Smarting Up The Power Grid
Technological advancements are truly converging the world into one, connected planet where resources can be managed rationally. Just like with power. Say, on Sunday mornings, most households operate their washing machine all in the same hour, increasing the demand of power on the grid. If the grid can suggest the appliance to operate after noon, when the demand is low and even the power is cheap, it will become efficient and cost effective for the whole ecosystem. Electronics becoming smart is almost set to revamp the power sector.
The "Internet of Things' (IoT) devices will soon be able to communicate with the smart grid on deciding the most optimal time to use energy. This connected system will give consumers, metrics on their usage, even helping them manage it well.
There will be $4.8 trillion in aggregate IoT investment between 2016 and 2021 as per a market report, but the advancements to make real sense in India, the power grid needs to become much more reliable. The grid needs to monitor in near real time, the demand in power and find the resources to supply it. This can be done by a smart grid that is connected, informed, automated and empowered by smart meters with the ability to communicate and manage IoT devices in the house. Thus, Advanced Metering Infrastructure (AMI) is a precursor to grid modernization in India which will require heavy investments and has become a bone of contention for power utilities, most of whom are reeling under heavy debt and "Aggregate Technical and Commercial' losses of over 30 per cent.
It is estimated that the deployment of smart meters alone in the whole of Europe and UK will require Euro 63 billion. The government in India has also set up 14 pilot smart grid projects with an outlay of 980 crore to test the cost-benefit analysis. As India aims to reach 100 percent rural electrification by 2018, grid modernization may be a very cost-intensive affair.
Reacting to the contention, Suhas Dhapare, Head- Performance and Efficiency, Tata Power, opines, "A utility has to anyhow keep spending on maintenance of the systems at regular intervals. The cost of modernization will be absorbed by the utilities over a period of time. It will also result into greater efficiency and considerable cost-saving for power distributors that will offset the cost of modernization." While the cost of modernization and AMI will be ultimately borne by the consumer, it may reflect into increased cost of power in India.
Addressing the apprehension, R.K. Verma, Chairman, Central Electricity Authority (CEA) says, "Prices of power to consumer will not increase. It is a one-time investment for utilities and the cost of production for smart meters will come down." While currently a smart meter may cost anything between 10,000-16,000 in India, A.K. Verma, Joint Secretary, Ministry of Power, Govt. of India expects, "Somebody has to innovate and bring down the cost below Rs. 1000 per unit."
The start-up ecosystem in India is budding with great creativity. Yashraj Khaitan, Founder and CEO, Gram Power, a start-up in the field of providing end to end smart grids solutions in India tells, "Big companies are providing AMI solutions at rates that are not viable. An electric smart meter at that cost is useless in rural areas."
Gram Power has designed a smart meter at an affordable cost apart from many other components and controllers of a smart grid. Highlighting the business opportunities for companies in smart grids sector, Hitesh Chaniyara, Director (Power and Utilities), PwC informs, "Government has directed utilities to install smart meters for consumers consuming more than 200 unit per month by Dec 2019 and for all consumers by 2027. India is projected to invest $44.9 billion in smart metering, distribution automation, battery storage and other smart grid market segments over the next decade."
While big companies can be fiercest of competitors, another start-up in the smart grids sector which was incubated at IIM Ahmedabad believes to rather partner them than fight. Harit Soni, Co-founder, Ecolibrium Energy, says, "Big companies like Cisco and Schneider have an international experience which is very different from the on-ground reality in India.
With insight into Indian scenario, we partnered with big companies like Honeywell to provide large enterprise energy data analytics services which can help their clients to reduce power costs and manage their energy better." He adds, "The competition by start-ups in this space is limited. This is because compared to starting an e-commerce website, a start-up in the power business needs to have a domain expertise and technical ability that are the entry barriers for them."
Large scale disruption has been happening in the power sector through integration of renewables, rooftops, decentralized generation and improved technologies in battery storage. "We will have no choice but to move to smart grids," says P.K. Pujari, Secretary, Ministry of Power. From technology to infrastructure, the whole ecosystem is progressing towards integration. However, utilities may face myriad problems while moving to smart grid.
Expressing the concerns of power distribution companies, Ajoy Rajani, Senior Executive Vice President, Reliance Infrastructure brings to the point, "From the utility perspective, we need an expanded ecosystem of smart meter vendors, Data plus analytics is actually useful information. There is an entire ecosystem of entities that should do data analytics beyond just billing. I think we have barely scratched the surface. Also, utilities and the market can benefit from more system integrators who will work with multiple meter vendors."
(This article was first published in the April issue of Entrepreneur Magazine. To subscribe, click here)