Development of

Business Model
For ‘Smart Grid’ Technology
Implementation in

DISCOMs
to improve SBU / Sub-Division efficiency

Presented by
Mrugesh Pawar
Page 1
Page 2
Research Study Introduction Structure Design
Literature Review
Concepts of Smart Grid
The Literature Review
Technology

Research Methodology

Data Presentation

Data Analysis & Findings

Conceptual Frame Work from the Literature Review

Development of Proposed Business Model for

Smart Grid Technology Implementation

Conclusion

Summary of Findings Limitations of Study Future Scope of Research

Issues & Challenges
Installed Capacity (in MW)

Peak Load (MW)

Years Fund Requirement – 11th Plan (Rupees in Crores)
Generation 4,46,771
Transmission 1,40,000
Electrical Energy Requirement (GWh)

Distribution 2,87,000
HRD 462
R&D 1,214
DSM 653
Total Power Sector 8,76,100
NCES and Captive 1,15,500
Merchant Plants 40,000
Total Funds Requirement 10,31,600
 Concepts of Smart Grid Technology :

Definition of ‘Smart Grid’

SMART GRID: It is a “making Grid intelligent, self-healing, self-

talking, communicating & self-decision making system which
will help attaining enhanced situation awareness and
responsiveness, enabling operational excellence for the utility,
and improved experience for the consumer through system
operations, automation and controlling the consumer premise
for load control” ..…….....….. DoE
Smart Grid Intelligent Grid
Inter Operating
Electronics
Leaching to
Improved
Grid
 Enterprises
“Smart Grid Technology implementation in Indian
Context”
-in totality is going to provide a situation of,
“End of Load Shedding”
•Peak Load Shifting through a combination of direct control and
differential pricing (demand response / dynamic DSM)
“Reliable Power”
•Robust systems with self-healing capabilities; first step in improved
monitoring
“Cheaper Power”
•Dramatic improvement in AT&C Losses? Knowing where every kWh is
going in real-time
“Shifting the Peak away from Costly Power”
•Better utilization of assets
“More sustainable Power”
•Integration of green and renewable resources at a massive scale?
Enough to increase energy independence
 Smart Green Grid its Integrated benefits through
Integrated AMI-NMS-OMS-iDMS System with SCADA-GIS & CIS

Operational Efficiency …
•Increase operational productivity
•Reduce capital and operating
costs
•Improve physical/cyber security
Customer
Energy Efficiency … Satisfaction …
•Optimize energy usage •Improve reliability
•Manage growing energy metrics
demand •Consumer empowered to
•Extend asset utilization control energy usage
•Tighter communications
with Utility
Environmental Impact … •Additional services
•Reduce, avoid and/or sequester CO2
emissions
•Meet or exceed regulatory
requirements
•Increase environmental options for
consumer
Source: IBM, EPRI & DoE
 “Customer is the only Profit, rest are overheads”

“Every Organisation earns profit when and only when a customer allows it to earn”

Supplier Custom
er

Feed - back

Custo Suppli
er
mer The knowledge
Channel

Feed-back
For any Project to succeed – Four indicating factors for consideration:
(1) Techno-Economical Feasibility,
(2) Cultural Appropriateness,
(3) Socially Equitability, and
(4) Ecological Sustainability
“Customer is the only Profit, rest are overheads”

“Every Organisation earns profit when and only when a customer allows it to earn”

•By way of improving the SBU’s i.e. Sub-Division efficiency at DISCOMs.

•At present SBUs  Revenue centers only  Profit Centers 

Investment Centers

•Thru ‘Smart Grid Technology’

Technology using ICT

•Smart Grid Project Investments in DISCOMs  SBU resources thru

appropriate Business Model
 Smart Grid Infrastructure - Power Sector Projects
Risks

• With the large capital outlay and long gestation period, the risk
levels in power projects are quite high
• Various risks involved are
– Project implementation risks
– Completion risks
– Operational risks
– Commercial risks
– Financial risks
– Political risks
• Viability of the projects and credit worthiness of the borrowers
are to be appraised in detail by the financial institutions
Page 21
 Business is a system – that occupies a niche in an ecosystem by;

• Creating a brand image

• Providing products and service at best
• Having ways of communicating
• Managing supply chain
• Making Organization sustainably profitably growing
• Applying state-of-the-art technology

…………. Creates what customers experience, those experiences shape the game of
business.

