SAP for Utilities Blogs
Discover insights and practical tips to optimize operations, reduce costs, and deliver reliable energy with SAP technology. Contribute your own blog post!
Showing results for 
Search instead for 
Did you mean: 
Former Member
0 Kudos

Aneel, the Brazilian electricity regulation agency, has announced in early August 2012 the
minimum specifications for electricity metering systems in low voltage consumer
units. Utilities, meter manufacturers and the metrology institute, Inmetro,
have been given 18 months to start replacing current meters and begin offering
a time-based tariff, known as the "white tariff."

I have already argued that this was a positive and significant milestone that would start the
modernization of Brazil’s distribution system. However, what is needed now is a
way forward that defines a feasible and financially viable model that doesn’t
rely on funding from the consumer.

The implementation costs of Aneel’s smart grid specifications could be billions of
dollars. So how can this investment be made without passing on increased costs
to the consumer? What business model is required? Much worse than that was the
new Federal law 12,783 established January 11, 2013, regarding concessions
extension new rules, which has stopped or reduced many crucial investments
already planned by utilities for coming years.

Across much of Europe and North America detailed mandates have been issued by regulators,
providing a degree of certainty for the market. In Europe, France has made its
own business case, which has delivered a positive result, but this has taken
more than ten years. Finland and Denmark commenced their rollouts based on
positive business cases for individual distribution companies. Sweden’s rollout
is mandated, but is paid for by the distribution companies, and the
Netherlands’ smart meter rollout will also be paid for by the distribution
companies. Spain has a Royal decree that mandates smart metering, but a
potential rate recovery is still under debate. In the United Kingdom, the retail
companies are responsible for the metering, and smart meter deployment is
mandated and paid for by them through including it in their electricity and gas
prices. In Italy, where Enel has replaced all of its 30 million-plus meter
units, the cost of upgrading has also been absorbed by the utility providers.
In the United States, the Obama government has established a stimulus package
that has boosted the market, financing smart meter projects previously
submitted by utilities and after approval by a government organization.

However, in Brazil, this is not the case. Outside the few utilities that have developed
their own models based on reduction of non-technical losses (i.e. losses
resulting from fraud or theft of energy), the vast majority of the 60-plus Brazilian
utilities cannot realistically begin any viable project under the current
scenario, even with the new Aneel resolution.

Regardless of the business model that Brazil chooses, its make up should not depend on input
from the regulator alone. A working group, active until the end of the
administration of President Luiz Inácio Lula da Silva, included representatives
from the Ministry of Mines and Energy, the energy research company Empresa de
Pesquisa Energética, Cepel, Aneel, Inmetro and the national system operator
ONS. It had one main objective: to precisely define a national business model
for smart grids. The resurrection of this group or something similar could
bring much needed clarity.

The creation of a Brazilian association for the smart grid industry, like those that already
exist in other markets, where projects have already reached millions of meter
points, would certainly be a welcome step to lead the plans for the Brazilian
smart grid. At the moment there is no clear direction or a single coordinated
plan. Instead multiple stakeholders are making their own plans and operating in
information silos. For example in Europe the European Smart Metering Industry
Group (ESMIG) was created, which is actively helping governments and regulators
in setting technology standards and business models in the continent. SAP is an
active member of ESMIG.

A similar initiative could also succeed in immature markets like Brazil, where the main
focus would be to subsidize and support the work of regulators, governments and
others in defining business models. This would help avoid delays in Brazil’s
development compared with other neighboring countries such as Ecuador, Colombia
and Mexico. In addition it will help avoid a situation where the consumer ends
up paying the bill.

About the author:
Geraldo Guimarães Jr. is Industry Principal – Utilities for SAP Brazil.
Guimarães has over 30 years of experience in the utilities sector, beginning
his career at the Pará state utility Celpa and working subsequently for
companies including Sonda Elucid, CGI Logica, Silver Spring Networks and
Elster. He has a degree in Data Processing from the Federal University of Pará
and specialized in knowledge-based systems (artificial intelligence) at the
Universities of Hiroshima and Tsukuba, Japan.

Labels in this area