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India Smart Grid: Market Forecast (2015 2025) In many ways, India represents the best smart grid market opportunity among all emerging market countries. India has the second largest electricity customer market size in the world. Unlike China, which has the largest, the Indian market is likely to be open to international vendors, creating significantly larger market opportunities. Just as important, India has power sector market conditions that will require significant smart grid investment. At 22.7%, India has one of the highest T&D loss rates in the world. In some states, loss rates exceed 50%, and almost all states have loss rates above 15%. Most Indian utilities fail to achieve cost recovery, and smart grid investment will be an important tool for utilities to reduce losses and improve revenue collection and operational efficiency. Gujarat Haryana Rajasthan Karnataka Kerala Jammu & Kashmir Punjab Maharashtra Delhi India T&D loss rates Madhya Tamil Nadu Uttar Pradesh Chhattisgarh Odisha Telangana Andhra Pradesh Himachal Uttarakhand Sikkim Bihar Jharkhand Meghalaya Assam Tripura West Bengal Arunachal Pradesh Nagaland Manipur & Mizoram Source: Northeast Group Financially strapped Indian utilities will need significant upfront financing to jumpstart these investments. The Indian central government has stepped in, making over $12 billion available for loss- reduction projects. Late in the last decade, India created an $8 billion fund for metering, GIS mapping, and data collection to set a baseline for smart grid efforts. More notably, in November 2014, Prime Minister Modi announced that the central government would make $4 billion available specifically for smart metering, with expectations that the private sector would provide an additional $1.6 billion. No details have been announced about this financing scheme, but this should help many utilities make the initial investments in smart grid necessary for long- term financial sustainability. The Indian government is also helping stimulate the smart grid market by developing 14 smart grid pilot projects across the country. These projects are testing a diversity of technologies and will help set best practices and cost expectations for future deployments. India s pilot efforts are expected to last until 2017, at which point the government has set a roadmap that calls Total value ($M) India cumulative smart grid forecast CAGR: 33% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 IT HEM WAM DA AMI Source: Northeast Group 2025 for large- scale deployments to all large metropolitan areas by 2022 and across the country by 2027. These plans also call for additional investment in renewable energy and microgrid projects. With strong drivers and a willing government, there is no doubt that the medium- to- long term smart grid opportunities in India are enormous. In the near term, the environment may be more challenging. India s power sector is
fragmented and complicated. Much like the US, 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. Additionally, most of the planned pilot projects have currently stalled due to local complications and cost issues. Understanding the unique dynamics of each state will be critical to participate in this growing market. 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. % total T&D losses 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: Northeast Group; several utilities ' T&D losses and consumption at India s largest distribution utilities* T&D losses Average monthly consumption Distribution franchising in Maharashtra Bhiwandi' Jalgaon' Aurangabad' Nagpur' 200 180 160 140 120 100 80 60 40 20 *Includes utilities with more than 2 million customers with available sales and loss data 0 Average residential consumption (kwh/month) Key questions answered in this study: How large will six smart grid market segments and fourteen sub- markets be in 2025? What are the unique regulatory frameworks and industry structures in place in the leading Indian states? How much money can each state and utility save by reducing non- technical losses? What financing mechanisms are available for smart grid in India? Where are distribution franchises improving the market conditions for smart grid investment? What is the current status of smart grid pilot projects in India and what are the major hurdles? Who are the leading local and international vendors? Table of Contents i. Executive summary 1 ii. Methodology 12 1. Introduction 16