………… A business model describes how a company is organized and operates to

deliver those experiences.
Research Scope
To derive appropriate Business Model for “Smart grid”
Technology implementation in DISCOMs

Research Problem
• To identify Drivers for the Project
• To find out effectiveness of Smart Grid Technology in DISCOM
• To Derive Best Road Map for implementation
• To identify Challenges for Project Implementation
• To identify Cost Benefit Analysis & EVA & Socio-Economic Evaluation of
Project
• To identify various effective major & minor stakeholders & their participation
• To identify prospective Investors and their wishes
• To identify various factors and clusters for Project implementation
• To identify Business Strategy suitable for the Project Implementation
• To derive Alternative Business Models
• Selecting appropriate Business Model best suitable for this Project
Research Objective
Major: To derive appropriate Business Model most suitable for “Smart grid”
Technology implementation in DISCOMs
Minor: To explore & derive best suitable strategy for SLAs and BLAs (outsourcing
structure) for the Project – a Contractual Framework
 Research Methodology

To generate set of Hypotheses for consideration of various Factors & Clusters

Phase-I
 Research Methodology

To generate set of Hypotheses for consideration of various Factors & Clusters

Phase-II
 Framing
Sampling Technique: Sampling Plan

Deciding
Sampling
Population

Designing
Sampling Frame

Deciding
Sampling Unit

Defining Sample
Size

Obtaining inputs
from Samples

Check Validity, Reliability, and

Objectivity then derive
Predictability

Conduct complete empirical

Study and Analysis
 SBU-
Basic Conceptual Framework Strategic
Business
Business Model
(with Unit / Sub-
Contractual Division
Framework) -
Strategy Efficiency &
Performance
PESTLE Competitiv Improvement
Analysis e
Positionin (using
g ‘Smart Grid’
Variables
Business Model Technology
(with
Contractual and
Framework) – appropriate
Strategy
Design Variables Business
Model (with
proper
Performance
Variables
Clusters
Variables
Contractual
Framework)
 Business Model Strategy based on CoT: ‘Circle of Trust’

performance-power to be checked for each

possible alternative model for each
performance variables & Clusters
Performance Variables

Clusters
 Relationship Direct Effects Model Coalignment Model
Business Orientations
Customer Orientation .009/.095 .820/.116
Competitor Orientation .009/.095 .556/.100
Employee Orientation -.049/.080 .206/.061
Shareholder Orientation .231/.109 1.106/.144
Management Assets
Customer Assets 2.132/1.12 .302/.103
Internal Assets -2.04/1.15 .688/.100
Channel Assets 2.101/1.160 .767/.0108
Allience Assets .043/.218 .680/.099
Management Capabilities
In-out capability .683/.197 .911/.130
Out-in Capability -.089/.105 .723/.119
Networking capability -.152/.067 .846/.147
Spanning Capability .043/.218 .830/.166
Coalignment  Financial ---------------- .831/.136
Performance
χ2=4158; df=1005; χ2=3090; df=1015;
GFI=.804, AGFI=.78, GFI=.86, AGFI=.84,
NFI=.713, TLI=.747, NFI=.83, TLI=.88
CFI=.765, RMSEA=.066 CFI=.90, RMSEA=.053
Business focus only on the core business activity
•Concentrate on APRU / Minute – a unique idea by only this Mobile Service
Provider
•Target the attainment of Objective efficiently
•Guru-Mantra: “Ensure the quality business support infrastructure through
outsourcing by way of stringent legal agreements (BLAs & SLAs), reduce CapEx
investments and botheration of conducting non-core activities and maintain
sustainable business leadership in core business activities”
Strategic Business Partnership

Strategic Business Partnership with Technologists

Shareholding with Hightech Global Partners
1 Warburg Pincus – a celebrated PE investor – an instrumental technology support to
Airtel in its beginning stage
2Vodafone strategically partnered to Airtel for some time
3Temasek – the Sigapore based Hightech Company invested and holds considerable stake in
Airtel
4Singapore Telecom also invested and provided technical support
Business Outsourcing Strategy
 Business Outsourcing Strategy

