Where the smart meters got lost

Published on 31. July 2022., News

For more than a decade, Elektrodistribucija has failed to implement the installation, even though the funds were contracted back in 2010.

Consumers in Serbia do not have smart meters, and it is not known when electricity consumption will be read that way. More than ten years ago, it was a very topical issue, the media wrote widely about the tender conditions for their procurement, about the great competition among manufacturers, their objections to public procurement… And then silence.

The Fiscal Council (FS) in the latest analysis of the problems of our energy sector in the light of the global crisis states that Elektrodistribucija Srbije (EDS) has failed to realize the project of installing smart meters for more than a decade, even though the funds were contracted back in 2010.

“Inefficiency in the implementation of investment projects in the distribution sector best reflects the project of installing smart meters, which the state started in 2010 with the then EPS distribution. At the end of that year, the first credit lines of 40 million euros each were contracted with the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), which, according to estimates at the time, was enough to install about 250,000 advanced meters in the first phase. However, according to the available data, no tangible progress has been made in their installation to date, which is also indicated by the fact that these meters have less than four percent of end users”, they state from FS.

The first phase of the project was supposed to be completed by 2015, however, due to multiple delays in public procurement, the project has not progressed far. The deadlines for using the loan were extended, so that eventually in 2020, the EIB credit line would be canceled since not a single dinar had been withdrawn in the meantime. A similar thing happened with the EBRD credit line, where about 90 percent of the loan value was cancelled. The project essentially remained at the beginning, and at the end of 2021 and at the beginning of 2022, EDS provided credit funds for these purposes again, with state guarantees.

Thus, an opportunity was missed to make greater savings in the past decade and reduce one of the pressing problems of the domestic power sector. The reduction of distribution losses, in the broadest sense, would relieve the pressure of consumption on production (from the existing production, a greater part of the electricity would reach the end users) and would improve the business of EDS through smaller outflows to cover the costs of loss compensation (by law, EDS must to buy from the manufacturer) and hiring a controller. Because of all of the above, it is a big and incomprehensible failure of both the state and the company (EPS and EDS) that this project has not been realized so far, according to the FS.

They estimate that in order to solve systemic problems, it is necessary to increase investments in the distribution sector by around 100 million euros. In order to reduce network losses (technical and theft), modernize the outdated network and increase supply reliability, it is necessary to increase investments in the distribution network. Given that investments in the previous period were below the level of depreciation, good economic practice dictates that they be kept at least 20 percent above that level in the following period, which would stop the further deterioration of the distribution network and compensate for the deficit from the previous period. Somewhat larger investments are suggested by a comparative analysis with the Czech energy distribution, which in the period 2016-2020, invested over 40 percent above depreciation.

“Taking everything into account, we estimate that the appropriate medium-term goal for EDS should be a more permanent increase in annual investments in this sector to around 200 million euros.” That is about 100 million euros more compared to their level from the previous few years and 50 percent above the level of depreciation. Investments should primarily be focused on the installation of smart meters, which would improve the measurement of electricity consumption and reduce losses due to theft, as well as the modernization of outdated distribution infrastructure. For example, wooden poles should be replaced, underground cables should be installed, new transformer stations should be built in order to reduce technical losses and the distribution network should be developed in accordance with the needs of the future energy transition. However, our analysis showed that the company, due to bad business, Politika writes.

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