What is an Energy Meter? A Detailed Guide on Types, Benefits, Cons, and Price of Electric Meters in India

An energy meter is an advanced electricity meter used to measure and record electricity consumption in kilowatt-hours (kWh) for homes, offices, housing societies, and industries. Based on the unit consumption recorded by the meter, an electricity bill is generated. Having an energy meter in India is not optional if you’re using the grid electricity. Based on your load requirements and phase supply, the utility company (DISCOM) installs a suitable type of energy meter. 

An energy meter can be classified in many different ways. The most important classifications are as follows:

• Based on phase supply: Single-phase and 3-phase energy meters.
• Based on technology: Old analog electromechanical meters, new digital electric meters, and smart meters. 
• Based on consumer requirements: Prepayment electric meter and submeter. 

Regardless of their type, the primary function of an electricity meter is to record the electricity units consumed over a specified period. The DISCOM uses this unit consumption to generate the electricity bill. While analog meters were previously used, most modern energy meters are digital, and some of them feature advanced algorithms that can transmit real-time power consumption directly to the DISCOM. 

While recording consumption is their primary purpose, modern meters, such as digital electric meters and smart meters, also help consumers to monitor their electricity usage patterns and identify opportunities for cost savings. 

In this blog, we will explain what an energy meter is, how it works, its main parts, types, functions, benefits, price, and limitations. We will also help you understand how installing on-grid rooftop solar panel systems for homes can lower your electricity bills by 90% or more.

TL;DR Summary Box: What is the Working Principle of an Energy Meter?

The working principle of an energy meter is based on a scientific law known as Faraday’s Law of Electromagnetic Induction. This law says that a changing magnetic field can produce an electric current in a conductor. Energy meters use this principle to measure the amount of electricity being consumed.

Over time, the design of energy meters has evolved, but the core idea remains the same. All energy meters measure the combination of current and voltage over time to calculate total energy used. 

Here’s how Faraday’s Law is used in energy meters:

• Electromechanical meters: In older meters, electricity flowing through coils created magnetic fields. These fields caused an aluminum disc inside the meter to rotate. The speed of rotation was linked to the amount of power being consumed.
• Electronic digital meters: Modern meters have replaced moving parts with electronic sensors, such as Hall-effect sensors and current transformers. These sensors detect current and voltage without physical movement. They convert electrical signals into digital data, which is then processed by microprocessors to calculate energy consumption with far greater accuracy than older meters.

Here are the main topics covered in this blog in detail:

What is an Energy Meter?

An energy meter, also known as a digital electric meter or electricity meter, is a device that continuously measures and records the amount of electricity used by a home, office, shop, or factory. It calculates electricity usage in kilowatt-hours (kWh). The primary function of an energy meter is to accurately record consumption, enabling the distribution company (DISCOM) to generate accurate electricity bills. 

Modern energy meters differ from traditional analog electromechanical meters, which used coils and moving parts to record consumption. Most modern digital and smart meters provide real-time consumption data and advanced monitoring. They are harder to tamper with and help consumers see when heavy appliances are being used. This makes it easier to match usage with time-of-day tariffs, shift heavy loads to cheaper hours, and reduce electricity bills.

What Are the Main Parts of an Electric Meter?

The main parts/components of an electric meter include current sensors, voltage sensors, microprocessors, display units, and a tamper detection system. All these electric meter parts work together to ensure accurate consumption recording and accurate billing. 

Let’s check out the role that individual parts of an energy meter play in recording the power consumption in the property where they are installed: 

• Current sensor to measure the electrical current in the supply lines: It converts high currents to safe levels that the meter’s electronics can read without damage.
• Voltage sensor to track the voltage across the supply lines: It steps down the voltage to a level suitable for electronic processing while maintaining accurate readings.
• Microprocessor to calculate power and total energy used over time: It also coordinates and controls the meter’s functions.
• Memory module to keep data safe during power outages: It stores consumption data, billing information, usage history, configuration settings, and tamper logs.
• Display unit for the benefit of consumers: It shows real-time information such as current usage, total kWh, voltage and current readings, error codes, and other helpful details on an LCD or LED screen.
• Communication module in smart meters: It enables remote meter reading and data sharing with the utility company, eliminating the need for a DISCOM representative to visit a property to record electricity unit consumption physically. In smart meters, the communication module supports protocols such as GSM, RF, or power line communication for integration with the smart grid.
• Power supply unit: It provides a stable power source to all electronic components inside the meter, enabling them to operate reliably.
• Tamper detection system for the benefit of the utility company: It monitors for signs of interference or unauthorized access, such as magnetic influence or cover removal, and flags any potential issues that could affect accuracy.

