After much hype, machine-to-machine communication is set for a global boom. Here’s a perceptive look at how M2M is being used by power utilities in India and its business potential By Mehak Chawla
Imagine a situation where you don’t have to worry about the reading of your electricity meters. Or of unsolicited elements attempting to siphon off electricity that you are paying for. Well, if we are to invest our faith in the potential of machine-to-machine (M2M) technology, this scenario might soon become a reality. Even though M2M is yet to take wings in India, it is beginning to be actively utilized by verticals such as automobile and utilities.
Hemant Joshi, Partner, Deloitte Haskins & Sells, puts the figures in perspective. “The GSMA has estimated that in 2020, there will be a $ 4.5 trillion opportunity arising from machine to machine communications.” Machina has forecast that there will be 3.5 billion active wide area M2M connections all over the world, by the end of 2020.
According to 6Wresearch, the Indian M2M market is expected to reach $ 98.38 million by 2016, with a CAGR of 33.81% from 2011-2016. For the same period, cellular M2M modules are expected to grow at a relatively higher CAGR of 35.32 %.
“A large portion of this growth is expected to come from the utilities sector. Globally, utilities are doing quite a lot of work on implementation of M2M and Indian utilities are fast catching the trend,” mentions Joshi.
According to Deloitte, energy and utility are expected to drive future market growth of M2M, as the Government of India is taking serious initiatives to deploy smart energy meters. Energy and utilities application markets are expected to grow at a CAGR of 38.12% from the period of 2011-2016.
Though there are several domains within the utilities vertical that can benefit from M2M communications, as of now, it is the smart meters that are garnering a lot of attention. Experts believe that though smart grids might still be too futuristic for us, things like smart meters can help in gradually moving towards intelligent switching and more robust infrastructure to avoid wastage.
But is the adoption of M2M moving beyond white papers? Express Computer took opinions from IT heads in the energy and utilities space to get the pulse of the situation.
How can M2M help?
When it comes to M2M in India, it is expected that revenues will be driven by opportunities in making buildings and cities intelligent, and utilities smarter. That we are losing a significant amount of our resources in transmission and distribution is a story well narrated today. According to Joshi, more than 30% of the power produced in the country is lost to theft and inefficiencies in the state distribution networks. “In terms of wastage of potable water, Mumbai alone loses 50% of its potable water as compared to a worldwide average of 34% loss and 10% loss for the most efficient water systems.” M2M can aid significantly in narrowing these losses, by minimizing manual intervention. A case in point is Mumbai, where 13 million smart meter installations eliminated 50 % of the 700 million liters of water which gets wasted or leaked by broken pipes every day.
Though the pilots have begun to mushroom in both private as well as state-owned utilities, experts believe there is a long way to go before we can automate all key aspects of business. Dynamic supply demand management, efficiently balancing peak load, intelligent switching and fault management system are a few horizontals waiting to be revolutionized once M2M comes into the picture.
According to Rajiv Sharaf, CIO, Reliance Infrastructure, presently, the energy and utilities sector is using M2M communication for basic applications like Supervisory Control and Data Acquisition (SCADA), Automated Meter Reading (AMR) and to some extent, Distribution Management System (DMS).
Joshi of Deloitte adds to that by revealing that “Smart metering, along with sensors which are being used in the pilot projects have been a huge success in reducing costs and also improving accuracy of the meter readings. In addition to this, they are also proposing to make billing prepaid which would avoid issues like bad debts, follow ups etc.”
Sharaf however is optimistic about the future of M2M in the power sector, thanks to the push emanating from the government quarters. “Recently the Ministry of Power (MoP) approved 9 pilot projects for smart grid. M2M will help in developing the building blocks for smart grid and smart metering initiatives.”
Karanbir Singh, VP, BSES, concurs with this view. “The main momentum for M2M connectivity in the utilities sector had come from the central government’s initiatives. That had been very encouraging and a positive signal. State owned utilities are setting aggressive targets for the deployment of smart metering.”Smart metering in M2M can facilitate flexible demand management without manual intervention. M2M is also expected to impact monetization methods by making available near real-time information on the flow of energy in the grid.
Lt. Col (Retd) Shankar Gurkha, CIO, Gujarat Industries Power Company, observes that M2M technology in the energy sector is beginning to advance to a stage where it can offer improved lifetime management of devices in the field, through services like remote upgrades and monitoring. “The utilities industry has a broad range of communications needs, from remote monitoring and control of fixed assets to mobile data and location tracking for large service fleets. M2M solutions offer the ability to monitor and control unmanned, remote applications, including measuring wellheads and flow meters, backing up substations and restoring power, and controlling remote equipment. In addition, these solutions can dispatch and track service fleets from a central location, and optimize customer service and efficiency.”
How they did it
As mentioned earlier, the potential of M2M in this vertical is pushing many IT heads to take the plunge and make significant investments in this technology. A case in point is that of Tata Power, who started implementing M2M pilots in 2012. As of now, they are running a pilot with 1500 commercial and industrial (CMI) customers, particularly for the distribution part.
“Before M2M, we were physically capturing the data and then sending out bills to customers. This methodology often led to a lot of errors, enhanced our recovery process and we realized we were losing business. There were many glitches like our people went out on the field and found the meters locked,” elaborates Ujjal Kumar Ghatak, CIO, The Tata Power Company.
