How smart grids can curb India's perennial problem of electricity thefts?

India has always been a power deficit country, and has consistently suffered grid failures and power blackouts. The wake up call came in July 2012, when the country faced the largest power outage in the country affecting 22 states and 620 million people. The outage was a wake up call to modernize the power infrastructure in the country. According to industry estimates, nearly 30 percent of the power generated in India is wasted in transmission and distribution primarily because of leakages and theft.

A new study published by the Northeast Group, LLC, estimates that theft costs the Indian power sector $16.2bn per year. "India's energy demand is rising very fast. In order to meet this rising demand, there needs to be sufficient reliable power infrastructure in place. Unfortunately, the high rate of electricity theft - which costs the country some US$16.2 billion per year - creates a situation where the utilities are not financially sustainable. The utilities fail to collect revenue and as a result, they do not have the necessary funding to invest in their grids," states Ben Gardner, President of Northeast Group.

Gardner says that nationally, total transmission and distribution losses approach 23% and some states' losses exceed 50%, which makes most Indian utilities financially unsustainable. The firm estimates that India loses more money to theft than any other country in the world. The state of Maharashtra, which includes Mumbai, the financial capital of India, alone loses $2.8bn per year, more than all but eight countries in the world.

Can Smart Grids Help?

Can technology come to the rescue? The Indian government believes it can and has already committed billions of dollars in funding for smart grid infrastructure and cumulative spending is forecasted at $21.6bn over the period 2015-2025, according to Northeast Group, LLC. In line with this objective, there has been a strong push for the deployment of smart meters and smart grid technologies.

The Ministry of Power has already approved pilots for smart grids in the country and private players like Tata Power, Reliance Infrastructure are already running smart meter and smart grid led projects. In November 2014, Prime Minister Modi announced $4bn in funding for smart metering programs. Additionally, over $8bn is available for loss reduction programs and dozens of projects are now underway across India's 29 states. The government is also helping to drive the efforts by developing 14 smart grid pilot projects across the country through the India Smart Grid Task Force.

With India's electricity demand growth set to exceed 7% per year over the next decade, there is a lot of focus by the major players on smart metering and distribution automation.

"We believe smart metering is a critical step required to address this problem. Smart two-way communicating meters - also referred to in the industry as 'advanced metering infrastructure' or 'AMI' - can help India to begin to alleviate the electricity theft problem. These meters can pinpoint where theft may be occurring and have tamper alerts so utilities know when there are issues," says Gardner.

Gardner believes that in the near term, the environment may be more challenging, as India’s power sector is fragmented and complicated. Each state has its own regulatory commission, and industry structure and regulations can vary widely from state to state as utilities are in dynamic states of reform, unbundling, and privatization. Hence, understanding the unique dynamics of each state is important.

India - a unique market

While each state is different, Gardner believes that the largest opportunities for smart grid infrastructure lies in Maharashtra, Karnataka, Delhi, Gujarat, West Bengal, Tamil Nadu and Kerala, due to the best combination of positive regulatory frameworks, market size and potential benefits from smart grids.

That said, with a willing government, there is no doubt that the medium-to-long term smart grid opportunities in India are enormous. "Overall, India is one of the most unique smart grid markets in the world, combining among the world’s largest market potential and high distribution and GDP growth rates with complicated regulatory structures and low per-capita income and consumption. Challenges are certain to persist, but the government’s commitment to addressing India’s significant power sector challenges by investing in smart grid infrastructure ensures strong smart grid market growth throughout the coming decade," opines Gardner.

With the central government showing intent with billions of dollars in promised funding for smart grid infrastructure, India represents the largest long-term smart grid opportunity in the world.