How Does an Electronic Energy Meter Work?

An energy meter measures electricity use by sensing current and voltage, calculating power from these values, and adding them over time to determine the total energy used in kilowatt-hours (kWh). Modern digital energy meters repeat this process many times each second. It helps keep the readings accurate even when appliances turn on and off.

Let’s check out the entire process of how an electronic energy meter works in simple steps:

• Step 1 – Current is measured: Conductors or current transformers (CTs) detect the current flowing in the live wire. These sensors convert high currents into smaller signals that the meter electronics can safely handle without damage.
• Step 2 – Voltage is measured: Voltage sensors monitor the voltage between the live and neutral lines. They reduce the high supply voltage to a safe level that the meter’s electronic circuits can process, while maintaining accurate readings.
• Step 3 – Signal conversion happens: Analog-to-digital converters convert the current and voltage signals into digital numbers. The energy meter samples these signals many times per second to ensure the recorded data accurately reflects what’s happening on the line.
• Step 4 – Power is calculated: The microprocessor multiplies the instantaneous current and voltage to find real-time power in watts. It also takes into account the phase angle and power factor to ensure the reading is the true active power.
• Step 5 – Total energy is added: The energy meter adds power values over time to calculate the total energy used. It then expresses this total in kilowatt-hours (kWh) for billing.
• Step 6 – Data is stored and displayed: The calculated readings are saved in non-volatile memory for billing purposes. The screen displays cumulative kWh and other useful information, including the current electrical load, maximum demand, and power factor.
• Step 7 – The communication module sends data to the utility company: Smart meters send usage data to the utility company through built-in communication modules, such as GSM, RF, or power line communication, in near-real time. This allows remote meter reading and near real-time monitoring.

What Are the Different Types of Energy Meters?

Energy meters can be classified into various types based on the consumer’s needs, voltage requirements, and phase supply. The three primary classifications that segregate types of electric meters into different categories are listed below:

• Based on the phase supply configuration: It includes single-phase meters and three-phase energy meters. Energy meters in this category are designed for either single-phase or three-phase electrical systems, depending on the load requirements. 
• Based on the underlying measurement technology used: These include electromechanical meters, digital electric meters, and smart meters.
• Based on consumer requirements: These include prepayment electric meters for budget-conscious users and submeters for individual tenant or room-level monitoring in shared spaces.

Let’s explore all the types of electric meters in detail.

Energy Meters Based on Phase Supply Configuration

Energy meters are designed for various phase configurations, as homes and businesses have distinct voltage and load requirements. Single-phase energy meters are commonly used in homes, while 3-phase energy meters are employed where demand is higher, such as in shops, large homes, and factories. 

• Single-phase energy meter: This meter measures electricity in homes and small commercial spaces. It operates on a 230 V AC supply and features a simple two-wire connection, comprising one live wire and one neutral wire. 
• Three-phase energy meter: This meter is designed for larger commercial and industrial users. It works with a 415 V AC supply and a four-wire connection across three phases and a neutral.

Here’s a tabulated snapshot of the main differences between a single-phase energy meter and a three-phase energy meter:

Energy Meters Based on the Measurement Technology Used

This classification categorizes energy meters based on the technology used to measure electricity consumption. The primary types we’ve discussed in this section include electromechanical meters, digital electric meters, and smart meters. 

Let’s understand how they work and differ from each other:

• Electromechanical energy meter: This meter uses an aluminum disc that spins when electricity flows. A current coil in series and a voltage coil in parallel create magnetic fields that make the disc rotate. The speed of the disc is proportional to power, and a gear train counts the disc’s turns to add up energy in kWh. It offers basic functions but has lower accuracy. As a result, this electricity meter is no longer installed in new properties. 
• Electronic digital meter: This modern energy meter replaces moving parts with sensors and a microprocessor. A current sensor and a voltage-sensing circuit provide signals to an analog-to-digital converter. The processor samples current and voltage many times per second, calculates real power, and adds it over time to get kWh. 
• Smart energy meter: This is the most popular energy meter type in India. It’s an electronic meter with built-in communication modules. It measures and calculates energy the same way as a digital meter, and then sends the data to the utility company through radio frequency (RF), cellular, or power line communication (PLC). It supports two-way communication for remote reading, near real-time monitoring, and time-of-use billing.

Here’s a tabulated snapshot that explains how the three types of energy meters differ from each other:

Energy Meters Based on Consumer Requirement

Energy meters also come in specialized types for specific billing preferences. The two most common are prepaid meters and submeters. They help consumers control costs and let property owners bill fairly for actual usage.

