Is South America The Next Smart Grid Hotbed?

The smart grid market in South America is expected to represent $25.1 billion by 2020, which includes 104.5 million smart meters, concludes a new report from smart grid research and consulting firm Northeast Group LLC.

In addition, other smart grid technologies - including distribution automation - will grow quickly in the region. Brazil will be first South American country to begin large-scale deployments, and Chile and Argentina will be next to follow, with other countries set to launch deployments in the latter half of the decade, the report says.

Brazil already has a smart grid regulatory framework in development and attractive market conditions, and the country's actions are expected to lay the groundwork for deployments in neighboring countries throughout the decade. Aging grid infrastructure and rapidly growing energy demand mean that large-scale investment will be necessary to maintain regional GDP growth of more than 4% in the medium term.

The factors driving smart grid deployment in South America may be different than in the U.S. and European markets, the report adds. For instance, in the U.S. and Europe - where large-scale deployments are well under way - smart grid benefits center on demand reductions, savings in meter-reading costs and reliability improvements. In the emerging-market context, however, the benefit case often rests on electricity theft reduction, social and economic development benefits and other region-specific drivers.

South America also exhibits several market conditions attractive for smart grid development compared with other emerging-market regions such as Asia, Northeast Group LLC says. These include per-capita energy consumption and enormous potential for distributed generation.

These are all key drivers of the smart grid, yet South America has lagged behind other emerging markets. This is about to change as governments in the region begin to take action in developing regulatory frameworks to encourage smart grid, the report adds.

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