Table of Contents (cont.) 1.1 What is smart grid? 16 1.2 How has smart grid been used elsewhere in the world? 27 2. India smart grid snapshot 35 2.1 India in comparison 37 2.2 Smart grid drivers 39 2.3 Smart grid challenges 46 2.4 Recent activity 53 3. India smart grid market forecast 54 4. Industry structure 63 4.1 Generation 63 4.2 Transmission 69 4.3 Distribution 73 4.4 Power sector regulatory bodies 76 5. Smart grid regulatory framework 78 5.1 Smart grid within broader government regulations 78 5.2 Pilot projects developed by ISGTF 84 5.3 India smart grid roadmap 86 6. Maharashtra 89 6.1 Electricity industry structure 91 6.2 Smart grid regulatory environment 95 6.3 Drivers and barriers 96 6.4 Utility activity 98 7. Karnataka 102 7.1 Electricity industry structure 104 7.2 Smart grid regulatory environment 108 7.3 Drivers and barriers 110 7.4 Utility activity 112 8. Delhi 115 8.1 Electricity industry structure 117 8.2 Smart grid regulatory environment 121 8.3 Drivers and barriers 121
Table of Contents (cont.) 8.4 Utility activity 125 9. Gujarat 127 9.1 Electricity industry structure 129 9.2 Smart grid regulatory environment 133 9.3 Drivers and barriers 134 9.4 Utility activity 137 10. West Bengal 139 10.1 Electricity industry structure 141 10.2 Smart grid regulatory environment 146 10.3 Drivers and barriers 147 10.4 Utility activity 149 11. Tamil Nadu 152 11.1 Electricity industry structure 154 11.2 Smart grid regulatory environment 159 11.3 Drivers and barriers 162 11.4 Utility activity 163 12. Kerala 166 12.1 Electricity industry structure 168 12.2 Smart grid regulatory environment 172 12.3 Drivers and barriers 173 12.4 Utility activity 175 13. Other Indian states and territories 177 13.1 Market drivers and barriers 178 13.2 Activity in other states and territories in India 183 13.2.1 Joint union territories 183 13.2.2 Rajasthan 184 13.2.3 Andhra Pradesh 185 13.2.4 Uttar Pradesh 187 13.2.5 Bihar 188 13.2.6 Rest of the country 190 14. Vendor activity 192
Table of Contents (cont.) 14.1 Domestic vendors 193 14.2 International vendors active in smart grid in India 203 15. Appendix 211 15.1 List of companies covered in this report 211 15.2 List of acronyms 213 List of Figures, Boxes, and Tables India smart grid: key takeaways 2 Total customer size of Indian states 5 India T&D loss rates 6 T&D loss rates and smart grid activity in Indian states 7 T&D losses and consumption at India s largest distribution utilities 7 Goals of India s smart grid roadmap 8 Smart grid regulatory drivers in India 9 R- APDRP 9 India Smart Grid Task Force pilot projects 10 India cumulative smart grid forecast 11 India cumulative smart grid forecast data 11 Northeast Group Smart Grid Forecasting Model 15 Figure 1.1: Smart grid value chain 16 Figure 1.2: Smart grid model highlighting focus in India 17 Table 1.1: Solar potential in India by state 18 Figure 1.3: Regional transmission grids in India 19 Table 1.2: Benefits of AMI in India 21 Table 1.3: Demand response options 23 Figure 1.4: Global smart grid activity 28 Figure 1.5: Cumulative AMI investment by region up to 2015 29 Figure 1.6: Cumulative DA investment by region up to 2015 29 Figure 1.7: Cumulative AMI investment by region from 2015 2025 30 Figure 1.8: Cumulative DA investment by region from 2015 2025 30 Figure 2.1: Emerging markets smart meter potential 36 Figure 2.2: Per- capita electricity consumption 37
List of Figures, Boxes, and Tables (cont.) Figure 2.3: Per- capita CO 2 emissions 38 Figure 2.4: Projected GDP growth (2014 2018) 39 Figure 2.5: T&D losses in India 40 Figure 2.6: Net profits of state utilities in India 41 Figure 2.7: T&D loss rates and smart grid activity in Indian states 42 Figure 2.8: Smart grid regulatory drivers in India 43 Figure 2.9: Total electricity demand growth in India 44 Figure 2.10: Solar and wind resources in India 45 Table 2.1: Distribution franchises in India 46 Figure 2.11: Delays in India s ISGTF pilot projects in 2014 47 Table 2.2: Status of India s ISGTF pilot projects (as of December 2014) 48 Figure 2.12: Per- capita electricity consumption by state in India 49 Figure 2.13: Costs of AMI deployments per kwh 50 Figure 2.14: Power sector spending in India to 2019 51 Figure 2.15: Global electrification rates 51 Table 2.3: Other smart grid pilot projects in India 52 Figure 3.1: India AMI penetration rate 54 Figure 3.2: India cumulative smart grid forecast 55 Table 3.1: India cumulative smart grid forecast data 55 Figure 3.3: Annual AMI deployments in India 56 Figure 3.4: Comparison of local and internationally made AMI meter costs 57 Figure 3.5: RF- based AMI cost breakdown 57 Figure 3.6: AMI forecast by segment 59 Table 3.2: AMI forecast data by segment 59 Figure 3.7: DA forecast by segment 60 Table 3.3: DA forecast data by segment 60 Figure 3.8: HEM forecast by segment 61 Table 3.4: HEM forecast data by segment 61 Figure 3.9: IT forecast by segment 62 Table 3.5: IT forecast data by segment 62 Table 4.1: Ownership and control in India s electricity sector 63 Figure 4.1: Generation in India 64 Table 4.2: Utilities and regulators in India by state 66 Figure 4.2: Growth in transmission networks in India 69