• Prepayment or prepaid electric meter: A prepaid meter allows users to purchase electricity credit in advance, which they can use as needed. The user loads credit through a code, smart card, app, or online payment. The meter measures energy in kWh, applies the set tariff, and deducts the cost from the stored balance in real-time. When the balance reaches zero, an internal relay disconnects the supply. Power is restored as soon as the user adds credit. 
• Submeter for a room or tenant: A submeter is installed after the main utility meter to track the consumption of a specific room, unit, or area within a building. It measures kWh for that circuit or tenant and keeps a separate record from the main meter. Owners read the submeter’s display. Then, each occupant is billed for actual usage. Submetering is common in apartments, paying-guest housing, shared offices, malls, factories with multiple units, and campus facilities.

Here’s a detailed comparison of the two types of energy meters:

What Are the Main Functions of an Energy Meter?

The primary function of an energy meter is to accurately record electricity consumption for the purpose of generating a bill. However, advanced digital electric meters and smart meters also carry out functions such as sending consumption data to the utility company in real-time and helping consumers monitor and manage their consumption habits to lower their bills.

Let’s check out all the main functions that a modern energy meter performs: 

• It records electricity consumption for accurate billing: The electronic energy meter measures current and voltage in real-time, calculates power from these values, and adds it over time to display total energy in kilowatt-hours. This reading helps generate the electricity bill based on actual unit consumption. 
• It keeps billing periods and history organized: The energy meter timestamps readings, stores past usage, and categorizes data by billing cycle. This supports accurate and transparent bills and easy month-to-month comparisons.
• It separates usage by time of day: The meter tags consumption into peak, off-peak, and normal hours. This encourages consumers to shift heavy loads to cheaper periods.
• It watches for tampering to protect accuracy: The meter detects the presence of magnets, cover removal, reverse energy flow, or bypassing.
• It checks power quality to ensure equipment remains safe: The energy meter tracks voltage, frequency, power factor, harmonics, sags and swells, and phase imbalance. These readings help find problems early and prevent damage to sensitive devices.
• It measures both import and export when you have a rooftop on-grid solar system: The smart meter or a bidirectional net meter records energy drawn from the grid and energy sent back. This enables solar power net metering and ensures correct settlement.
• It shares readings automatically with the utility: The smart meter sends usage data to the utility company over RF or power line communication. This removes manual reading requirements and supports near real-time monitoring.

What is the Electric Meter Price in India?

The digital electric meter price in India varies substantially based on the type of energy meter and the phase configuration. Also, single-phase energy meters tend to be less expensive than 3-phase meters. 

Here’s a snapshot of the electricity meter price in India based on standard market estimates:

*Please note: The bijli meter price range mentioned in the table above is indicative, and not fixed. The actual electricity meter price in India can vary significantly from the given range based on factors such as the brand, manufacturer’s discount, product warranty, type of energy meter, phase configuration, etc. Besides, these are just the meter prices. Installation costs and electrician charges are not included in this price range. SolarSquare does not promote any meter brand. We install on-grid rooftop solar for housing societies, homes, and commercial complexes. 

What Are the Benefits of Using an Energy Meter?

The biggest advantage of modern energy meters, such as smart meters, is that they send accurate consumption data to the utility company, which helps generate an accurate bill. It means consumers are not overcharged. These electricity meters also help the DISCOM remotely monitor for signs of errors and tampering. 

Here are the multiple benefits of using smart and digital energy meters: 

• They generate accurate electricity bills: Consumers are charged based on actual metered units, not estimates. Clear records reduce billing disputes for both consumers and utilities.
• They enable better cost control: Time-of-day insights identify expensive periods. Shifting heavy loads to off-peak hours helps consumers lower their monthly electricity bills.
• They detect tampering and protect revenue: Built-in checks identify magnetic influence, cover removal, bypassing, and reverse energy flow. Alerts and logs preserve measurement integrity.
• They monitor power quality: Energy meters continuously monitor voltage, frequency, power factor, harmonics, and events like sags and swells. Early detection protects sensitive equipment and prevents damage.
• Smart meters transmit readings remotely: The electricity department doesn’t have to send a meter reader to manually record electricity consumption, as smart meters send consumption data directly to the utility. This speeds up service and reduces operating costs.
• Smart meters support on-grid rooftop solar systems: Both energy imported from the grid and energy exported to it are measured. Accurate netting ensures fair billing. If consumers use more electricity than they import from the grid, the DISCOM gives them credits. If they import more grid electricity than what their solar panels supply to the grid, a solar bill is generated.

What Are the Disadvantages of an Energy Meter?

Some of the biggest limitations of an energy meter include upfront installation cost, communication failure, and privacy concerns. However, despite limitations, it’s not optional in India to install an energy meter. If you use grid electricity in your property, you’re mandated by the law to have an energy meter that can record the unit consumption. 

