Brazil's Smart Meter Regulations Not A Binding Mandate, But Still Indicate Significant Smart Grid Market Potential

WASHINGTON, Sept. 5, 2012 /PRNewswire/ -- Last month, Brazil's electricity regulator ANEEL announced long awaited regulations regarding the deployment of smart meters throughout the country.  The new regulations were not the market catalyst – in the form of a binding mandate - many were anticipating, but nonetheless still provide for a very significant smart grid market to materialize in the country over the next decade.

Northeast Group, LLC today released a second volume of its earlier study Brazil Smart Grid: Market Forecast (2012-2022) that analyzes the market impacts of the new regulations announced in August 2012. The research firm found that Brazil is now expected to cumulatively spend $27.7 billion on total smart grid investments by 2022, as compared to the original forecast of $36.6 billion.  These smart grid investments cover the transmission, distribution, metering and home energy management segments of the market.  The largest reduction in the total forecast was found in the smart metering, or AMI, segment of the market.  Distribution and transmission network investment forecasts remain largely unchanged. 

"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 in 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, or a more advanced smart meter (AMI) with additional functionality. Customers would need to cover the cost themselves of the more advanced smart meter. The additional functionality will include – among other things - 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," continued 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."

In addition to updating its forecast, Brazil Smart Grid: Market Forecast (2012-2022) Volume II includes 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. In the past several months, international vendors such as Elster, Itron, Sensus, Siemens, Silver Spring Networks, Trilliant and others have been active in either partnerships or merger and acquisition activity with Brazilian vendors, or have announced recent wins with utilities. The market has seen significant 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, which are well above the levels seen in other parts of the world. The research firm added that, "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%. 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 that leverage a number of smart grid applications, such as distributed renewable generation and sophisticated home area networks."

Brazil Smart Grid: Market Forecast (2012-2022) Volume II forecasts 14 segments of the smart grid market in Brazil.  These include market values for AMI segments (meter hardware, communications, IT, professional services and installation costs); distribution automation segments (substation automation; fault detection, isolation and restoration (FDIR); volt/VAR optimization (VVO); and grid monitoring and control); wide area measurement (synchrophasors), and home energy management segments (home area networks, electric vehicle supply equipment and smart solar inverters) through 2022.  The 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 that make up more than 90% 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.

The report is 134 pages long and includes over 65 charts, tables and graphics.  Primary research was completed on the ground in Brazil, while secondary research used English and Portuguese sources. To order a copy of the report, please visit www.northeast-group.com or email Ben Gardner at: ben.gardner@northeast-group.com

ABOUT: Northeast Group, LLC is a Washington, DC-based smart grid market intelligence firm. Our research is focused on the smart grid opportunity in emerging market countries. 

Key questions addressed in this report:

  • How will new regulations affect near-term smart meter deployments?
  • How large will the smart grid market – including 14 segments – become over the next decade?
  • Which international vendors are already active in Brazil, which have won recent contracts and which have been engaged in M&A activity?
  • Which domestic vendors are poised to partner with international firms to exploit the growing smart grid market?
  • How will Brazilian utilities build their smart meter business cases?
  • Which utilities have already developed pilot projects and which technologies are they using?
  • Where in Brazil are distribution automation and home energy management likely to see large deployments?

