By MICHAEL KELLY – RESEARCH ANALYST AT NAVIGANT RESEARCH
Across the smart grid vendor landscape, one country in particular seems to be at the top of everyone’s minds: India. Mirroring much of the developed world, India is in the middle of fundamentally transforming its electric power system to adopt a smart grid framework. Plagued by inefficiencies across the network and faced with new and emerging pressures, utilities and government regulators are shifting focus to aggressive electrification, decentralization, and digitization efforts that aim to bring the country’s grid into the 21stcentury.
When examining the Indian smart grid landscape, a clear understanding of the different grid operators and market players is necessary. The Indian intra-state transmission network is owned and operated by state-specific grid operators, while the inter-state network is under the management of the Power Grid Corporation of India, a state-owned central utilities company. India’s transmission system is already highly automated and remotely managed. When moving downstream into the distribution network, vendors find where the true opportunity lies.
Ownership and management of the electric distribution network is divided between both public and private distribution companies (DISCOMs). India’s private DISCOMs have been at the forefront of recent smart grid development, primarily as a means of profit generation. A mix of wholly-owned companies and public-private consortiums, these DISCOMs have invested in advanced metering infrastructure (AMI), IT, and automation solutions to reduce network losses and improve grid reliability, and in turn have improved their bottom lines.
Public DISCOMs, on the other hand, largely have been reliant on government funding to pursue non-essential projects, and thus have trailed in modernizing their distribution networks. These operate state-by-state and manage the majority of the country’s distribution network (approximately 95%). While maintaining a more tapered approach than its private counterparts, public DISCOM spending is expected to ramp up as the government makes grid modernization an increasingly vital priority. That being said, the focus of this spending will likely remain in low-cost solutions that can be deployed at economies of scale.
The vendor landscape across India is still fluid as many nascent smart grid markets are now blossoming. With the Chinese market largely closed to international vendors, India represents the largest potential market in the world, the majority of which remains untapped given the extremely low penetration of smart grid technologies today. Major smart grid solution vendors are increasingly entering this high-growth market, with a particular emphasis on software development. Domestic smart grid suppliers tend to have more of an emphasis on the hardware (operational technology) side of the coin, which should enable some interesting local partnerships moving forward.
Like the Chinese market, smart grid technologies in India will need to maintain a significantly lower price point compared to similar solutions deployed in North America or Europe. This needs to be understood among interested vendors, integrators, and associated players. High price point solutions with advanced capabilities are unlikely to penetrate public DISCOM operations until more basic technologies are deployed and reach the end of their lifecycles.
The Indian smart grid is becoming more active with each passing day. While still in its infancy, India’s smart meter market is set for rapid growth as a function of the country’s aggressive rollout strategy. While India Smart Grid Forum’s lofty goals of 50 million smart meters by 2020 may appear overly ambitious, robust growth is still expected as the Ministry of Power (MoP) forms relationships with meter manufacturers and as the price of meters fall because of high volume purchase orders.
As India’s utilities deploy more smart meters and grid sensors into the field, the importance of proper data management becomes critical. The adoption of smart grid IT systems again falls along the public/private divide. Within the private sector, utilities have been much more active in deploying advanced management systems, including the introduction of data analytics. Meanwhile, public DISCOMs have been largely tied to government funding programs such as the Restructured Accelerated Power Development and Reforms Programme (R-APDRP). As part of R-APDRP, multiple systems have and are being deployed within utility operations, including customer information systems, geographic information systems, distribution management systems, and SCADA. This establishment of low-level monitoring and control will provide a foundation for these DISCOMs to build an expanding portfolio of IT solutions.
Automation efforts have been strong among India’s private DISCOMs as they push to improve their profits through enhanced network management and improved efficiencies. Within the public sector, little has been done in terms of distribution automation (DA) and substation automation (SA) outside of R-APDRP due to lack of funding. The establishment of last-mile connectivity through AMI—as well as growing SCADA penetration—will help advance the market for and penetration of DA/SA solutions.
India is expected to be a major market for distributed generation in the coming decade. The Indian government has set a goal of increasing installed solar capacity to 100 GW by 2022, and the country’s business landscape is characterized by low price point spending—as evidenced by the record low solar tariff issued last week. India is currently experiencing rapid urbanization and environmental degradation as a result of rapid economic growth. These factors will help drive market growth for distributed generation over the foreseeable future.
Navigant Research expects that the adoption of smart grid solutions will naturally vary depending on the technology and level of maturity. Additionally, the distinction between public and private DISCOMs will likely play a critical role in the evolution of smart grid adoption among individual utilities. India’s business and operating environments have historically been plagued by lofty goals, project delays, and lack of return. This is now changing as vendors are expressing higher levels of interest among public and private DISCOMs, and government entities like the MoP and the related India Smart Grid Forum are pressing the issue like never before. All eyes will be on India moving forward, where there are real, valuable opportunities to be had for smart grid solution vendors, integrators, and associated market players.
For more information on India’s Smart Grid, see the recent Navigant Research report, FutureGrid India, which includes detailed market forecasts from 2017 to 2026 for AMI, DA/SA, IT and analytics, distributed generation, microgrids, and energy storage.
Michael Kelly is a research analyst with Navigant Research, contributing to the Utility Transformations program, with experience in renewable energy research and analysis.
Prior to joining Navigant Research, Kelly worked as a research analyst at Energy Acuity, where he researched renewable energy projects and transmission planning dockets. In this role, he also contributed to the development of annual reports on solar and wind markets and analyzed public planning documentation. Kelly holds an MS in geography and environmental services, with a focus on geospatial analysis, from the University of Colorado Denver, and a BA in environmental studies from the University of Colorado Boulder.