All non-core business outsourced

Neutralized Bargaining Power of Suppliers
• Ericsson was given the mandate to provide, manage and maintain the
equipment as well as provide quality assurance in Airtel’s Mobile Operating
Circles
•IBM was given mandate to handle the back office requirements of Airtel’s
presence in India
•Bharti Infrarel & Indus Towers ware give mandate to provide physical network
infrastructures and maintain service levels
•IBM Daksh, Mphasis, Hinduja TMT, Aegis BPO, and Nortel were given mandate
to provide Customer Care support and solutions
Bharti-Airtel’s Value Prepositions
 Summary of Hypotheses
On analysis of Phase-I & II, a set of Hypotheses derived for testing
Factors NULL Alternative
Hypothesis: H0 Hypothesis: H1

Business Model: Investment Opportunity (RoCE) Power No Significant Yes, there is

Difference betn Mean Significant Difference
Values betn Mean Values

Business Model: Revenue Sharing v/s Sharing Relationship, -- do -- -- do --

Roles & Responsibilities, Rights, and Obligations Power
Business Model: Manufacturing / OEMs & IPR Legal Power -- do -- -- do --
Business Model: Technical Power -- do -- -- do --
Business Model: Finance Power -- do -- -- do --
Business Model: R&D and Technology up-gradation Power -- do -- -- do --
Business Model: Governance, Version Control and Change -- do -- -- do --
Management Power
Business Model: Enforcement, Indemnification & Remedies -- do -- -- do --
Power
Business Model: Liability, Risk Management & Insurance -- do -- -- do --
Power
Business Model: Entrance & Exit of Members Power -- do -- -- do --
Factor Analysis – Impact of All Factors on Models
Hypotheses Testing Results
Hypotheses Testing Results
 Basic Conceptual Framework Adopted
Value
Need Design Engineering Bid Build
Engineering

Archi- Consulting Archi- Contra-

Owner
tect Engineers tect ctor

Contr-actor

Consulting
Archi-tect
Engineers

Owner

Time
Profit Planet
Smart
Economy Grid
Economy
Human
Green Ecology
HSW
Technol PPP-SPV
ogy With SAAS

People
Equity Cost Quality
Correlation Matrix
Regression Analysis
 BMt = ᾶ+β a1A1t + β b1B1t + β c1C1t + β d1D1t
+ β e1E1t + β f1F1t + β g1G1t + ε

BMt = 0.14286+0.142A1t + 0.142B1t + 0.142C1t +

0.142D1t + 0.142E1t + 0.142F1t + 0.142G1t + 0.00714

Business Model = 0.143 + 0.304A1 + 0.284B1 +

0.248C1 + 0.347D1 + 0.232E1 + 0.173F1 + 0.352G1
 A Parable of Business Model Warfare
• The difference between success and failure: some companies fails,
which don’t change their business model v/s most of the innovative
companies succeed which change their business model
Business Model Components:
• Product innovation
 Value proposition, target and aptitudes
• Customer Relationship
 Feel, serve and protect customers’ interest
• Infrastructure & logistics
 Logistics control, process and alliances
• Finance & Revenue generation
 Investment opportunities (RoCE) v/s smoothened assured cash
in-flow for the Project
 Technology
Innovation

Allows

Business Development &

Revenue Enhancement •Business
Customer Using ICT & e-commerce ….. improve
Value
Relationship •Promotion
Product Levier to change •Customer Service
Infrastructure
Innovation & Logistics
….. reduce •Cost
Finance & •Diffusion time
Revenue •Learning
Business Strategy
….. create •New
Product/servi
Allows ce
Impact •New Channels
•New Business

Business Model
ICT Strategy

Impact
Integration Infrastructure

Inter-
Power Industry
operability
Intermediary
Community

Open Standards
&
User friendliness
 Who?
• To manage relationship with
Customers?
•Satisfy them & generate revenues to be
on the winning side?

