Last month, Brazil’s Electricity Regulatory Agency (ANEEL) made an announcement that will change the scope of smart meter deployment in that nation – from the anticipated replacement of all 65 million legacy meters to new installations only, excluding low-income households.
However, research just released by the Washington, DC-based Northeast Group, LLC, finds that although the new regulations were not the market catalyst that many in the industry were expecting, they will still support very significant smart grid market growth in the Brazil over the next decade.
The research firm states that Brazil is now expected to cumulatively spend $27.7 billion on total smart grid investments by 2022, compared to the original forecast of $36.6 billion. These smart grid investments will go into the transmission, distribution, metering and home energy management segments of the market.
As expected, the largest reduction in the total forecast will be in the smart metering, or AMI segment of the market.
"The August regulations were not the binding mandate that many had expected ANEEL to announce, calling for the replacement of all 63 million meters in Brazil," said Northeast Group. "As a result, we have revised downward our smart meter forecast for the country. At the same time, the regulation provides clarity for utilities and vendors and will help ensure that investment in this multi-billion-dollar market will increase over the next few years. A recent wave of merger and acquisition activity in the Brazilian smart grid market shows that firms still see big opportunities in the country."
The recently announced regulations require all new meter installations to be smart meters by early 2014, but do not require the replacement of existing legacy meters. Instead, customers may "opt in" by requesting one of two types of smart meters:
- A free meter that enables time-of-use (TOU) pricing
- A more advanced smart meter (AMI) with additional functionality
Customers will be charged for the cost of the more advanced smart meter. The additional functionality of this meter will include net metering, to boost distributed or micro-generation in the country.
"Combined with a recent micro-generation law, it is clear that Brazil is eagerly pursuing increased use of distributed generation," according to the Northeast Group. "Brazilian residents now have access to the smart grid infrastructure and regulatory incentives they need to implement residential-level solar panels and other forms of distributed generation. Given Brazil's high transmission costs and high solar resource potential, this is a top priority."
Above, given the recent changes in Brazil’s regulatory framework, Northeast Group has modified its predictions for advanced metering infrastructure (AMI), distribution automation (DA), wide area management (WAM), and home energy management (HEM) in that nation.
In addition to updating its forecast, “Brazil Smart Grid: Market Forecast (2012-2022), Volume II” includes a detailed analysis of the new regulations passed within the past six months, as well as information on recent smart meter deployments and new partnerships between Brazilian and international smart grid vendors.
Within the past several months, Northeast Group reports, international vendors – including Elster, Itron, Sensus, Siemens, Silver Spring Networks, Trilliant (News - Alert) and others – have been active in Brazil, announcing partnerships and M&A activity with Brazilian vendors, as well as recent wins with utilities.
The market has seen substantial activity, which is a sign that large deployments are imminent.
Northeast Group has not altered its forecasts for distribution and transmission level investments, such as distribution automation and wide area measurement technologies in Brazil. These are expected to make up a significant portion of the total smart grid market in the country. Distribution automation technologies in particular will be critical in improving the reliability of Brazil's grid in the run-up to the 2014 World Cup and 2016 Summer Olympics.
Northeast Group expects many Brazilian utilities to continue to deploy smart meters to help combat non-technical losses – such as electricity theft – which are well above the levels seen in other parts of the world.
"Even without a binding mandate, all Brazilian utilities will deploy AMI in some form, especially since five of the largest utility groups have non-technical losses above 14 percent,” the research firm added. “These utilities have found that AMI deployments can bring immediate savings by reducing theft; this alone justifies the business case. Several Brazilian utilities are even already experimenting with full-scale 'smart city' concepts, [which] leverage a number of smart grid applications, such as distributed renewable generation and sophisticated home area networks."
The 134-page report also provides a detailed overview of the electricity industry structure in Brazil and profiles the 12 consortia controlling 33 of the largest distribution utilities, which comprise more than 90 percent of the market.
A smart grid vendor analysis in the report profiles those firms positioning themselves to win large smart grid contracts, including domestic Brazilian firms and international smart grid vendors.
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Edited by Braden Becker