Smart Energy International spoke with Ben Gardner, president of smart infrastructure market intelligence firm Northeast Group; Patricio G. Donato, researcher with Argentina’s National Scientific and Technical Research Council; and Frost & Sullivan’s María H. Mistrorigo Benintende (senior industry analyst: Latin America) and Naren Pasupalati (senior industry analyst: India) to explore smart grid development in Latin America.
As countries increase their focus on decarbonisation of energy networks to reduce carbon emissions, decentralisation and digitisation are key to achieving national, regional and international goals regarding environmental sustainability.
This article was originally published in Smart Energy International 4-2018.
Moreover, global utilities, especially in well-developed economies, have over the past years invested heavily in digitization of grid systems to ensure grid reliability through optimal management of generation, transmission and distribution networks.
Smart grid capabilities have to date reached a point where utilities are able to remotely manage the energy consumption of consumer household appliances to avoid demand exceeding supply as efforts to replace conventional generation with renewable and distributed energy generation as primary energy sources intensify.
Digitising utility operations is also helping energy providers to address challenges such as revenue losses due to energy theft and high technical transmission and distribution losses, in addition to improving customer services through personalisation of offerings.
On the other hand, lack of funding and policies to support penetration of smart grid technologies, disagreements on who pays for smart grid technologies such as smart meters, high upfront costs and lack of local content is restraining adoption in developing regions.
One developing region that holds a great deal of potential is Latin America.
“After years of slow progress, South America is finally showing signs of becoming one of the most attractive emerging market regions for smart grid investment. Eight of the ten countries in South America already have significant pilot projects in place, while half of the countries have developed some form of smart meter regulatory target,” says Gardner.
“The total smart grid infrastructure market in South America will cumulatively be $20.1 billion over the period 2018–2027, with smart metering representing just over half of this amount, or $10.2 billion.”
At the end of 2017, Chile, Colombia, and Uruguay all announced plans for rollouts and/ or regulatory targets and smart grid investment plans have already been developed.
The key driver of smart grid infrastructure initiatives is the unique near-term and longterm benefits South American countries will receive from deployments.
Most notably, South American utilities will receive near-term savings from smart meter deployments by reducing non-technical losses. At nearly 15%, the regional transmission and distribution (T&D) loss rate is among the highest in the world. Longer-term benefits will be seen through increased integration of renewable resources and customer engagement benefits.
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 company is playing in the power digital transformation in Europe, says Frost & Sullivan.
The integrated energy company is increasing its presence across the region in all stages of the power industry, but especially in power distribution. Enel 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.
Brazil and Mexico
Mexico’s CFE has very significant projects as does the utility Light in Brazil. In addition, there are a number of other projects in diverse countries across the region such as at Edesur in Argentina, Codensa in Colombia, UTE in Uruguay and a host of others.
Utilities in the region have gained valuable experience with pilot projects and are now moving towards larger deployments.
In terms of deployments, Brazil is the regional leader, with on-going deployments in the hundreds of thousands of meters and larger projects expected.
Work being done by various industry associations including Brazil’s ABRADEE, the Brazilian Distribution Utility Association and the Brazilian Energy Storage Association, LATAM Smart Community Alliance and Smart Grid Mexico are contributing positively to the growth of the market.
One of South America’s key case studies is the utility Light in Rio de Janeiro which has an ongoing 1.4 million smart meter deployment.
Developments in Brazil are being driven by the recent implementation of Time of Use energy tariffs and continued deployment of distributed generation.
The majority of smart grid projects in Brazil are being financed with research and development (R&D) compulsory investment budgets under the National Electricity Agency (ANEEL)’s R&D programme, which establishes that all public service power distribution companies must invest approximately 1% of their operating revenues in R&D programmes.
Brazil’s impressive growth of distributed generation installations (around 300% CAGR during 2014–2017) under the net metering tariff scheme is not only driving investment in rooftop PV equipment and services, but also deployment of smart metering systems and other components of the smart grids.
Furthermore, in Mexico, the utility CFE is deploying hundreds of thousands of AMI meters per year. The deployments have been largely funded to date by the Mexican government’s PIDIREGAS scheme but now deployments are also on-going outside of the scheme.
Donato agrees that the smart grid revolution has reached Latin America, although not with the intensity of other parts of the world.
Argentina is no exception, but it is important to point out that in this country there is no official incentive or impulse programme for smart grids.
While there are laws, regulations, and funding for distributed generation and renewable energy developments and projects, there is nothing similar about smart grids and smart meters.
Although the national research plan Argentina Innovadora 2020 includes smart grids as one of the strategic socio-productive cores in the energy sector, there is no correlation with any national regulation or programme involving distribution companies and cooperatives.
Therefore, the advance of smart electricity networks in the country has been made, until now, by the development of small- and medium-scale projects that are uncoordinated.
To date, four or five pilot projects have been successfully implemented in different provinces of the country, including small towns such as Armstrong and Centenario, to medium-sized cities such as General San Martín and Salta.
Examples of pilots in Argentina include:
- EDESA smart metering project in Salta
- General San Martín smart metering project in Mendooza
- Centenario smart metering and solar PV Project in Neuquen
- Armstrong smart metering and solar PV Project in Santa Fe
- Trenque Lauquen smart grid project in Buenos Aires
- Edesur smart meter project in the City of Buenos Aires
These projects were partially funded by national and provincial government agencies.
However, an independent (and uncoordinated) process of smart meter installation has developed across the country.
This phenomenon has been driven mainly by some electrical cooperatives in small towns with rural and semi-urban demographics, where smart meters have been installed to facilitate both the reading of user consumption and the connection/ disconnection of customers.
According to some reports, there are more than 30,000 smart meters operating in small inland locations such as Vicuña Mackenna, Las Varillas, Dos de Mayo and Gaiman. In all these cases, the smart meters were first installed in rural environments, with the aim of reducing reading times and costs for these customers, and due to the success achieved, the installation continued into urban areas.
Although the use of smart metering systems in the country has grown, they still represent a small fraction of the low-voltage electricity distribution market. The projection for the coming years is momentarily conditioned by the economic context, but undoubtedly the use of smart meters is a one-way road.
The key to obtain a relevant percentage of smart metering systems is the materialisation of a massive deployment programme in the largest cities of the country, starting in Buenos Aires and surrounding areas and following with the main cities in the interior of the country.
In the particular case of Buenos Aires, the electricity distribution companies, EDENOR (north sector) and EDESUR (south sector), are launching small pilot projects of smart metering and distributed generation that may be the starting point of a more ambitious programme.
January 2018, Resolution N° 40072 of the Colombian Ministry of Mines and Energy established a target for advanced metering infrastructure to be deployed by 2030 to cover 95% of consumer units in urban centres 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 meters will be part of the power distribution company asset base. The government expects investment to be quickly repaid with the reduction in operational costs and power losses.
The Commission for Electricity and Gas Regulation (CREG) has this year (2018) to release the application regulation.
This initiative will not only involve deployments of smart meters but also a communication network to the ODS, and other key equipment for smart grids.
Despite the challenges which Latin America is facing in modernising its grid operations, the region needs to be applauded for developments recorded so far. Collaboration between energy stakeholders and an increase in participation by both the private and public sector will hopefully change the nature of the landscape in a positive way. SEI