This week, we continue with our focus on smart grid development in Latin America.
We spoke with analysts from research firm Frost & Sullivan to understand the landscape.
María H. Mistrorigo Benintende – Senior Industry Analyst – Latin America and Naren Pasupalati – Senior Industry Analyst – India at Frost & Sullivan had this to say:
Latin America is one of the most attractive emerging markets for smart grid investments, but opportunities are developing slowly.
Enel is a key driver for smart grids in the region, as it is progressively bringing smart metering to its regional subsidiaries following the leading role which the firm is playing in the power digital transformation in Europe.
Enel is increasing its presence across the region in all stages of the power industry, but especially in power distribution and is active in Argentina, Peru, Chile, Colombia and Brazil, – where it has just acquired former AES’s Eletropaulo, the largest distribution company in Brazil in terms of number of clients- and has deployed several smart grid pilot projects.
Old issues on lack of mandates, disagreements on who pays for the meters, high upfront costs, lack of local content products, etc. hold the market back overall.
On the positive side, minimizing commercial losses, which are particularly high in the region is driving adoption.
In Brazil, there is not a mandate for power distribution companies to install smart meters.
So far, investment in smart meters in Brazil is mainly restricted to pilot smart grid projects undertaken by power distribution companies.
The projects are being financed with research and development ((R&D) compulsory investment budgets under the National Electricity Agency’s programme, which establishes that all public service power distribution companies must invest approximately 1% of their operating revenues in R&D programmes.
However, implementation of Time of Use tariff model and distributed generation are also driving market growth.
ToU: Initially implemented in January 2018, the model is being adopted in stages and is now optional for a limited group of consumers based on its power demand levels.
Now, LV consumers with average monthly consumption above 500kW/h -which encompasses around 4 million users and approximately 5% of consumer units in the country- can opt to be billed with a TOU tariff.
From Jan 2019 the TOU will be available for consumers with average monthly consumption of above 250kWH and, extensive to all users from 2019.
Argentina is only now starting to put in order its power sector, after more than a decade of frozen tariffs and low investment levels. Plans for rehabilitation and expansion of the distribution grid involves conventional technologies with little space for smart grid in the short-medium term. There is interest in smart grids but the priority focus is another.
We understand that given the stage of development around the world, Argentina learning and implementation curve will be considerably faster than the experience in other countries.
Smart grid deployment is limited to a few pilot initiatives driven by distribution companies such as Edesur, Edenor, and EDESA; governmental entities; and associations of companies.
January 2018, Resolution N° 40072 of the Colombian Ministry of Mines and Energy established a target for advanced metering infrastructure (AMI) to be deployed by 2030 to cover 95% of consumer units in urban centers and 50% of rural units, equivalent to 11 million units.
The smart meters will be provided by the power distribution company with some federal subsidies.
The Commission for Electricity and Gas Regulation (CREG) is set to release the application regulation. This initiative will not only involve deployments of Smart meters but also communication network to the ODS, and other key equipment for smart grids.
In Mexico, smart meter installation is driven by the single state-owned distribution company CFE, which for some years has been slowly deploying smart meters in key areas where commercial power losses are high.
The company aims to reach deployment of 4 million smart meters by 2020.
Current Mexican smart grid research/pilots include Demand response to support network operation 2017-2022, automatic fault locator, energy storage and integration to operation 2017-2024 and Forecast of wind and solar generation for the operation 2017-2022.
In Chile, Enel has installed 90k meters and expects to have installed 250,000 by the end of 2018.