The ongoing energy transition has brought into play newer opportunities in the green infrastructure space for investors. Smart meter concessions, backed up by a Union Government scheme, has garner a lot of interest from investors as it offers an enviable mix of a high-IRR, growth play, with a very capital efficient business model and robust ESG credentials through the critical role they play in supporting larger amounts of green electricity in the electricity in the grid to the lesser understood social angle through loss and cost reductions.
We have set out to create a crisp commercial overview of the sector – from the unique concession model, the payment security that has built investor confidence to the nuances of dealmaking in this novel sector. In a nutshell, this serves as a Smart meter 101 for investors exploring the smart meter play.
Key Takeaways
- Smart meters are essentially a data play – offering unprecedented data that can be used to bring online more green energy, curb electricity loses and reduce costs for consumers
- The sector has immense depth – USD 30 bn over just the next 2-3 years
- Large appetite for smart meter concession from global investors – largely due to robust payment mechanism and revenue protected concession model
- Potential for high IRR – with low cost ESG debt and capital recycling from the substantial revenue generated during the construction phase
- Underlying technology has larger application – including in the emerging water sector
- Smart meter concessions under RDSS considered part of "Electricity Distribution" by Ministry of Power, glide path to InvITs opened up
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Originally published October 9, 2023
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