By Rui Mano

Several recent seminars about smart grids have demonstrated the high interest raised by this subject today in Brazil. The regulator ANEEL has allowed the introduction of electronic metering and the first remote metering system has been recently certified by Brazil’s metrology institute, INMETRO.

Smart grid implementation requires high investments. The motivations vary in different countries, like President Obama’s stimulus package in the United States and emissions reductions in Europe. In Brazil, an important motivation comes from the attempt to reduce the high non-technical losses. These nontechnical losses are basically composed by energy theft and fraud, but also can be added the associated problem of bad debt through delayed collection or failure in collecting payment (default customer). Historically, although utilities have tried several different initiatives to fight these losses, most have had limited or no success at all. Further losses have even increased, imposing high financial losses on the utilities and increased rates for the customers who are compelled to share the costs.

This scenario – which is not uncommon to most developing countries – opens space for the introduction of new technologies to solve current problems and also improve services. New technological challenges like renewable and distributed generation integrated to the grid bring problems like multi-directional flows of energy and control of the multiple and renewable sources, such as solar and wind whose availability is difficult to predict, which have to be resolved. Smart grids aim to solve such dilemmas and improve quality of energy, reduce outages and technical losses, optimise energy consumption and promote energy efficiency. These technologies also will create new business opportunities – new applications, new services, and new appliances that ultimately also would foster economic growth. With the smart grids, innovation is popping up in grid equipment, automation and control systems, intelligent meters and appliances in the homes, and will revolutionise the way energy is managed, distributed and used. Utilities all over the world and also in Brazil are now embarking on this exciting business and technological journey – a huge challenge to develop and implement intelligent technologies and introduce intelligence into the grid.

Brazilian utilities are starting the process to modernise their grids and introduce intelligence. Many already have some level of automation and a few have now started implementing electronic metering, mainly as a tool to help reducing non-technical losses. Still there is a very long way to travel, with the regulator and the Ministry of Mines and Energy expected to play very important roles by developing the right price signals and incentives (fiscal, monetary, etc) for investment and new regulations (including a new tariff structure). There is an increasing interest in energy efficiency and also in renewable energy, which will certainly help drive incentives for the smart grids.

The users of energy will also be important agents of this change. The way the new technologies and services are implemented and presented to them and the costs (rate structure) will be fundamental to drive their support and the adoption of new facilities and applications.

Besides the technical advantages, the high investment to be made and consequently the economics will initially be the most difficult challenge to be resolved. Results of first movers show that the reduction of losses, reduction of operating and maintenance (O&M) costs, reduction of peak demand (demand shaping) and economy of energy could be some drivers for the investments. Each utility will find its own drivers and will have to find out how (and when) the investment is justified.

Some utilities have started studies to evaluate their own status and to determine what would be the best course of action – a “master plan” to orient what to do and when. An in-depth study should determine the most adequate functions and applications that should be implemented first and then help – through its technical and economic success – to support and justify additional steps. Others have started implementing electronic metering. Besides the initial application, the important point is that this implementation should be chosen in order to provide the best return of investment and also be a technical enabler for the following phases, so to bring the most beneficial short term economic and technical advantages. Only a study based on ground facts and experience will guarantee that.

It is also important to mention that the new smart grid applications are not only a matter of infrastructure (equipment, communications, etc.). While one implements electronic metering or smart devices in the network, lots of new data from the grid and from the customers, basically on the use of energy, will be acquired and will flow into the control centres. Data integration is a concern that must be adequately addressed to avoid data silos. When these data will finally be available at the control centres, new applications will have been developed to wisely use these pieces of information for business optimization. Utility plans should not underestimate the need to start developing new applications for business optimization together with the infrastructure implementation.