Variable power metering

SMARTSHARE

It is only a matter of time before variable power rates, depending upon the Time of Use (TOU) , are introduced in India. In many European countries you have as many as 48 time zones in a 24 hour cycle.

Under this mechanism, the user has the option of getting billed on a flat rate basis or on variable rate basis. In the variable rate basis, he is billed according to consumption pattern.

Peak hour consumption will attract a higher charge and the off-peak hours will see billing at lower rates. By reducing their peak hour consumption, consumers can reduce their energy bills.

Power companies can also breathe easy as it helps them reduce demand during peak hours and increased usage during lean hours.

During this peak period, power companies must have enough capacity on hand to meet the loads placed on them by their customers. Having this on hand capacity creates additional expenses for the utility. To lessen the required capacity, the company often offers incentives to customers that are willing to shift or move a portion of their demand to off-peak hours.

Leaving aside industrial usage, the consumption of power in offices is high during the 9:00 am to 7:00 pm and only minimal after that. If the office is a call centre, peak power load may be at any time during day or night, depending upon the geography the centre is serving.

Working nuclear families would have peak load between 7:00-9:00 am and 7:00-11:00 pm with power requirements tapering off after that. Families with dependent members would have continued high usage during the day.

In India, we have a peak hour deficiency of around 14 per cent. During the leanest period of the 24 hour cycle, the power load falls by 60-85 per cent, depending upon the geography.

Profitability of power companies can increase substantially if they could increase the plant load factor (PLF), which is a function of the power consumed and installed capacity.

Thermal plants (coal+gas+oil) account for 71 per cent of the power produced, hydel power accounts for 22 per cent, nuclear energy around 2 per cent, and the balance comes from renewable sources.

As thermal energy accounts for the bulk of the power produced, you cannot switch off these plants during a lean period.

Who would benefit in the TOU regime?

Companies that make these electronic metres will be the biggest beneficiary as metres will have to be replaced. All those consumers, who are desirous of availing differential pricing, will need to get their metres replaced. These metres will be able to monitor the usage over various different time frames and, accordingly, bill the consumer.

Another beneficiary of this system would be A-C manufacturers. Today, more households have a washing machine than own an A-C. While a 1.5 tonne A-C will cost around 25 per cent more than a fully automatic washing machine, the reason you don't find enough A-Cs in residences is not affordability. The real reason is the high running cost of an A-C.

When power becomes cheap during the night hours, A-C sales are likely to take off. The kind of revolution that we saw in mobile usage when call charges fell, will then be seen in this segment, provided the power cost during the lean period is lowered.

All those households that have a washing machine, could end up buying an A-C. And those that have only one could buy more for all the bedrooms.

Units that produce solar power could benefit. As all the power in these units is produced during the day, they can sell their power in the day at peak rates and buy the same back in the night at lower rates.

This system could even foster the growth of the solar power units as their viability increases in the proposed regime. While such a regime is not immediately round the corner, it might pay to be well prepared for such an eventuality.

Just as reasonable air fares empowered the burgeoning middle class to fly, and lower telecom tariffs changed the lifestyle of the common Indian, the TOU regime will also leave its mark behind in terms of changing the way India sleeps in a galloping economy.