What? How?
• Is the scope of Products & Services •To organize the infrastructure?
improvement? •Its resources?
•Its value (benefits) for the consumer?
•Knowledge?
•Capabilities to deliver them in an
•Structure of resulting costs?
innovative way? •Manage the value chain & processes?
•Build alliance to achieve performance?
Customer
Relationship

Product
Innovation Infrastructure &
Logistics

Finance &
Revenue

How much?
• What is the revenue model?
•The profit model?
•Its sustainable growth?
•Its design to last – life cycle?
 Business
Model Innovation

Industry Model Revenue Model Enterprise Model

Innovation (IMI) Innovation (RMI) Innovation (EMI)
 Owner
/
Devel-
oper

CM /
Arch- Contrac-
itect tor

Profit Smart Planet

Consulting Economy Grid Economy
Engineers Green Users
Technol
ogy

People Equity

Comm-
Finan- unity
ciers

Supp-
liers
CRM Listen to the
Customer

Establish the
configuration
Smart Grid multi-
functioning
Distribution
One-to-many, one-to-one
Mass-customization
Planning of
production

Production (internal)

Outsourcing
ERP (external)

SCM
Custom Product/Servic Infrastructure
Value for Resource for
er e

Personalizati
on
Fee Target Resources
l
Distribution
Value Activities
Serve Propositio /processes
CRM n
Online Value
Channels sales & chain
service Value
Dis-
E- shop
intermediation Value
markets
Trust network
Info-mediation

Capabilities Alliances/netwo
rks

Revenu
Value added Costs
e

Price Profit
 ‘Contract Governance’
Dimensions
Time Horizon

ice y o gy n t c ent
l s e i
erv ver o
n i ce i ce em t eg em
S eli h r v ov ra a g

Support Processes
c rv e t e
D Te Se S pr S an th
& Im M age h i p
a n ns
M atio
el
Monitor R

& er
t
is t
Control in rac
m nt
d
A Co
Plan th
e

Core Processes
 Financial Risk

Lender
Loan Funds Debt Repayment

Purchaser /
Raw Mtrls. Out put - Service

Supplier PPP-SPV – JVC

Supply Contract Service / User Contract User
Revenue /
Purchase Risk
Equity Funds Returns to Investor
Cash Deficit
Agreements & Other

Equity / Credit Support

Investors
Sponsor /
Investment Risk Investors
Credit Risk
Page 70
 Financial Financial Risk
Completion Risk Consultant Operation Risk

FC Operating
EPC
Lender Agency
Pr n
oj t io
ec ra ct
Co tC Loan Funds Debt Repayment pe ra
Technical O nt
ns on ct Co
t ru s tru je n
Advisory ct P ro tio
io ct ra
n io
C n pe
on O AERA
tra
ITC ct
Regulatory
Committee

Purchaser /
Raw Mtrls. Out put - Service

Supplier PPP-SPV – JVC

Supply Contract Service / User Contract User
Revenue /
Project Approval Purchase Risk

Granting Equity Funds Returns to Investor

Cash Deficit
Project Appraisal

Authority Agreements & Other

Legal
Regulatory
Equity / Credit Support
Sponsoring Advisory
Risk Investors Authority
Sponsor / LC
Investment Risk Investors Concessionary /
VGF Risk
ITIA, SIA Credit Risk Land Acquisition

