Figure 1.5 Nobel business model for power distribution.

      1.4.2 Physical Infrastructure Unit (PIU)

Various physical entities such as DISCOM, metering company (MCOM), information technology company (ITCOM), and communication company (CCOM) are part of this unit, whose roles and functions are now given.

      1.4.2.1 DISCOM

      DISCOM, which is either government owned or a corporatized government owned or a private company, is responsible for building all the physical infrastructures. Physical infrastructures include: towers and poles, overhead conductors, cables, transformers, etc. DISCOM is responsible for any expansion or upgradation work.

1.4.2.2 MCOM

      Metering is an essential task to bring energy accountability, data collection, appropriate planning, device monitoring, risk reduction, etc. Meters are required at all different modes of power transactions, which is very huge in numbers. Therefore, metering activity is a big task in power distribution and hence the metering business can be carried out as a separate segment of power distribution business as MCOMs. An MCOM receives the metering contract from a DISCOM through metering technology consultants (MTC) hired by them.

      1.4.2.3 ITCOM

Maintaining and managing a network database is an essential requirement in the power distribution sector, like many other sectors. It helps in planning and monitoring, decision making, creating transparency, keeping records, etc. In a power distribution business, it is required to deal with a very big data base as collecting and managing this large amount of data is not possible manually. Hence automation is highly essential where the information technology plays an important role. Automation should necessarily be preferred over manual activities and this distribution automation (DA) can provide power utilities with a long-term competitive advantage through better power reliability and an improved customer service [11]. As the data maintenance and management activity is a very big activity in a power distribution business, it can be carried out as a distinct business activity. This is the basic function of power distribution and hence there exists scope for involving different ITCOMs for data maintenance and management. To get the business contract from a DISCOM, an ITCOM has to approach it through an IT consultant (ITC).

      1.4.2.4 CCOM

Very big data is required to be communicated across different nodes of the power distribution network to ensure the reliable, stable, and secure operation of the distribution networks for which a strong communication channel is essential. As the power distribution system is distributed across a huge area at which millions of nodes are present, the number of communication channels required is also huge. Hence, focusing on the development and management of this communication infrastructure with the focus on electrical infrastructure becomes difficult for the DISCOM. Furthermore, the demand response (DR) is also considered an integral part of the power system and market operational practices [12] and is considered a key focus area, which needs communication that is possible through smart grid initiatives [13]. Hence, the activities related to communication can be segregated as a distinct activity and a separate entity can be allotted to hold the communication related business as a CCOM. To get the business contract from a DISCOM, a CCOM must approach it through communication technology consultants (CTCs).

      1.4.2.5 ICOM

      There exists a risk of contingent and uncertain losses in every business. Hence to protect the business participants from such risk, involvement of an insurance company (ICOM) is essential, as in other sectors.

1.4.2.6 IR

      It is highly essential for any organization to protect the interest of various stakeholders for which regulatory frameworks and standardizations are required. To carry out these tasks, roles of an independent regulator (IR) are necessary in the power distribution sector. An IR functions as a non-profit organization and will help all the stakeholders.

      1.4.2.7 PFA

Like other businesses, there must be the provision for financing in the power distribution business as a very huge investment is required during the setting-up of different infrastructural requirements in the distribution sector. Hence there is a provision for a financing agency, called the Project Finance Agency (PFA), that has been made part of this model. Financial debt for current existing lending agencies is continuously increasing and there is a risk of financial contagion [14], so the newly proposed entity will solve the issue of financing in the power distribution business.

      1.4.3 Distribution Management and Maintenance Unit (DMMU)

      This unit is responsible for different activities related to supply management and network maintenance. It becomes difficult by a single entity to carry out all the various tasks related to maintenance and supply management activities. Therefore, outsourcing of various major distribution components such as a distribution feeder, a distribution transformer, etc., for their separate maintenance and management can lead to more efficient results. The financial capital required by the DISCOM for management and maintenance related works can be utilized in infrastructure development works by allowing private participants to carry out these tasks through outsourcing. To facilitate outsourcing, the concept of a feeder franchisee (FF) and distribution transformer franchisee (DTrF) has been proposed. Similarly, active power management, reactive power management, various other auxiliary services-based management are some other essential tasks that can be managed through the creation of a distribution power trader (DPTr), a distribution VAR trader (DVTr), and an energy service company (ESCO).

      In this model FF will take part in power trading (both active and reactive) business through DPTr and DVTr. For the contract period, FF will be responsible for the management and maintenance of the allotted feeder. FF will do the business with all the DTrF connected to that particular feeder as its end-customers. Apart from DTrF, various industrial consumers will also buy power from the FF at HT (high tension) level. Similarly, DTrF will be responsible for all the management and maintenance-related works of the distribution transformer for the contract period. DTrF can do business directly with residential and commercial consumers. Required manpower to carry out different management and maintenance-related tasks can be hired through business process outsourcing (BPO).

      1.4.4 Control, Operation, and Revenue Management Unit (CORMU)

To ensure efficient operation and sustainability in the power distribution business, control, operation, and revenue management-related tasks are highly essential. Hence making the provision for a separate entity that is not being allowed to carry out any commercial activity is highly essential. Different components of this unit each function as a non-profitable organization.

      1.4.4.1 RME

      Different revenue management-related activities of the DISCOM are being carried out through the RME (Revenue Management Engine). Energy pricing, billing and collection, consumer management, new connections, vendor management, etc., are being done by the RME. Except for energy pricing, all other activities of the RME are done through BPOs.

      1.4.4.2 DSO

      The Distribution System Operator (DSO) is responsible for all the activities such as control, monitoring, decision making, etc., required to maintain the stability of the distribution system. To do so, the DSO maintains a data center and a control center. The DSO also helps in promoting and monitoring renewable-based DG integration into the distribution network.

      1.4.4.3 SNE