Table of Contents

i. Executive Summary

1

               i.i Updates in Volume II of this report

3

ii. Methodology                                                                                                               

10

1. Introduction                                                                                                                               

13

2. Brazil smart grid snapshot     

21

               2.1 Current situation

21

               2.2 Regional comparison                                                                                                

23

               2.3 Electricity industry structure                                                                                

27

               2.4 Smart metering regulatory framework                                                                    

32

               2.5 Market drivers and barriers                                                                               

38

3. Smart grid market forecast                                                                                                                

50

               3.1 Changes from the Volume I forecast                                                                

50

               3.2 Deployment start date and pace                                                                               

51

               3.3 Cost estimates                                                                                                               

54

               3.4 Alternative scenario                                                                                      

55

4. Detailed smart grid market forecast and technology outlook                               

56

                4.1 AMI                                                                                                                 

56

                                4.1.1 Meter hardware

57

                                4.1.2 Communications options                                                                               

58

                                4.1.3 IT: meter data management and customer information systems                

61

                                4.1.4 Professional services                                                                               

62

                                4.1.5 Installation costs                                                                                               

62

                                4.1.6 Prepaid metering                                                                                               

63

                4.2 Wide area measurement                                                                                               

64

                4.3 Distribution automation                                                                                               

66

                                4.3.1 Overview of DA in Brazil                                                                                   

66

                                4.3.2 Distribution automation components                                                 

68

                                4.3.2.1 Substation automation and monitoring                                               

68

                                4.3.2.2 FDIR                                                                                                               

69

                                4.3.2.3 Volt/VAR optimization                                                                               

70

                                4.3.2.4 Grid monitoring and control                                                               

71

                                4.3.3 Distribution automation activity in Brazil                                                              

72

                4.4 Home energy management                                                                                                

74

                                4.4.1 Home area networks                                                                               

75

                                4.4.2 Distributed generation: solar inverters with communication capability  

75

                                4.4.3 Electric vehicle supply equipment                                                                             

77

5. Utilities                                                                                                                                

80

                5.1 AES                                                                                                                               

80

                5.2 Iberdrola                                                                                                                                

84

                5.1 CPFL                                                                                                                                 

85

                5.2 Light                                                                                                                               

87

                5.1 Cemig                                                                                                                               

91

                5.2 Endesa                                                                                                                               

93

                5.1 Copel                                                                                                                                   

96

                5.2 Rede Energia                                               

98

                5.1 EDP                                                                                                               

99

                5.2 Eletrobras                                                                                                                                

100

                5.1 Celesc                                                                                                                                    

102

                5.2 Cemar                                                                                                                               

103

6. Vendor activity                                                                                                                               

105

                 6.1 Domestic vendors                                                                                                               

106

                6.2 International vendors                                                                                                

111

                                6.2.1 International vendors in AMI projects                                               

111

                                6.2.2 International vendors in distribution automation projects                             

116

                                6.2.3 International vendors poised to expand in Brazil                                

118

7. Conclusion                                                                                                                                

120

8. Appendix                                                                                                                                

121

                 8.1 Domestic electricity sector vendors in Brazil                                                                          

121

                8.2 List of companies mentioned in this report                                               

125

                8.3 List of acronyms                                                                                                                

126

List of Figures, Boxes, and Tables

 

Updated vs. original smart grid forecast

4


Brazil smart grid: key takeaways

6


Brazil smart grid: leading indicators  

7


Smart grid development at Brazilian utilities 

8


Updated Brazil smart grid forecast data

9


Updated combined smart grid forecast  

9


Figure 1.1: Smart grid value chain  

13


Figure 1.2: Projected wind generation in Brazil         

14


Figure 1.3: Smart grid model highlighting focus in Brazil  

15


Table 1.1: Benefits of AMI in Brazil 

16


Table 1.2: Demand response options

19


Figure 1.4: Solar and wind resources in Brazil 

20


Table 2.1: Classification of meters by type 

21


Table 2.2: Functionalities of electronic meters 

22


Figure 2.1: Emerging markets smart meter potential      

23


Figure 2.2: Current smart meter penetration rates in Latin America     

24


Figure 2.3: Per-capita electricity consumption in emerging markets               

25


Figure 2.4: Average residential consumption in Brazil   

25


Figure 2.5: Global per-capita CO2 emissions  

26


Figure 2.6: Actual and forecasted GDP growth in Latin America

26


Box 2.1: Smart grid throughout Latin America

27


Figure 2.7: Global residential electricity prices 

28


Figure 2.8: Electricity generation mix in Brazil               

29


Figure 2.9: Contracted and forecasted new generation   

29


Figure 2.10: Utility ownership in Brazil                

30


Box 2.2: Brazil political situation – the Dilma effect 

31


Figure 2.11: Electricity regulatory structure in Brazil    

32


Figure 2.12: Conventional and "white" tariffs    

35


Table 2.3: Smart grid-related government action in Brazil                                                                  

37


Figure 2.13: Global distribution losses 

38


Box 2.3: Smart meter business case in Brazil – an analysis of loss reduction alone                         

