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When will Latin America definitively switch to smart meters?

Bnamericas Published: Tuesday, August 13, 2019
When will Latin America definitively switch to smart meters?

US market research firm Northeast Group estimates that smart meters will account for 50% of the US$20.1bn that South American energy firms will invest in smart grid infrastructure between 2018 and 2027.

However, Navigant Research and Chilean legal affairs site Derechos Digitales note that most countries in the region have lingered in 'pilot' mode for several years, with limited roll-ut of advanced metering infrastructure (AMI) and little in the way of immediate plans to step up deployment.

BNamericas searched for updates in the key markets but also found very few reports of upcoming deployments.

Even in Mexico, where penetration of smart meters is double that of rival markets in the region, at 10% of meters installed, it is not clear whether the country will succeed in reaching its longstanding goal of 30mn smart meters (79% penetration) by 2025.

The 2018-32 electricity development plan, Prodesen, states the goal of upgrading 5.7mn meters by the end of 2022 with either partial AMI capabilities or digital connectivity. Over the same period, state utility CFE will replace 121,000 traditional meters with full, AMI-level smart meters.

CFE was reportedly expected to end 2017 with 2mn AMI meters installed, so in 2023 Mexico will still be 22.2mn meters short of its 2025 AMI goal.

In an absurd twist, Mexico is the largest supplier of smart metering technology to the US, which, according to EY, had migrated 50% of its meters to AMI by the end of 2015 and is expected to reach 74% penetration in 2020.

On paper, Chile is close to catching up with Mexico, since distributors Enel and CGE have installed some 250,000 units, and have active programs to install another 400,000 this year, which will amount to roughly 10% of the country's 6.7mn pre-existing meters. The industry expects to complete migration of all meters by early-2026.

The latest phase of installations risked being interrupted when in April this year the government confirmed that the distributors had the right to charge homeowners the cost of the new devices, a practice that had been evident since late 2018 when small quotas towards this cost started appearing on consumers' bills.

After a series of complaints from pro-consumer organizations, the government ruled in July that consumers had the right to claim back this cost, and that from now on meters will only by upgraded to AMI devices if specifically requested by the consumer.

Source: US Dept. of Commerce

In terms of national penetration, Costa Rica and Uruguay are positioning to become the first Latin American countries with total coverage.

In December 2018, Uruguay's state utility UTE announced a supply deal with meter vendor Isbel, mentioning an initial goal to install 350,000 units. And in May UTE said it would have 750,000 meters installed by the end of 2020, which would amount to 50% penetration.

That deployment rate leads us to suppose that it will take a year to deploy the initial 350,000 units, and UTE probably has 12% penetration at present. UTE expects to have migrated all 1.5mn of its service accounts to AMI by mid-2023.

In Costa Rica, state operators ICE and CNFL have stated that they aim to achieve full migration to AMI by the end of 2024, and in March this year ICE awarded supplier Elmec a contract to provide 285,000 meters, adding to some 124,000 meters already installed by ICE and CNFL. In June 2018 ICE said it would have 385,000 AMI meters installed by mid-2021, which now seems feasible given the Elmec contract.

However, progress is proving elusive in the region's other major markets.

Last year Colombia said it aimed to reach 50% penetration by 2030, but has not indicated how it will do this. A recent energy ministry report put the number of AMI meters installed at 564,000 by the end of 2017, which was 4% penetration at the time.

In an academic paper last year, the figure in Argentina was put at 12,140 meters installed, which is less than 0.5% of service accounts. Distributor Edesur recently aired plans to install another 15,000, but did not give a timeline.

The process in Peru started late 2017, when Enel said it would deploy 10,000 units, but this is a very slow-moving project, with a goal of installing 1.4mn meters by late 2024.

In Brazil, as far back as 2014 there were reports that the country aimed to install 63mn smart meters by 2021, but a November 2018 news report describes power company Elektro as the first firm to install AMI meters, starting with São Paulo state's Atibaia municipality. Elektro had installed 10,000 units by mid-January and plans to deploy 75,000 meters by year-end.

Also at the end of 2018, Enel Brasil announced plans to deploy 1mn smart meters in the city of São Paulo by the end of 2021.

What is surprising in this region is that apart from Chilean consumers' anger about having to foot the bill for replacing the devices, the general public have not objected to the two-way communication aspect of smart meters, which implies that power companies could use back-door software to remotely alter the readings.

Some journalists have warned about the possibility of power companies building up real-time snapshots of households' consumption habits, which some may see as an invasion of privacy. And trade unions in Chile have complained that smart meters will force the redundancy of thousands of people who until now have gone door to door to take readings.

Worse still, there is the risk of third-party hackers accessing the devices, either to use that real-time data or even to cut off service altogether.

This is where the lengthy pilot phase could play in the power companies' favor, since consumers are likely to be more trusting if the devices have a long history in their country, particularly if there is no 'bad news' associated with those trials.

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