Business of Smart Metres to Increase Adani Energy's EBITDA

According to American rating agency Fitch, following the company, Adani Energy Solutions (AESL) would increase its earnings before interest, depreciation, and amortisation (EBITDA) with the support of the smart metering sector. The corporation can better manage retail distribution by using smart meters to track and forecast power usage patterns across microgeographies. With 23 million meters, AESL holds a 17% market share in the segment. Cash generation, according to Fitch, begins when 25,000 metres, or 5% of the contracted metre capacity, are placed, whichever comes first. Although direct debit services for customer bill payments to distribution utilities help the collection of dues, it said that its cash flow is vulnerable to India's poor state-owned power distribution organisations. By 2030, the government wants to have 250 million smart meters. With an order book of 23 million through February 2025, AESL has emerged as a major player in this initiative thanks to its experience running Mumbai Discom, according to Elara Capital, a global financial markets firm.

AESL’s Plans to Enhance its Revenue Stream

An initial capital investment of approximately INR 5,800 is required for the installation of each meter. The company is expected to make about INR 12,000 per metre throughout the course of the 90-month arrangement. According to Elara, the corporation plans to maintain an EBITDA margin of 85% in this vertical. The goal for FY25 and FY26 is 10 million meters, of which 7 million come from existing contracts. The remaining amount comes from fresh agreements. This is because AESL is currently working on smart metering projects totalling roughly 23 million meters, or about `27,200 crore (in value).

Tata Power Also Joining the Competition

Smart meters are also being implemented by Tata Power. Recently, Tata Power Delhi Distribution adopted a Universal Network Interface Card (NIC) with Bluetooth-enabled communication in collaboration with Probus Smart Things to advance smart metering technology. According to a recent report by CareEdge Ratings, power distribution firms (discoms) may deploy smart meters nationwide and earn an extra INR 4 lakh crore over the next seven years. By January 2025, there were about 20 million smart meters in the nation. However, CareEdge Ratings predicted that by March 2026, smart meter installations would only reach 25% of the 250 million meters that the government had set as its goal. The rating agency stated that a substantial expenditure of INR 1.25 lakh crore, consisting of INR 95,000 crore in debt and a 25% equity contribution, is necessary to meet the ambitious goal of installing 250 million smart meters.