List of Figures, Boxes, and Tables (cont.) Figure 4.3: Regulation of India s transmission sector 70 Table 4.3: Main utilities in India 72 Figure 4.4: T&D losses and consumption at India s largest distribution utilities 73 Figure 4.5: Map of distribution franchises in India 74 Table 4.4: Distribution franchise models 75 Table 4.5: Key elements of the Electricity Act of 2003 76 Table 5.1: R- APDRP 79 Box 5.1: Political risk in India 80 Figure 5.1: Roadmap to Enable the Transformation of Power Distribution Through Technology 82 Table 5.2: India Smart Grid Task Force pilot projects 84 Figure 5.2: Map of ISGTF pilot projects 85 Table 5.3: India smart grid roadmap 86 Figure 5.3: Goals of India s smart grid roadmap 87 Table 6.1: Maharashtra key data 89 Table 6.2: Smart grid indicators in Maharashtra 90 Figure 6.1: Maharashtra electricity generation statistics 91 Table 6.3: Main utilities in Maharashtra 93 Figure 6.2: Distribution franchising in Maharashtra 94 Figure 6.3: T&D loss comparison in Maharashtra 97 Table 6.4: Smart grid projects in Maharashtra 99 Table 7.1: Karnataka key data 102 Table 7.2: Smart grid indicators in Karnataka 103 Figure 7.1: Karnataka electricity generation statistics 105 Table 7.3: Main distribution utilities in Karnataka 107 Figure 7.2: Karnataka solar policy 108 Figure 7.3: T&D loss comparison in Karnataka 110 Figure 7.4: Karnataka smart grid projects 112 Table 8.1: Delhi key data 115 Table 8.2: Smart grid indicators in Delhi 116 Figure 8.1: Delhi electricity generation statistics 117 Table 8.3: Main distribution utilities in Delhi 120 Figure 8.2: Evolution of T&D losses in Delhi 120 Figure 8.3: T&D loss comparison in Delhi 122 Figure 8.4: Tariff and T&D loss rates in metropolitan India 124
List of Figures, Boxes, and Tables (cont.) Table 9.1: Gujarat key data 127 Table 9.2: Smart grid indicators in Gujarat 128 Figure 9.1: Gujarat electricity generation statistics 129 Table 9.3: Main distribution utilities in Gujarat 132 Figure 9.2: ADB support for power sector projects in Gujarat 134 Figure 9.3: T&D loss comparison in Gujarat 135 Figure 9.4: Smart grid drivers in Gujarat 136 Table 10.1: West Bengal key data 139 Table 10.2: Smart grid indicators in West Bengal 140 Figure 10.1: West Bengal electricity generation statistics 141 Table 10.3: Main distribution utilities in West Bengal 143 Figure 10.2: Annual growth rate of key electricity metrics in West Bengal 144 Figure 10.3: Contributing factors to West Bengal s strong utility performance 145 Table 10.4: Electrification progress in West Bengal 146 Figure 10.4: Electrification programs in West Bengal 146 Figure 10.5: T&D loss comparison in West Bengal 147 Table 11.1: Tamil Nadu key data 152 Table 11.2: Smart grid indicators in Tamil Nadu 153 Figure 11.1: Tamil Nadu electricity generation statistics 155 Figure 11.2: India s Green Energy Corridor project 156 Figure 11.3: State distribution losses due to underpricing 157 Figure 11.4: Tamil Nadu smart grid plan 160 Figure 11.5: Renewable energy in Tamil Nadu 161 Figure 11.6: T&D loss comparison in Tamil Nadu 162 Figure 11.7: 1.5 million meter replacement tender in Tamil Nadu 164 Table 12.1: Kerala key data 166 Table 12.2: Smart grid indicators in Kerala 167 Figure 12.1: Kerala electricity generation statistics 169 Figure 12.2: Annual capital outlay in Kerala 170 Figure 12.3: Renewable energy policies in Kerala 172 Figure 12.4: T&D loss comparison in Kerala 173 Figure 12.5: Kerala meter replacement program 174 Figure 12.6: Annual per- capita consumption in key states 175 Table 13.1: Key data for other main states in India 177
List of Figures, Boxes, and Tables (cont.) Table 13.2: Smart grid pilot projects in other Indian states 178 Figure 13.1: Population, market size, and electrification rates of largest Indian states 181 Table 13.3: Key data for Joint Union Territories and Goa 183 Table 13.4: Rajasthan key data 184 Figure 13.2: Smart grid drivers in Andhra Pradesh 186 Figure 13.3: States with highest T&D losses in India 189 Table 13.5: States not covered in depth in this study 190 Figure 14.2: Leading smart grid vendors in India 192 Table 14.1: Other leading Indian smart grid vendors 202 Figure 14.2: Other leading international smart grid vendors in India 209 Table 14.3: Partnerships of key Indian vendors 210
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