SAO PAULO, Feb. 28, 2013 /PRNewswire/ -- Brazilian energy distribution companies are keen for improvements in distribution loss management but their wait is not likely to end until government regulations regarding energy distribution are firmly established. Once regulations and standards are in place, distribution loss management solution providers will be able to make technological improvements to their energy management systems and meters and consequently, grow in the dynamic Brazilian market.
New analysis from Frost & Sullivan (http://www.energy.frost.com), Assessment of the Brazilian Distribution Energy Losses Management Power Meter Market, finds that the market earned revenues of $341.4 million in 2012 and estimates this to reach $874.3 million in 2017. This will be mostly due to favorable government policies and the smart grid trend. The smart meter segment is expected to grow at a compound annual growth rate of 69 percent over the next five years, whereas other segments will face significant declines.
Technological enhancements to energy management solutions will attract greater investments to the market as the solutions will allow customers to better manage their spending, distribution companies to fine-tune customer data management, and the Government to provide superior quality energy distribution.
While market participants are optimistic about the effect of regulations on their systems' adoption rates, they are still uncertain about the market strategy that needs to be adopted at present. Despite government incentives such as the implementation of white tariff as well as pre-paid energy and smart grid system, manufacturers are unable to determine the insertion rate of new meters.
"As the law does not mandate customers to exchange their existing meters to new meters, the sales of new meters will depend on consumers' willingness to adopt smart meters," said Frost & Sullivan Energy & Power Research Analyst Paulo Zani. "Therefore, the adoption is likely to progress at a slow pace and restrain revenue growth."
Meter manufacturers are also heavily dependent on foreign parts for the production of power meters, which closely links the prices of meters in Brazil to the dollar's volatility. On an average, imported parts account for almost 70 percent of the meter's costs. The strong presence of low-cost Chinese manufacturers further compounds the pricing issue.
Nevertheless, Brazilian manufacturers have the home advantage over foreign competitors in this emerging market. Domestic participants have a much deeper understanding of the energy meter market, customer behavior and preferences, as well as government regulation and standards.
Acknowledging the global smart grid trend, companies should prepare for the imminent prevalence of smart meter technology in the market by launching new products such as smart meters and energy managing systems.
"The time is ideal for smart meter introductions and the raising of entry barriers to low-cost foreign companies," noted Zani. "Companies should look to preserve their market share by signing agreements with distribution companies as well as lobbying for government support to shield their market space."
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Assessment of the Brazilian Distribution Energy Losses Management Power Meter Market
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SOURCE Frost & Sullivan