Implementation Risk Page 71

 2015 2020
2010

2010- 2011- 2016-

2011 2015 2020

Customer supply side & storage decisions become

Deploy base technologies Automated outage detection, restoration, the norm
and customer notification
 Smart meters installed  Significant DER Penetration
OMS/DMS system  Expanded SCADA & line devices Additional Micro grids where cost effective
Microgrid Pilot AMI-GPRS, 3G, EDGE, PLC controls “Customers as resources”
Mobile Work Force Management System
New Customer programs offered by Utilities PHEV adoption rises- utility becomes "gas station
Asset Mgmt. System
of the future“
 Dynamic Pricing Self-Healing Grid technologies in place
 EE, Demand Response Traditional utility relationship with  PHEV adoption emerges as a critical component of
 HAN, Energy Management customer is changing due to more mature DER
Many Smart Grid components to be initially new services for customers Charging infrastructure in place
deployed PHEV rates in place (charge & discharge)
 Load control with DR
Advanced grid technologies in place
 AMI – ADR Bundled services
IDMS DER Aggregation (including PHEV)  CBM, Cable Diagnostics
Energy Accounting-Auditing Major regulatory issues be solved Advance Energy Storage to support RPS goals
AT&C Loss control Self-healing grid is a reality
Power Theft curbing  Data ownership and access
Self-healing-grid technologies in full deployment Cross jurisdictional conflicts
Micro grid technology deployed and self- T&D renewable strategy
sustaining community concept demonstrated
PHEV infrastructure pilots
To make all S/Dns – SBU in DISCOMs as ‘Perpetual Investment Centre’ with
sustainable profitable socio-economic growth; the investment plan must ensure to
have a “Good Governance” and an effective “Management Control System” with
continuous transparent and fair monitoring and control system inbuilt from its very
begging stage.

As the all IT and ICT expertise are very well aware that the IT and ICT both of these
technologies are very fast changing and quick radically transforming areas & gets
obsolete or radically transformed within two to three years maximum. None of
these technologies have reached to its ‘maturity stage’ ever.

It is therefore required to invest into these areas very carefully and cautiously.
Similarly the investment in ‘Smart Grid’ also must be very much careful.
Through this it can be concluded that by considering all relevant factors and clusters by way
of introducing PPP-SPV Business Model it will definitely will give better outcome of the
Project and if further if the ‘ESOP’ and the ‘SaaS’ techniques included in to that then it will
give the best result outcome with highest level of performance as an appropriate Business
Model for “Smart grid technology” implementation which ultimately will improve the
efficiency of the SBUs – Sub/Division of the various DISCOMs in Indian Power Sector and
it will lead towards making them Investment Centers rather than simply remaining as
Revenue Centers.
 Where do
DISCOMs
Should be?

DISCOMs

S/Dn-SBU as
Investment
Centre

DISCOMs ?

S/Dn-SBU as
Revenue
Centre

Where do
DISCOMs
are?
An Intelligent Smart Grid Utility Network is information architecture and infrastructure
which enables the continuous automated monitoring of a Utility’s Customers, Assets &
Operations and uses this ‘On Demand’ information to improve Service, Reliability &
Efficiency
Cos Risk AT&C
t s Loss
Reven Customer
ue Stakeholders
Satisfacti
’ Value
on
Business Sustainable
Profitable Growth
with Customer
delighters
“Most important Point to be considered at Top most Priority
while Designing the Business Model”

AT&C Loss Factor in entire Power

Sector Value Chain
Page 82
Page 83
Page 84
Page 85
 Demand Response Solution

ALC Load
2
ALC

Loa Loa
d1 d1
Loa
d1

Load
2

Load
1

Loa
Loa d1
d2

ALC Loa
d1
ALC : AMI Load Controller
 Demand Response Solution
Option

10101

ACC ..

Power Usage >

< 3A R Y B
10101

101010
ALC

10101
10101
10101

ACC
10101

Data Concentrator
Interne
Interne
101010 GSM / t
t
GPRS
Zigbee Wi-Fi / Wi-
PLCC Max
Fibre
6LowPAN
Optics
RF
PSTN
Data Call 10101
Memory

IRIS MDMS
ACC : AMI Control Card
Integrated NMS-OMS System with SCADA-GIS & CIS using ICT & providing a strong Platform for
AMI and ADR
‘Smart Green Grid’ an
ICT: Integrated Information
Communication Technology
Improved
Sensing ICT
Advance Interfaces
and
d Control and
Measureme
Methods Decision
nt ICT Support

ICT
Advanced
Components

Connection Conformation Bus COTP – Connection Oriented Transport

Socio-Economic IRR & Cost Benefit Analysis
Project Case Study: Surat Division - DGVCL
Socio-Economic IRR & Cost Benefit Analysis
Socio-Economic IRR & Cost Benefit Analysis
 Thank You

Acknowledgements:
•M/S Infosys
•M/S IBM
•M/S C-Step, CPRI