39


Figure 2.14: Payback on AMI meter from loss reduction in average Brazilian home                     

39

Figure 2.15: Payback on average res/comm. AMI meter from loss reduction in two utilities   

40


Figure 2.16: Aggregate cost savings from res/comm. non-technical loss reduction                       

41


Figure 2.17: Percent manufacturing sales lost to power outages                                                 

42


Figure 2.18: Electricity consumption growth in Brazil      

42


Table 2.4: Percentage of customers who would alter habits if peak prices were to double        

43


Table 2.5: Appliance ownership in Brazil                     

44


Table 2.6: Smart grid drivers and barriers in Brazil   

45


Figure 2.19: Percentage renewable energy consumption in Latin America                                        

47


Figure 3.1 Updated vs. original smart grid forecast  

51


Figure 3.2: Timeline of smart grid development in Brazil             

52


Figure 3.3: Combined smart grid forecast                

53


Table 3.1: Brazil smart grid forecast data             

53


Figure 3.4: Annual AMI deployments          

54


Figure 3.5: Brazil smart meter penetration rate                 

54


Figure 3.6: Delayed deployment scenario            

55


Figure 4.1: AMI cost breakdown                

56


Table 4.1: AMI forecast data     

57


Figure 4.2: Combined AMI forecast                                                                                       

58


Table 4.2: Communications technologies             

59


Figure 4.3: Phasor measurement unit (PMU) forecast         

64


Table 4.3 Distribution automation forecast data                 

65


Figure 4.4: Distribution automation forecast     

65


Figure 4.5: Substation and distribution automation in Brazil

67


Table 4.4: Home energy management forecast data     

74


Figure 4.6: Home energy management forecast       

74


Figure 4.7: Electric vehicle forecast      

77


Figure 4.8: EV incentives in Brazil           

78


Figure 5.1: Smart grid development at Brazilian utilities              

80


Table 5.1: Brazilian distribution utilities               

81


Box 5.1: Light's Optimus program         

88


Figure 5.2: Non-technical losses as a percentage of total sales in Brazilian utilities                        

89


Figure 5.3: "Smart city" projects in Brazil          

92


Figure 6.1: Leading smart grid vendors in Brazil                

105


Table 6.1: Leading smart metering vendors in Brazil    

106


Table 7.1:  The next steps and necessary actions             

113


Table 8.1:  Domestic electricity sector vendors in Brazil                                                                   

120


 

Companies covered in this report

 

  • ABB (Sui)
  • AES (US)
  • Alstom (Fra)
  • BPL (Fra)
  • Celesc (Bra)
  • Cemar (Bra)
  • Cemig (Bra)
  • CESP (Bra)
  • Choice (Bra)
  • Copel (Bra)
  • CPFL (Bra)
  • CTEEP (Bra)
  • Echelon (US)
  • Ecil (Bra)
  • Eletra Energy (Bra)
  • Eletrobras (Bra)
  • Elipse (Bra)
  • ELO (Bra)
  • Elster (Ger)
  • Elucid (Bra)
  • eMeter (US)
  • Endesa (Esp)
  • Enel (Ita)
  • EDP (Por)
  • Gamesa (Esp)
  • GDF Suez (Fra)
  • Iberdrola (Esp)
  • IBM (US)
  • Impsa (Arg)
  • ISA (Col)
  • Itron (US)
  • Landis+Gyr (Sui)
  • Light (Bra)
  • Logica (Ned)
  • Nansen (Bra)
  • Rede Energia (Bra)
  • S&C Electric (US)
  • Schneider Electric (Fra)
  • SEL (Ger)
  • Sensus (US)
  • Siemens (Ger)
  • Silver Spring (US)
  • Telvent (Esp)
  • Terna (Ita)
  • TIM (Ita)
  • Tractebel Energia (Bra)
  • Treetech (Bra)
  • Trilliant (US)
  • V2Com (Bra)
  • Way2 (Bra)
  • Wobben (Ger)

 

 

SOURCE Northeast Group, LLC



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