Rs 2.5 trn smart metering play has Adani, Tatas walking different paths

Installation of 25 crore meters is estimated to offer Rs 2.5 trillion revenue opportunity

Tata Power and Adani Energy Solutions, the country’s two major private distribution companies, have adopted different approaches when it comes to the Rs 2.5 trillion smart metering business. 
 

India aims to install 250 million smart meters under multiple schemes nationwide. According to industry executives, when calculated at the cost of meter plus maintenance revenue of Rs 10,000 each, it offers a market size of Rs 2.5 trillion.
 

Despite the revenue opportunity, not everyone is excited. “City circles are where we are interested. We are not very aggressive in this market as we understand the difficulties of it,” Sanjay Kumar Banga, president, transmission and distribution vertical, Tata Power, told Business Standard.

In July, Tata Power won an order to install and maintain 1.86 million meters in Chhattisgarh, with a combined worth of Rs 1,744 crore. Tata Power’s rival in the private city power distribution business, Adani Energy Solutions, has a bigger plan for smart metering. In an investor presentation in January, Adani Energy Solutions noted it had an under-construction pipeline of Rs 25,100 crore in smart metering for nine contracts and 21.1 million meters and a 21 per cent share of the market. Adani Energy Solutions did not comment on new queries sent to the company on Thursday.
 

In August, Anil Sardana, managing director for Adani Energy Solutions had told this newspaper that 5-6 private players in the power distribution business were best suited to deploy smart meters. In its latest presentation, the company noted the segment offers a high Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin possibility to an early mover.

 

Banga said it was a segment where only companies with deep pockets would compete. “Revenue trickles in only once the meters are installed. In case there is any installation delay, it can eat into margins, as meters will be sitting idle at godowns,” he explained.

The segment has attracted new players such as GMR Power and Urban Infrastructure with plans both for distribution and smart metering. The company in July received a letter of Intent (LOI) to deploy 7.56 million prepaid smart meters across Uttar Pradesh with a total contract value of Rs 7,593 crore.
 

While Tata Power is expected to be selective in third-party smart meter deployment, the company aims to have 100 per cent smart meter coverage for its Mumbai power distribution circle by 2025. Overall, the company targets to ensure 70 per cent of its distribution income is from businesses that have smart metering installed, to be met next year. Tata Power is spending a total capex of Rs 760 crore to increase smart metering coverage across its distribution business in Odisha, New Delhi and Mumbai.