Now, let’s check out the disadvantages in detail:

• They cost more upfront: Digital and smart meters have higher initial costs than older analog models, especially when communication modules are included. Since the government has been upgrading old meters with smart meters in India, the financial load falls on consumers. However, to ease the load, the government makes it clear that the entire amount doesn’t have to be paid all at once.
• Their accuracy can drift over time: Heat, humidity, surges, and component aging can affect the meter accuracy. Thus, periodic testing and recalibration may be needed.
• The communication modules can fail: GSM, RF, or PLC links can suffer from issues such as weak signals, congestion, or outages, which can pause remote reading and near-real-time updates.
• They raise data-privacy concerns: Detailed interval data can reveal usage patterns. Strong access controls and data handling policies are essential.

How to Lower Your Electricity Bills in India?

The most effective way to reduce electricity bills and achieve energy independence in India is by installing an on-grid rooftop solar system. Residential and commercial rooftop systems have a lifespan of 25+ years, and during their lifetime, they continue to generate free solar electricity. When appropriately sized, a rooftop solar system can reduce electricity bills for homeowners by up to 90% and save tens of lakhs of rupees across its entire lifespan. 

Here are some of the reasons why installing an on-grid rooftop solar system benefits consumers: 

• The government offers financial support: Homeowners and housing societies can claim a subsidy under the PM Surya Ghar Muft Bijli Yojana for installing on-grid rooftop solar systems. This support, however, will not be offered if you install off-grid solar systems or ground-mounted solar systems.
• They are the most cost-effective solar system types: Unlike off-grid and hybrid solar systems, which rely on expensive lithium batteries to store excess solar energy generated by the panels, on-grid solar systems send any excess power directly to the grid. Since they do not require batteries, they are the most cost-effective.
• They lower electricity bills by 90% or more: Since rooftop solar systems can take care of all your energy requirements, they reduce reliance on grid electricity. As a result, the electricity bills are reduced by 90% or more. Many customers receive zero electricity bills after installing solar.
• They save tens of lakhs of rupees over their life: Solar systems can last for 25+ years with proper maintenance. Since you won’t have to pay bills for as long as they last, all the money that would have gone on electricity bills will now be saved. 

Want to find out how much money a solar system saves in 25 years? Use SolarSquare’s free solar panel calculator to get an estimate of the investment you will make and the savings you will receive. 

We’ve also made this table for demonstration purposes to take you through the estimated cost of installing a 5 kW solar system in India vs the savings it offers in 25 years: 

*Please note: The 5 kW solar panel price in India with subsidy mentioned above is indicative as of 2nd October 2025 for the SolarSquare Blue 6ft variant. The actual solar plate price depends on your DISCOM charges, city, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change. Additionally, when calculating savings, we have considered an annual tariff escalation of 3% and an annual degradation of 1%. The actual final savings from a 5 kW solar system depends on the types of solar panels you’ve installed and their efficiency, intensity of sunlight your rooftop receives, orientation of the panels and tilt angle, the pollution level and weather conditions in your city, the temperature, shadow on the roof, impact of dirt/dust, and how well you maintain your panels after installation.

For any further queries about going solar, you can book a free solar consultation call with SolarSquare today.

Conclusion

Energy meters are essential measurement devices that help with accurate billing and electricity management. They measure real consumption and form the basis of transparent billing. Choosing between digital and smart meters depends on the type of supply, load, required features, and budget.

Modern energy meters are more accurate than older analog models. They include tamper detection and real-time consumption data. This visibility helps consumers shift heavy-load appliances to lower-tariff hours, reducing their electricity bills.

While there are certain limitations, such as higher upfront costs, installing energy meters in India is not optional. Any premises connected to the grid must have an approved electricity meter.

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FAQs

Q1. What do R1, R2, and T mean on an electric meter?

Ans. R1 and R2 are readings for different tariffs or time slots, for example, off-peak and peak. T shows the total units or indicates the active tariff. Exact meanings are given on the meter label or in the model’s manual.

Q2. What is the unit of an energy meter?

Ans. The standard billing unit is kilowatt-hour (kWh). It represents the total electricity consumed by the user.

Q3. Which type of energy meter is commonly used for residential applications?

Ans. Most homes in India use a single-phase energy meter. However, if the power consumption at a home exceeds 5 kW, a 3-phase energy meter can be installed.

Q4. What are the common errors that occur in an energy meter?

Ans. Accuracy can drift due to heat, humidity, voltage surges, or aging components. Poor wiring, CT issues, and phase angle errors can also affect readings.