Since it would have been very tedious for the company to rip and replace every meter, they installed modems and then used GPRS or CDMA and other telecom services for capturing data automatically every 15 minutes, as per the regulation requirements. This data is then fed into their master databases. “Since all meters give data in proprietary formats, we use our Master Data as a service (MDaaS), which are installed in a district wise manner to process these data sets into readable formats before feeding them in to the master data management (MDM). Our MDM uses Enterprise Service Bus to connect to SAP where all the month end billing takes place and directly goes to the customer via emails,” details Ghatak.
The customer then has the option of paying either through the credit card or through our portal. Either way, it gets directly updated in the balance sheet of the company. As a result, the whole process from data collection to billing is done without any manual intervention and is thus, error free. Tata power is also using the data collected for their load analysis.
Sharaf reveals that Reliance Infrastructure started making investments in Advanced Metering Infrastructure (AMI) way back in 2005. “We have also pioneered the use of SCADA, DMS, and Equipment Management System (EMS) in India.
All these systems are well integrated with all of our current operations.” The organization is utilizing the expertise of vendors like Honeywell, Micro Technologies and Reliance Communications for their M2M needs.
Gujarat Industries Power Company is utilizing M2M for their Plant Information System where the occurrence of any breakdown is reported instantly through SMS to all senior executives. Another area where they are exploiting the technology is Availability Based Tariff System (ABT), which Gurkha informs is an important step towards building smart grids. “It is a performance-based tariff for the supply of electricity by generators owned and controlled by the central government. It is a new system of scheduling and dispatch, which requires both generators and beneficiaries to commit to day-ahead schedules,” he elaborates.
Gurkha adds that E-tendering system is another area where M2M is being utilized . “Vendors get email and SMS alerts when any tenders are published on our system. Similarly the purchase department gets alerts on receipt of proposals.” Gujarat Power is working with vendors like CMS and Bulwark Systems for their M2M implementations.
According to Singh of BSES, the key advantage that M2M smart meters offer the electric utility industry is the efficient collection of data from the meter, leading to the ability to optimize energy consumption and improve load management.
M2M challenges
Though M2M pilots have become commonplace, the wide spread implementation of the technology for energy sector is yet to take off. The reasons can be attributed to several challenges that IT heads have on their plate when it comes to deploying M2M. Unless these technology challenges are addressed, M2M might remain as a pilot technology for the vertical.
The first apparent challenge is the cost. Ghatak puts it in perspective when he explains that Tata Power has already spent over Rs 11 crore on their M2M project. “Our major challenges in this process was the cost because the hardware as well as the technology services are pretty expensive. We have spent over Rs 11 crore so far on this technology and convincing investors is also a challenge. We have approached the regulator and expressed our desire to do the next project for 3000 customers, but only with relevant budget allocation.”
Gurkha further notes that in some cases, resistance to change and limited technology knowledge of vendors can also act as hurdles to a smooth implementation. In a such a scenario, choosing a right implementation partner becomes of paramount importance, he believes.
Another factor impacting the adoption of M2M in the utilities industry is that the sector is traditionally based on a regulated tariff model. That limits the flexibility of both the provider as well as the customer to manage their consumption patterns, and in a way, disputes the eventual goal of M2M. As Sharaf says, “A big challenge here is the absence of Availability based Tariff (ABT) / Time of Day (TOD) regime. As a result, there is no benefit for the end-customers to manage their energy usage.”
Sharaf also feels that lack of system interoperability, scalable internetworking, scalable overlay networks and legacy systems with no standardization also act as deterrents in the way of any sophisticated technology deployment.
From smart metering to smart grid
With most of M2M projects being around smart metering as of now, the only gradual evolution of the technology, say analysts, will be towards smart grids. M2M communication is considered as a building block for smart grid as a means to deploy a wide-scale monitoring and control infrastructure. The communications network will not only facilitate advanced control and monitoring, but also support extension of participation from generation, transmission, distribution and end customers.
According to a report by Deloitte (Machine-to-Machine: Vision 2020 Is India ready to seize a USD 4.5 trillion M2M opportunity?), the Indian market is presently dominated by short range modules such as Wi-Fi, Bluetooth and Zigbee. In the coming years, a shift is expected towards cellular and satellite M2M modules. This could work well for businesses such a utilities.
Programs like Restructured Accelerated Power Development and Reform Programme (R-APDRP), that are already underway and have a roadmap that is inclusive of M2M technology, are also likely to fuel the growth of M2M market in the country. Vendors like Vodafone that are already working on large scale M2M projects for utilities abroad could soon taste success in India. A good global example of a mass M2M metering solution, is that of British Gas collaborating with Vodafone in 2010 to roll-out smart meters to nearly one million households. Though we might be far from such large scale roll-outs, small beginnings are being made. An example closer home is that of Bechtel executing “The new Jamnagar Refinery Project” in India for Reliance Industries, that required significant M2M intervention.
Joshi opines that “Privatization, lower taxes on capital expenditure, higher incentive for R&D, would be the key drivers for M2M usage in power sector in the near future.”
By 2020 around 1.5 billion M2M communications are likely to emanate from the utility business worldwide, majority of them coming from smart meters. Lets hope that Indian utilities get their fair share in that number.
