Mumbai-headquartered ERO Power LLP is India’s first power distribution systems operator (DSO), catering to special economic zones (SEZs) and other commercial hubs. Currently, it is providing cost-effective power supply to five SEZs in Maharashtra, with a cumulative load of over 125 MW. Very recently, ERO Power received interstate trading licence from CERC that has added a new dimension to the company’s offerings. In this exclusive interaction, we have Vandana Yermalkar, CEO, ERO Power, also joined in by Nisar Shaikh, Distribution Licensee Head, ERO Power and Jaikumar Dakhane, Business Development Head, ERO Power, giving a detailed account of the company’s current operations, its future plans and how the newly-acquired trading licence can gainfully complement the company’s existing DSO activities.
ERO Power recently got a trading licence from Central Electricity Regulatory Commission (CERC). What specific activities will ERO Power now be entitled to undertake?
Vandana Yermalkar: ERO Power was keen on the interstate trading license since its inception. Yes, ERO Power has recently got an interstate trading license from CERC for Category IV. ERO Power can now trade power pan India.
We understand that interstate trading licenses are issued under several categories. In the case of ERO Power, what is the scope and technical limitation of the trading licence?
Vandana: ERO Power was issued an interstate trading license by CERC under Category IV. With this, ERO Power can now trade up to 500 MU (million units or million kwh) across India. ERO Power shall now be able to participate in the bidding process conducted by discoms and also can deliver power to C&I (commercial and industrial) clients through Open Access.
We have good connects with the conventional and non-conventional generators in the market and will be able to trade power for them. We are in process of setting up a 24×7 control room which will monitor the power scheduling/transactions on a 15-minute block basis to ensure competitive and reliable power supply to our clients.
In general, how does inter-state trading complement the existing operations of ERO Power, which largely includes that of a DSO?
Vandana: ERO Power has expertise in power distribution and is currently running five power distribution licensee(s) in the state of Maharashtra as distribution system operator (DSO). Our power trading arm would help to get competitive power for all the five power distribution licensees, which will in turn help to optimize the power purchase costs of the distribution licensee benefiting the customers of SEZ’s.
As we anticipate, ERO Power would like to graduate by becoming a distribution licensee. In which case, will it have any bearing on interstate electricity trading activities? We understand that interstate transmission licensees, for instance, cannot undertake interstate electricity trading.
Vandana: To foster healthy competition, the Electricity Act 2003 does allow parallel licensee(s). ERO Power will initially target tier-II cities in the state of Maharashtra as a power distribution licensee. This will help clients of the license area choose power supply either from the local discom or ERO Power. This will help residential, commercial and industrial customers in the license area to source competitive and reliable power supply.
Speaking about the power trading licence, the power distribution business expansion shall have no effect on power trading. In fact, it will be complementary in that our power distribution division can source power through our power trading arm, at competitive rates.
Speaking of existing operations, how is ERO Power faring with respect to its Panchshil Realty SEZ project — EON-1 and EON-2 — in Maharashtra. How has the size of the business grown in terms of total electricity supplied and total number of customers, since the time the deal was signed in 2020?
Vandana: ERO Power has been able to gain confidence in the clients of SEZ as well as SEZ developers in a very short span of the operations. Various IT clients have appreciated the services and competitive tariff offered by ERO Power as compared to the local discom. We will be soon completing five very successful years of operations at EON SEZ I & II, Kharadi, Pune.
Electricity consumption and the customer base have been steadily increasing due to hybrid work model of IT industries. As SEZs have limited licensee area, the load is restricted at a certain point. However, we are confident that EON SEZ I & II shall together reach the 30-MW mark, once the SEZ reaches full occupancy.
Has ERO Power begun formal operations at the newly-contracted SEZ Bio-tech Services Pvt Ltd in Pune? Tell us about the size of the operations – current and projected.
Jaikumar Dhakane: Yes, ERO Power began operations at both the SEZs of Cyrus Poonawala Group’s SEZ Bio-tech Services Pvt Ltd Ltd, in July 2024 and we have been running it smoothly for over six months now. Both the SEZs— Hadapsar and Manjari — are located on the eastern corridor of Pune. Currently the combined load of Hadapsar and Manjari is around 40 MW and this is expected to grow up to 75 MW.
Interestingly, state power generation utility Mahagenco (Maharashtra State Power Generation Company Ltd) had emerged as the lower bidder in the competitive bidding process that was carried out last year by ERO Power.
On a technical note, are deemed private distribution licensees, such as SEZ developers, out of the purview of the Centrally-sponsored Revamped Distribution Sector Scheme (RDSS). In your view, what is the overall situation with respect to prepaid smart metering amongst SEZ developers?
Vandana: The Revamped Distribution Sector Scheme (RDSS) is focused on reducing the AT&C losses to 12-15 per cent for state-owned distribution companies. It is a five-year program by the Government of India to improve the quality, reliability, and affordability of power supply. RDSS focuses on the prepaid smart metering majorly in residential and commercial areas where it will help discoms to get the revenue in advance. In our case, all the SEZs are sector specific and have “promptly-paying” customers. However, to ensure monitoring of the electrical system, we have installed SCADA and also ensure automated meter reading (AMR) systems for all clients inside the SEZ. As such, prepaid metering does not offer an edge or added advantage when it comes to SEZs.
What is the current size of ERO Power’s distribution operatorship portfolio, in terms of number of SEZs, number of clients, quantum of electricity, etc? Please also highlight how customers have generally benefited from ERO Power’s services.
Nisar Shaikh: ERO Power is currently handling five power distribution licensees as a power distribution system operator (DSO) with a cumulative load of over 125 MW, which is soon likely to reach up to 200 MW. ERO Power currently serves over 250 niche clients in the IT/ITeS and biotechnology space. Per se, clients are getting savings in the range of 15-30 per cent as compared to local discoms, when it comes to electricity billing. Furthermore, clients are delighted to experience the quality customer service that ERO Power provides. Customer service is a critical aspect in power distribution.
As a testimony of customer satisfaction, I would like to quote two of our esteemed clients – Madhav Karandikar from Broadcom WPS: “It has been almost five years since you started providing power to CA India Technologies Pvt Ltd, a Broadcom company at EON, Pune. We are satisfied with your overall service and prompt billing. We hope this partnership continues forward successfully with good service every year,” as well as Rashmi Khedkar of Seagate Technology: “Thanks for the service provided by ERO Power. You have provided good support and our queries are attended to promptly.”
Tell us about the growth of ERO Power’s team. Do you face challenges in manpower recruitment?
Vandana: ERO Power’s team was just three people at inception and now it has grown to over 60 employees. Hiring a skilled professional, especially in power sector, is a challenging task. We have in-house HR professionals who work hard to onboard employees who shall fit in. Further, our employee engagement, continuous emphasis on training and healthy workplace, has helped us to achieve attrition rates that are much lower than the Indian market average.
We understand that SEZ developers are deemed distribution licensees, which opens avenues for DSOs. How do you therefore see prospects for ERO Power? Incidentally, is ERO Power planning to extend its footprint beyond Maharashtra where it has been predominantly active?
Vandana: ERO Power has been instrumental in operationalizing the first SEZ as power distribution licensee in India. We have already captured majority share in Maharashtra and now are expanding to other states like Telangana, Karnataka and Madhya Pradesh. We are expecting support from other State Electricity Regulatory Commissions in this endeavour.
