few large players, which are operating at 65%70% capacity against the cumulative requirement of 25 crore smart meters, it added.
Semiconductor chips are a critical component of smart meters, and their seamless imports are a precursor for removing any supply bottlenecks to the sector.
Capacity ramp up
However, the pace of installation is likely to pick up in the next two years with an expected rampup in sanction and awarding, as well as higher utilisation of smartmeter manufacturing capacity, it said.
CareEdge Ratings Senior Director Sabyasachi Majumdar said it was clear smart meters had significant revenue potential for discoms which had been otherwise bleeding in the past on account of inadequate billing.
There is a governmental impetus to drive the rollout quickly through financial support so that the power distribution sector makes a turnaround operationally.
Tardy pace
However, the implementation pace of the smart metering sector has remained sluggish in the last 12 years, he added.
“The surprises during construction which may have significant impact on the project economics, have not fully emerged. Moreover, once the projects are operational, it will be interesting to observe to what extent is the counterparty credit risk mitigated for the advanced metering infrastructure services provider (AMISP),” he said.
“While smart metering may not be the panacea for discoms, it has the potential to cure the operational inefficiencies to a large extent,” he stressed.
(The writer is with The Hindu businessline)